Learning More about Home Equity

Many people find that one of the easiest and most affordable ways to access money is through the equity that they have accumulated in their home. This is a very popular option, especially when you have an excellent first mortgage in place.

Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.

While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out equity for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home's equity in record numbers, taking out billions of dollars in cash each year.

In years past, many saw their homes as a shelter of safety, yet today, they are more than ever before, willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is often used to one's advantage.

While removing equity from your home can be a good idea, you should do so with caution and fully understand the benefits and possible risks. The best thing you can do is to consult a licensed mortgage professional and financial planner to discuss opportunities to make your home's equity work for you.

As always, if you have any questions about your mortgage, please do not hesitate to contact me - I am always here to help!

Energy Retrofits Done Right

Energy efficiency retrofits can reduce your energy consumption, impact on the environment and save you money. If not done properly, however, replacing windows, adding insulation and reducing air leaks can have unintended effects on your house, indoor air quality and your family’s safety.

So before the work is started, have your house checked for pre-existing conditions that could lead to problems down the road. These problems may include high humidity, water leaks, dampness and mold. Your house may also have stale air, lingering odours, soil gas intrusion and pollutant emissions from household products. Structural sags, cracks and deflections in the walls, floors or ceilings also represent problems that may need to be addressed first. Undertaking an energy efficiency building envelope retrofit before dealing with pre-existing conditions may make the problems worse and result in loss of time and money invested in the retrofit work.

For example, sealing air leaks can improve comfort, reduce heating costs and protect walls, windows and attic because it cuts down on the amount of leaking in to and out of your house. But, this can cause the air in the house to seem stale and odours to linger longer. Odours from previously unnoticed sources such as hobbies, pets or stored items may become more noticeable.

Measuring the air leakage of the house with a blower door test before and after the retrofit work can offer an idea of how much the air leakage of the house has been reduced. If the reduction is significant, it may be a good idea to add a bathroom fan, range hood, air exchanger or better yet, a heat recovery ventilator. When properly designed and installed, mechanical ventilation is more energy efficient and effective than uncontrolled air leakage.

Reducing air leaks can also decrease the air needed for the safe and efficient operation of furnaces, water heaters and fireplaces. Adding powerful or numerous exhaust fans can further increase the risk that fuel-fired appliances will not properly vent combustion gases – a situation known as “backdrafting”.

Providing adequate combustion air for heating appliances and sufficient make-up air to balance exhaust fans may be a necessary part of a building envelope insulation retrofit project. The safest solution is to convert fuel-fired appliances to direct-vent units or sealed-combustion units. The backdrafting risk can often be assessed by a qualified energy advisor. Mechanical contractors can be consulted regarding make-up air systems as well as direct-vent and sealed-combustion appliance options for furnaces, hot water tanks and fireplaces.

Retrofitting your home to make it more energy efficient and to reduce your heating and cooling costs is always a good idea. By recognizing and addressing the potential issues associated with any retrofit project, you’ll help reduce the likelihood of problems occurring after the work is done. Consult a qualified energy advisor, building professional, home inspector or contractor before you begin your energy efficiency retrofit to better understand, and plan for, pre-existing conditions and possible unintended effects of the retrofit project. Often, corrective measures can be planned that not only prevent problems, but also add value to the overall project.

To learn more about other sustainable technologies and practices that can improve the performance of your home, visit Canada Mortgage and Housing Corporation’s website at www.cmhc.ca or call 1-800-668-2642.

Homeowners Tip: Creating a Family Photo Wall

Looking for some indoor projects to tackle this fall or winter that will help warm up your spaces? Why not discover a new way to display photos of your loved ones without using a hammer and nails?

Removable self-adhesive plastic hooks are great for photo displays because they won't mark the walls - you can move them around as much as you'd like until you have created your desired display. You can gather your favourite family photos and display them in frames of different shapes and sizes, and put a new spin on showcasing your loved ones. Since you probably already have a variety of frames around the house, this project doesn't have to cost a lot. And this is also a project that kids and other family members can join in on.

We hope this tip helps you to make your house the perfect home!

Why Your Mortgage Term Matters

Choosing the mortgage term that's right for you can be a challenging proposition for even the savviest of home-buyers, as terms typically range from six months up to 10 years.

By understanding mortgage terms and what they mean in dollars and cents, you can save the most money and choose the term that is suited to your specific needs.

The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a shorter corresponding interest rate. While this generalization made lead you to believe that a shorter term is always the perferred options, this isn't always the case. Sometimes there are other factors - either in the financial markets or in your own life - that you'll also have to take into consideration when selecting the length of your mortgage term.

With  mortgage rates starting to rise, for instance, a longer term may be worth considering now. And if paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you'll be able to afford your mortgage payments should interest rates increase further.

By the end of of a five- or 10-year mortgage term, most buyers are in a better financial situation, have lower outstanding principal balance and, should interest rates have risen throughout the course of your term, you'll be able to afford higher mortgage payments.

If you're shopping for a mortgage for an investment property, you'll likely want to consider choosing a longer mortgage term - depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.

On the other hand, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.

Choosing the right mortgage term if a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.

As always, if you have any questions about mortgage terms or your mortgage in general, I'm here to help!

Homeowner Tips: Fall Lawn Care

What you do for your lawn during the fall will have a great impact on what your lawn will look like next spring?

There are four simple steps you can take to help ensure your lawn will be healthy, green and the envy of the neighbourhood next year:

1.     Aerate. This means to puncture your lawn with small holes throughout to allow the fertilizer, sunlight, water and important nutrients that grass needs to grow deep within the ground; 

2.     Fertilize. Basically this means feed your lawn before it goes to sleep for the winter; 

3.     Overseed. This is when you spread new grass seed all over your existing lawn with a spreader; and 

4.     Mow. In early November, mow your lawn one more time as short as you can without scalping your lawn. This will help all the other steps above work better.

By completing all of these steps, your lawn should look better than ever when the snow melts and spring has sprung!

Is Your Home Airtight?

 

In Canada, space heating can account for up to 60% of most homeowners’ energy bills. This is especially true with older homes, which can often be drafty, lightly insulated and may still have older, less energy-efficient windows, doors and heating systems. This can add up to substantially higher home heating costs.

One of the best ways to cut down on your bills and keep your house warm in the winter and cool in the summer is by making sure your home is well sealed. Canada Mortgage and Housing Corporation (CMHC) offers the following tips on how to improve the airtightness of your home, in order to help you save money, reduce your environmental footprint and make your house more comfortable to live in.

Air sealing not only cuts heat losses and gains, but it also improves comfort by reducing drafts, helps improve the performance of the insulation in your walls and attic by stopping cold winter wind from washing through it, and it can help prevent moisture build-up in your walls and attic.

Finding air leaks can often be a challenge. Sometimes they’re detectable by feeling for cold drafts in suspect locations. Other times, you may be able to see daylight shining in through unwanted openings. Blackened insulation is often another sign. For a more thorough assessment, consider hiring a qualified residential energy service provider to perform a “blower door” test of your house. During this test, your house is forced to leak, making it easier to find air leakage locations with smoke emitting devices or a special thermographic scanner.

A blower door test can also tell you the size of the hole all the leakage areas would add up to if they were all centralized in one location. This is helpful when you want to know how leaky your house is relative to other houses. If a blower door test is done before and after air sealing, you can also find out how much you’ve reduced the air leakage of your home.                        

Some of the more common air-leakage points can include: ceiling pot light fixtures installed through ceilings into attic spaces, electrical boxes in ceilings and exterior walls; inside to outside wiring, plumbing and duct penetrations; bathroom exhaust fans installed in attic ceilings; older windows and doors; the joint between windows and the surrounding walls; and floor-wall joints.

Once you have located the leaks, you can use a variety of different approaches to seal them. For instance, leaky windows and doors can be sealed with gaskets or new weather stripping. Gaps around wiring, pipes and ducts can be sealed with caulking or spray foam. Electrical boxes can be sealed with special gaskets that fit behind the box plate covers. Joints between walls and floors and around the top of your foundation may be sealed with caulking or spray foam depending on the size of the gap. To find out the right options for your home, be sure to consult a contractor with expertise in air leakage control.

If you’re replacing your exterior siding, it’s a good time to add an exterior air barrier (and more insulation) that wraps your house in a draft-proof cover from the basement to the attic.

While air sealing is always a good idea, you may have to add mechanical ventilation in the form of a bathroom fan, range hood or, better yet, a heat recovery ventilation system, to help maintain healthy indoor conditions.

Air sealing can also adversely affect the ability of some fuel-fired furnaces, boilers and hot water tanks to safely vent combustion products, so an additional source of outdoor air may be needed. Consult a qualified mechanical contractor for guidance on ventilation system options and combustion air needs for your home before you start.

The Importance of Portability

Selling your current home and moving into a new one can be stressful enough, let alone worrying about your current mortgage and whether you’re able to carry it over to your new home.

Porting enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. And, better yet, the ability to port also saves you money by avoiding early discharge penalties.

It’s important to note, however, that not all mortgages are portable. When it comes to fixed-rate mortgage products, you usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

With variable-rate mortgages, on the other hand, porting is usually not available. As such, upon breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage.

Porting conditions
While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, some conditions that may apply include:

·         Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day. Other lenders offer a week to do this, some a month, and others up to three months.

·         Some lenders don’t allow a changed term or force you into a longer term as part of agreeing to port your mortgage.

·         Some lenders will, in fact, reimburse your entire penalty whether you’re a fixed or variable borrower if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand new term of your choice and start fresh.

·         There are instances where it’s better to pay a penalty at the time of selling and get into a new term at a brand new rate that could save back your penalty over the course of the new term.

As always, if you have any questions about mortgage portability or your mortgage in general, I’m here to help!