Open House is hosted by Steve Gregory, and features Paul Rushforth and Barb Kramer of MortgageBrokersOttawa.com
Air Date: November 7, 2015
Paul: Wait for Barb; get her mike ready.
Steve: Yes, yes.
Paul: This is going to be a bit of a rough segment, everybody.
Steve: You think so?
Paul: Yes. Barb’s a little rattled this morning. She came a little bit late. The Queensway, by the way, for anyone who’s, I’ll do Frank’s—
Paul: Traffic. Queensway going eastbound from both Kent on–
Barb: Oh, it’s way before Kent; way before Kent.
Paul: It’s way before Kent. It’s a parking lot so don’t take Queensway. Barb’s a little bit late this morning and so if anyone knows Barb—
Barb: I’m not late. I’m here. We’re starting the show. I’m here.
Steve: She got in at four minutes to ten.
Paul: If anyone knows Barb, like you take a different route up to the studio here. She’s lost for about an hour. Her being late, we should’ve have taken her on a different route to get up here.
Barb: Oh, yes, just twist me more.
Paul: Yes, so Barb is a little bit frazzled right now.
Steve: It was four minutes to ten; she pulls up in the parking lot.
Barb: Steve was waiting for me.
Steve: I could hear her heart from the door.
Paul: Oh, yes. Don’t expect much from Barb in the first segment; she just needs to decompress.
Barb: I didn’t know that if you guys knew that Frank wasn’t going to be here and I was afraid you’d be calling Frank going, “Hey, buddy. Where are you? You’re never this late.”
Paul: We knew Frank–
Steve: Frank’s been this late.
Barb: Oh, really?
Paul: Frank’s always this late but—
Barb: I’m still going to have a job Monday.
Steve: Before we get going Barb, did you see the new Bond movie yet?
Barb: If you want to talk about rates…
Paul: We won’t get into the Bond — Market.
Steve: Speaking of bonding there was a lot of it going on at your blood clinic.
Paul: Oh, yes. It was fantastic.
Steve: I saw some posts on Facebook. That looked really—
Paul: Yes, it was fantastic. We’re lucky enough to be granted sort of a—
Paul: Sponsorship, yes. We sponsored the blood clinic yesterday. Friday is always the worst day because they try to fill I think it’s something like 62 appointments on Friday. We’ve managed to sell out the whole clinic, not sell because there’s no cost to it but we managed to book out the whole clinic yesterday and get 62 appointments for the blood drive.
Paul: —which is unbelievable. Unfortunately, to give blood, it’s so stringent, the rules. I mean I wasn’t even able to give blood.
Barb: I’m not able either.
Paul: No, I mean there were so many different rules like someone came they had a bit of a cold, they couldn’t give blood.
Paul: Yes, it’s very, very stringent, the rules but—
Steve: Your blood was too thin?
Paul: My blood was pickled apparently. No, we actually booked out the entire thing, which was amazing. I had five huge pizzas for everyone who gave blood. We had Timbits and coffee. I do want to thank actually, Mark & Kathy Dickie, friends of ours who own the MannaTech Tim Horton’s. Also the… I have to find the other Tim Horton’s but there’s two Tim Horton’s that donated all the Timbits and the coffee, so thank you so much. Our friends, Mark & Kathy Dickie, we really appreciate the offer –donation
Barb: Generous move for a great cause.
Paul: It was, it was. You know what; we will do it again because it was amazing that we’re able to book out an entire day for blood.
Steve: That’s fantastic.
Paul: It was awesome, yes.
Steve: Where did I see it on Facebook, one guy had given over 800 times.
Paul: I was sitting with a lady who had donated over 489 times so this was her 489th time giving blood. You can only give blood every 56 days. Think about that. That’s four times a year, no, five times a year? Actually it’s more than that. Six times a year you can give blood and there was one guy who’s at 850.
Paul: He has donated blood 850 times. He would have been donating when he was 18 years old all the way to where he is now.
Barb: Good for him.
Paul: Good for him.
Steve: Imagine how many lives he’s saved.
Paul: Oh, he’s saved a lot of lives.
Paul: It’s a very, very unselfish act, so if anyone wants to do that blood.ca, go donate blood because they’re in desperate need of blood. Especially I think it’s O-positive or O-negative, they’re desperate in need of blood.
Steve: Beautiful. All right, mortgages and real estate.
Paul: Oh, wait, yes, the hour’s over.
Steve: Yeah, yeah. Rates are up a little.
Barb: Rates are up a little. The bond market has been up the last week for sure, a little bit the week before. We’re seeing some movement ten basis points with some lenders. Not all them. We still got our 264 and prime minus 55 so we’ve seen the variable move as well but it’s still some really great rates. We’re just starting to see some movements.
Paul: Is the variable, I know a lot of banks now are prime minus .35 or 55?
Barb: Three-five. Well, five-five, a lot of the banks are prime minus 40. Have you seen that?
Paul: Realy, yes.
Barb: Yes, be we still got 55.
Steve: What is the five-year rate now?
Paul: The five-year rate, we can still get 264 but we saw a couple of lenders at the end of the week go up to ten basis points to 274. Not everybody’s made the move yet but they were a couple of our bigger mono-lines so I suspect—
Steve: Now is the moment of lock-in.
Paul: Barb I’ve seen a couple of banks at 284.
Paul: Yes, I’ve seen a couple of banks at 284.
Barb: We’re not, not at 284?
Steve: Good so–
Steve: So it’s 264 get a rate lock.
Barb: Yes, get a rate lock. It’s, you know, call, get a rate lock and if you’re thinking of looking at all, get the rate lock in now before everybody goes up and who knows maybe we’ll see some more movements.
Paul: What’s the reason for that? Why now are the rates going up do you think?
Steve: Because the bond market went up.
Barb: Yes, because the bond market’s up.
Paul: Good, just wanted to check.
Steve: That’s because it opened on Thursday, right?
Paul: That’s right.
Steve: The Bond movie?
Paul: Yes, yes, yes.
Barb: No, it’s still a really great time to get a rate hold for a 120 days. Rates, you know, it’s that same thing. People call in and say, “I want the lowest rate.” Well, 2.64 is the lowest rate and it’s a great rate.
Barb: 2.74 is still a really low rate, ten basis points not a huge movement so yes.
Steve: Two-six-four, it’s still unbelievable.
Steve: Yes, it’s still really low.
Barb: It really is.
Paul: Well, Frank and I went to the CMHA Seat Conference this week and if anyone doesn’t know that’s Canada Mortgage and Housing Corporation. What they do is they usually, especially in the third quarter they’re telling us what’s going on and what happened in 2015 and what to expect in 2016.
Barb: It was really even, like—
Paul: It was—
Barb: There’s not a whole lot going on.
Paul: No, it was actually a pretty boring conference honestly. The speakers were very dry. It was nothing earth-shattering that we didn’t already know. We know that we’re up about 1% on the market here in 2015. Sorry that’s my phone.
Paul: Stuntman Stu. Stop texting me, please. We know that in 2015 we’re up about 1%. It’s been pretty flat. We consider 1% a very flat market so it has been flat. In 2016 we expect it to be flat again. Once again, I mean, I’ve said it ad nauseam, it’s the condo market that’s killing us right now.
Paul: What they’re trying to do is and what builders are slowly doing,
is they’re not building as many condos right now which is great because that is going to start saturating some of those unsold condos. Once that happens, then we’re going to get back to a better market in 2017. Expect a bit of a flat market again next year.
Barb: Yes, because it looks like you drive around town and there’s still a lot of condos in the early stages going up.
Paul: There are.
Barb: They’re not just going to stop.
Paul: There is a slow down. There’s definitely going to be a slowdown in condos.
Barb: A slow down at the entry level.
Barb: —before it even gets to that.
Paul: Yes, because I think builders are realizing that the condo market is over-saturated. They’re going to slow down a little bit on the building of condos which is great and get back to a very healthy level in probably 2017.
Steve: What do you see for listings next year?
Paul: I think we’re going to hit another ten, eleven thousand in the prime time of the market. We’re going to hit that. We’re going to be very listing heavy again. I think 2016 is going to be almost a mimic of this year in 2015. It’s going to be a very— It’s going to be a tougher market than what we’re used to seeing. In 2017 I think it’s going to even out a little bit and we’re going to start to see a little bit of a spike maybe two, three, four percent up which is good news.
Steve: What are expensive properties doing now? Are they selling?
Like in the East End?
Paul: Like in Navan, you mean?
Paul: Like the one I’m about to put on the market. If anyone is looking for a house, I’m just about to put my house on the market. I’ll probably wait till January though but if someone wants it, they can have it earlier.
Steve: Tell us a bit about it.
Barb: This is a real estate and mortgage show after all.
Paul: I mean; anyone wants—
Steve: If I can’t get you to pimp your own house in this show…
Barb: A lot of people have a lot of problem pimping their own house.
Paul: It’s 6,000 square feet. It’s got an indoor hockey rink. It’s got
everything under the moon. It’s got fully-loaded, five-bedroom, six bedrooms, five bathrooms, something like that and–
Steve: All renovated.
Paul: Done to the ninth and my backyard is like a Nordic spa, it’s absolutely gorgeous. So if anyone’s looking for that in the Navan area, get a hold of me.
Barb: Pretty specific buyer for that property.
Paul: It’s going to be a very specific buyer and I’m taking a bit of a risk. My wife and I are looking at a home right now in Orleans and we’re thinking of putting an offer in today. I’m taking a bit of a risk. I’m pretty sure I’ll be owning two properties. I guess my house will take awhile to sell–
Steve: Can you guarantee this one today?
Paul: So anyone looking for that, get ahold of me quick—
Barb: Hey, hey, can we just back up a bit. I had a client in my office yesterday.
Steve: Hit the music please, Chris. Thank you. Break time. Sorry,
Barb: I had a client in my office yesterday. Oh really, I have to stop?
Steve: Yes, It is break time. 521-TALK.
Paul: By the way, Steve, I had a client in my office yesterday. Let me tell you a little story, okay.
Steve: 521-TALK; 521-8255 We’ll be right back with Barb and her client and a Did You Know?
[00:10:23 Radio Advertisement]
Steve: Welcome back to the show. 521-TALK, 521-8255. We should mention and we haven’t that Frank is still part of the show—
Steve: —but his son is playing football again today with the Ravens.
Paul: You know what—
Barb: Yes they’re in qual–
Steve: He’s got to stop missing the show, you know.
Barb: Excuse me, there’s a problem?
Paul: Not really.
Steve: Barb is still hyped up for being late.
Paul: No, I think she’s calmed down a little bit. Do you want to—
Steve: Well, I hope she’s calmed down because do you know what time it is?
Paul: It is…
Steve: Did you know–?
Barb: Long long ago in a galaxy…
Steve: Did you know —
Barb: Did you know that if you have a mortgage maturing in 2016 that now is a really good time to get a rate locked, find out what your penalty would be because we’re finding in many, many circumstances there’s a large interest savings most times enough to cover off the penalty to break the term and take the rates now while they are so low and you’re buying yourself five years from now instead of renewing in a year.
Paul: Let me challenge you on that, Barb. You’re saying in 2016, so you’re saying these people are four years into their mortgage.
Paul: Four years ago, weren’t rates really low?
Barb: No. Four years ago we’re seeing people coming off, renewing in 2016, 384, 429, that kind of thing.
Steve: What kind of penalties are you seeing?
Barb: I mean different penalties; depends on mortgage size, right?
Barb: But, in a few circumstances that we’ve seen the cost of the penalty, your saving sometimes just in the first year of the mortgage of the newer rate.
Steve: Savings of how much?
Paul: From, again it depends on the mortgage rate. $300,000 mortgage, 20 basis points, it makes a difference.
Steve: Like a $1000, $5000?
Barb: Yes, the one we did was you were saving, the penalty was $7,000 and you more than made it up in the first year.
Steve: That’s good.
Steve: When’s your mortgage up, Paul?
Paul: Oh, geez, I totally forgot about that I needed a mortgage. Oh my God.
Steve: Are you pre-approved? Barb, can you handle this right now?
Barb: I don’t know if Paul would qualify. I don’t know. He doesn’t really, like business for self, it’s complicated, right?
Steve: Should he go variable or should he—
Paul: I’m just thinking to myself right now. I’ve sold probably about 4000 homes in my career and I’ve given advice all the time. I don’t even followed my own advice. I haven’t taken any pictures of my house at all and I have a gorgeous backyard and I totally forgot—
Steve: —and the pool—
Paul: I have a five-year fixed mortgage.
Barb: You have a five-year fixed, you’re a variable guy.
Paul: I am a variable guy but I was a year and a half ago maybe, when it was at 2.99%, I locked in, which stupid. I locked in at 2.99%
Paul: Here’s a question for you, Barb. Can I port that mortgage if I’m going to a house that’s half the price of my own house?
Barb: Port in decreased, is it with the bank?
Paul: It is. I have about, I don’t need to say the figure, but I have a large mortgage.
Paul: My mortgage is almost the same price as the—
Barb: —as the house you’re buying.
Paul: —as the house I’m buying.
Barb: Port and decrease, some of the banks do it differently. One scenario is you pay the penalty on the amount you’re decreasing.
Barb: Then you put your 299 on just the amount that you need. One bank specifically, if you port and decrease you need to pay down your mortgage before you close by the amount that you’re decreasing to avoid the penalty.
Paul: Okay, good advice.
Steve: What you can do, is pay you 20% that you’re allowed—
Steve: —for the year. Then your penalty will be lower.
Paul: Smart idea.
Paul: Smart idea – See, I don’t even follow my own advice. This is advice I would give a client and I’m not even following my own advice. What kind of a real estate agent am I?
Steve: A 299 he wouldn’t—
Barb: Penalty will be huge.
Paul: Huge; especially if you have a sizeable mortgage which it sounds like you do.
Barb: Not palatable.
Steve: Porting, if he puts 20% down—
Barb: Yes, then that goes against, again depending on your prepayment privileges of the bank you’re with.
Paul: Yes. Ten-.
Paul: Yes. Royal Bank.
Steve: Royal Bank’s ten?
Paul: Ten or fifteen yes.
Barb: I would think it’s Fifteen.
Steve: Wait a minute. Wait a minute. How many years have you been in on this show?
Paul: Eight and a half.,
Steve: Eight and a half. It’s been variable almost the 8 1/2 years.
Paul: Yes, I know, Steve.
Steve: You are locked in.
Paul: I know, stupid. I know.
Steve: Its interest rate differential as opposed to three months’ interest.
Paul: I know.
Steve: You haven’t taken any pictures. Your pool is empty.
Barb: It’s a little bit offensive that he clearly doesn’t take the mortgage advice we give on the show. But the listeners do.
Steve: You’re not with the model lender.
Paul: All right, I guess I’m not buying a house today. Thanks a lot guys.
Paul: Thanks a lot.
Barb: Sucked all the fun out of that. Can I go back to my condo question?
Paul: Is there a… music is break– Break time or no? No break yet?
Barb: I had a client in my office yesterday talking about buying a 3- bedroom condo. Of course we had the conversation about buying a condo at all. But he travels three weeks and then he’s home for three weeks so he needs something that can look after itself; no lawn, that kind of thing. What is the market for 3-bedroom condos?
Steve: There’s not a market at all right now for condos. Not a market at all.
Barb: For three bedrooms?
Paul: Well, three-bedroom condo, more popular as a two-bedroom condo but there still a market for a three-bedroom condo the problem is right now the condo market is terrible.
Steve: Why, he should be able to steal it?
Barb: Well, that was—
Paul: Oh, yes.
Barb: If there’s any on the market because I wouldn’t think there’s a large demand for a three-bedroom condo.
Paul: You don’t see it a lot. You definitely don’t see them a lot which makes that a little bit unique. I mean if there’s someone who’s looking for that three-bedroom, maybe someone with a kid and/or kids—
Barb: Two kids, yes.
Paul: —or someone with one child and wants a spare room. It’s a unique product; most condo’s are either one-bedroom or two bedrooms so having a three-bedroom condo’s a little bit unique so it’s probably going to be in their favor but the condo market right now is not good.
Steve: It would be further ahead to get a townhome wouldn’t he?
Barb: But it’s a maintenance thing.
Paul: Get a townhome that’s —
Steve: Terrace home?
Barb: Terrace home or you know, hire it out, right? Like just hire someone to do your lawn and your driveway.
Steve: Townhome, it’s not a huge lawn anyway.
Barb: Depending, he wants to be like core area or Westborough type thing.
Steve: You’re talking about resale. I would think it would be difficult
to sell a three-bedroom condo.
Barb: A three-bedroom condo.
Paul: Condos are going to make a comeback. They are, but it’s going to take a while. It will definitely take a while. We’re probably into 2017, potentially 2018 before the supply of condo like, it’s almost nine months of supply of condos on the market right now. What that means is if no other condo hit the market it would take nine months for all the inventory to actually sell. That’s a long time. That’s a strong, strong, buyers’ market. There’s something in the CMHC conference that I was like a little bit puzzled with. They were calling residential homes in the balanced market. I mean, yes, they’re sitting in an office looking at stats but we’re out in the field. It’s not a balanced market. It’s definitely a—
Barb: A buyer’s market.
Steve: How many months does it take to clear the inventory of homes?
Paul: Total? About eight —
Paul: Yes, about six and a half months. Now we’re talking when you look at condos and residential you’re looking at seven and a half, eight months of supply in the market. The condo market is definitely in the buyer’s market. They talk about the condo market as being in the edge of the buyer’s balanced market. It’s
not. Listen, we’re out in the field we see what’s happening in the condos and there’s a lot of people who are selling their condos. Well, not just we, but real estate agents in general are selling condos for less than what people paid for them usually. It’s a — yes, it’s a tough market. I mean if you’re looking to sell a condo, I’m not going to lie to you it’s a tough market.
Steve: Even if you rent it out you’re going to be in the ditch.
Paul: You probably will but depending on your condo fees are.
Barb: Yes, your condo fees. Your mortgage payments will be low.
But the condo fees can kill you.
Paul: If you’re looking at a suburb condo like a Mentor or one of those condos like a terrace home, you’re not going to be in the ditch because the condo fees are so low. If you’re looking at anything over $300 a month in condo feeds, you’re probably in the ditch. You’re probably in the negative there.
Steve: 521-TALK, 521-8255 is the number. Finish your cookie now.
Barb: I’m not saying anything.
Steve: 521-TALK, 521-8255. We’ll be right back.
[00:19:12 – 00:19:35 Music playing and radio program ID segment]
Steve: All right, we got all of Paul’s finances settled now.
Paul: Yes, thanks for settling that.
Barb: Paul’s depressed now.
Paul: Yes, like I totally— I totally forgot about it. I have a mortgage.
Barb: Go talk to a mortgage broker.
Steve: 521-TALK, 521-8255. Let’s say hello to Ken in Ottawa. Good morning, Ken.
Ken: Good morning. I’m looking for the mortgage question. I am trying to renew my mortgage and the bank is offering me .45, full shebang.
Ken: Point 45, is it worthwhile moving that I have excellent ratings and so on, and several properties there.
Barb: What’s the balance of your mortgage?
Ken: Well they have the step mortgage. They have it up to 600,000 but I’ll only be asking for 350.
Ken: Two-fifty is the right one, I’m just raising it by a hundred thousand.
Barb: The thing about a step mortgage is the way that that mortgage is registered; it’s registered as a collateral mortgage because there’s a revolving piece on the line of credit, right? So it’s registered differently than a standard mortgage. At mortgage maturity, if you have a standard charge, your mortgage is
movable to any lender without any fee except the existing lender you have will slap a discharge fee on it on the way out but it’s an industry standard. When you’re in a collateral mortgage, the only way that mortgage is transferrable is by using a lawyer. Then you’re getting into higher cost which means the ten basis points that you’re saving may not in fact make up for what it would cost you to move.
Paul: Just what you wanted to hear, eh, Ken?
Ken: No. They used to give .75 and I am—
Barb: Oh, yes, those days are gone, yes.
Ken: Yes, and then I thought they will let me use over .55 but why they’re offering me .45 I don’t understand. Being with them, with that bank for almost 45 years.
Paul: Negotiate with them.
Barb: Yes, negotiate with them but they know they have you, right? They know it’s going to cost you money to go.
Barb: They’re aware of that. Now, that product, I don’t want to paint the product with a bad brush but that step product is a wonderful mortgage to have. It’s really flexible and it allows you to use the equity on your own home if you’re borrowing any other money at a great rate but if you’re going to move, it can be costly.
Ken: What about this butler mortgage is this as you’re offering for 1.89 or 1.99?
Barb: The butler mortgages?
Barb: Well, I mean we’re not a fan of that. You don’t necessarily know what you’re getting. There’s often rates quoted aren’t rates at closing, there can be difficulty closing. I mean, we don’t use butler mortgages.
Ken: I see, okay, so all my step mortgages are, you know, and the various property step mortgages, is it worthwhile to get out of those then?
Barb: Well, it depends if the product’s meeting your needs. It is a great product. It’s just—
Steve: —and how much time is left, right?
Ken: Yes. I’m just signing next week —
Steve: You can find then what the penalty would be.
Barb: Yes, you can find out what the— I mean, to move the mortgage for a better rate like you’re up for renewal so there’s not going to be a penalty to break the term but the legal fees if they want an appraisal, you’re looking at around a thousand bucks.
Paul: —which is not a lot.
Barb: It’s not a lot; it depends on the… and then the discharge fee, right? I think Scotia’s discharge fee is three and quarter? Around 300 bucks.
Steve: —but over five years.
Barb: —but over five years with ten basis points. Again, it depends on the balance of your mortgage and what you’re really saving, whether it’s the wash and whether you want to lose that product. You have it for a reason, right?
Steve: Speak to a mortgage broker.
Barb: Yes, I’m happy to help you out if you wouldn’t mind calling—
Ken: Well, I left a message with Frank yesterday but I didn’t hear back.
Barb: Yes, Frank was out of the office yesterday because he’s gone to Guelph but if you want to call in on Monday, I’m happy to help you out.
Paul: Thanks, Ken.
Ken: Thank you.
Barb: Thanks, Ken.
Steve: Anybody else want to call in, we could ruin your day, too.
Paul: Yes, yes, yes. You know what, Steve, every week you do a promo for the show. I think for Barb this week you should use that segment for her promo because she sounded very, very intelligent in that segment.
Barb: Oh, and I don’t always? I think that was a shot.
Paul: Oh my gosh, you’re such jogj maintenance. I was just giving you a compliment, Barb.
Barb: Thank you, Paul.
Paul: —but no you don’t always sound intelligent, sorry.
Steve: Are you guys bonding?
Paul: Oh, Steven, Steven, Steven.
Barb: Seriously. Tough crowd. Tough crowd.
Paul: I’m just saying she sounded very intelligent in that segment.
Barb: We get asked that question a lot. We get a lot of calls about my mortgage’s coming up for renewal. Can I ask you a few questions?
Paul: What is a step mortgage?
Barb: A step mortgage is a mortgage and a line of credit piece.
Paul: Oh, okay.
Barb: So, you’ve got both. I mean—
Steve: So, I have a step mortgage but it’s not collateral.
Barb: Well, because you’re with First Line.
Barb: First Line, when they existed, they were the only lender that would register theirs as a matrix.
Barb: —that would register a matrix as a standard mortgage not collateral. They were a little niche there. There was only a period of time where they did it and I think it changed.
Steve: I think that was done just for me.
Barb: Well, no doubt.
Paul: You are special.
Barb: Frank would have had a—
Paul: —in a couple of ways.
Steve: See, I went to Frank.
Barb: Look, he’s not nervous about his mortgage.
Steve: Oh, is that a shot?
Barb: Ah, yes.
Steve: We’ll have some issues off the air.
Barb: Paul, you’re with the bank.
Steve: What is your number so Ken can call you on Monday?
Barb: 656-0758 and Frank is 0757.
Barb: We’re one office apart; one number apart.
Paul: Oh, so cute.
Steve: I see a slogan on the business card.
Barb: We do get asked that question a lot. It’s the first, a few of the first questions I say are, “Who’s your existing mortgage lender? Is it a step or is it a home line or is it a combined product?
Paul: You’re saying that at maturity, like if I have a five-year step mortgage and it was due today, I would still have to pay a lawyer?
Barb: If you’re transferring it, yes, because they have to de-register. It’s not just a straight transfer across of a standard mortgage. They have to de-register because there’s that revolving portion and anytime its revolving it’s registered as a collateral.
Steve: As Barb said, it’s not expensive
Barb: In the large scheme, if they’re like, Paul, do you have a home line? I don’t really want to ruin your day anymore than–
Paul: I do have a home line.
Barb: You do have a home line.
Steve: He’s in a step mortgage?
Barb: He’s in a step mortgage.
Paul: Oh, what does that mean?
Steve: Means you and Ken, are going to have a meeting with Barb on Monday.
Paul: Sorry, honey, not buying a house today.
Steve: Well, this has been a really good hour for you, hasn’t it?
Paul: Yes, I’ve learned a lot.
Barb: That’s — we like to give information on this show. Good solid mortgage advice.
Paul: What would you do in my situation, Barb?
Barb: Well, your situation is unique.
Steve: —but he can port, right?
Barb: You can port, yes. You port what’s in the fixed portion, right, not anything on the variable side, like in the revolving side because that’s open.
Paul: No, I’m fixed.
Barb: All of its fixed; even though you have a home line, it’s all in the fixed portion?
Steve: No, no, no. Your line of credit would be variable.
Barb: Yes, the line of credit is open. You’re not paying a penalty on that.
Paul: No. I have to go back and look actually.
Barb: Yes, I think so.
Steve: Can he port his line of credit as well?
Barb: He ports the product—
Steve: Right, so everything goes?
Barb: —but I mean different loan devalue; you’re buying down, right? Your line of credit is going to be less but your mortgage, the fixed portion is going to be the same.
Steve: Clear as mud, Paul?
Barb: Yes, Paul is looking stressed over there. Sorry, Rhonda.
Steve: Let’s go to Russs on her cell phone. Hello, Russ.
Russ: Good morning.
Russ: Dumb question; if you’re buying an investment property, a single family dwelling, can you get 100% financing?
Russ: What’s the maximum?
Barb: Investment property, 80% loan to value, 20% down payment. If you’re—
Barb: If you’re buying it as a second home for a family member to live, you can get by with 5%.
Steve: —but if it’s—
Barb: If it’s a pure investment property, then it’s 20%.
Steve: 20% down.
Russ: If you’re planning of renting it in it has to be 20% minimum?
Steve: Minimum, unless you adopt the people that are renting it.
Paul: Yes. Investment property you need 20% down.
Russ: Yes, I know. I think the cost of adoption will probably outweigh the 20%.
Barb: I think it is adoption month, though. I think I heard that in the car on the way in, in my long drive. Anyway, I digress.
Paul: Is this your first investment property, Russ?
Steve: Paul would like to shake your hand.
Paul: Good for you. You’re well on your way there, Russ.
Russ: Thank you very much.
Russ: Okay, take care.
Steve: Bye now. That’s nice.
Paul: Yes, I love hearing people buying investment properties. It’s the best way to build wealth. In our investment seminars when we show the return on the investment, it’s so much more than the financial markets, it’s so much more.
Barb: Especially in Ottawa.
Steve: I definitely think you need to diversify but you need real estate in your portfolio. You really do.
Paul: There are lots of ways to do it. You can use your RSPs.
Steve: You can use your RSPs. You can refinance a portion of your house to put the down payment on an investment property.
Barb: That’s where those products are good, the home lines and the step mortgages.
Barb: If you do want to buy an investment property. I mean you’re paying prime plus a half on what you borrow against your line of credit. The rates are low.
Steve: The interest becomes tax deductible, right?
Paul: When you refinance a portion of the house or use a line of credit to buy an investment property, the interests are tax deductible; along with all the repairs are tax deductible against the house. It’s a great way to build wealth.
Steve: You can take your exiting house and rent it out to 15 people because it’s big enough.
Barb: No, you don’t get a mortgage for that. That shows like a rooming house, locks on the doors, stuff like that. Lenders don’t like that.
Paul: She is ruining my day right now. You know that.
Barb: I’m a fun stealer today.
Paul: You really are. You really are.
Steve: She didn’t even bring me a cookie.
Barb: I did bring you a cookie. I gave it to Chris because nobody wants— Oh, I actually brought it for Paul.
Paul: Sorry, Barb, the music’s playing.
Steve: 521-TALK. 521-8255, we’ll be right back.
[00:29:56 – 00:30:29 music playing and radio program ID]
Paul: For those of you who don’t know Barb, she’s such a worrywart, like I catch her looking at the clock and I know why she’s looking at the clock — because her car doors are open right now!
Barb: I rushed.
Paul: And she has her cell phone in her car.
Barb: It’s in the car.
Paul: By the way, if you are in the parking lot of CFRA—
Barb: No, no, don’t do it. It’s not like my car can be hidden easily either.
Steve: He’s just kidding.
Paul: I’m just kidding. Your doors aren’t unlocked and your cell phone… Keep looking at the clock, though, Barb.
Steve: Let’s go to Cornwall, shall we and say hello to Mark. Hello,
Barb: Hey, Mark.
Mark: Good morning guys. How are you?
Steve: Wonderful, how about you?
Mark: Good, great show.
Steve: Thank you.
Barb: Thank you.
Mark: I have a question regarding investment properties. What is an investor looking to make on his money on a rental property?
Paul: Whereabouts? What location?
Mark: I’m in Cornwall.
Paul: Oh uh…
Steve: Well, there’s two things, right? There’s either cash flow or the property itself.
Paul: Yes, there’s cash flow or there’s built-up equity. Cornwall market, the equity is not going to go up quite as much but you will probably find something a little more cash flow positive in Cornwall. I’m not super familiar with the Cornwall market because I don’t work the Cornwall market so it’s hard for me to know but I know that your appreciation of your property is going to be very small in Cornwall.
Steve: —but at the same time, it’s going to cost less, right?
Paul: It’s going to cost less –
Barb: And the down payment’s less.
Paul: And the rents are still pretty good in Cornwall so you’re definitely going to be cash flow positive which is very important but don’t expect a huge return when you go to sell that property.
Barb: We see clients buy in Cornwall if their kids are going to school there rather than pay the resident’s rates. Buy a rental property in Cornwall. Get some kids in there.
Mark: I guess my question is what would an investor like if I’m going to sell my properties, what are they looking for to make on it? What kind of percentage?
Steve: It all depends.
Paul: So you’re saying you have a few properties and now you’re looking to unload a few?
Paul: It all depends. When you bought it, how much you paid for it, it’s really hard for me to suggest a percentage on that, Mark. I need to know more details on how long you’ve owned the property, what you owe on the property, what paid for the property, how long you held the property, things like that.
Steve: Do you have any connections in Cornwall that he can call?
Paul: Yes, I do have some agents in Cornwall that can help you out for sure.
Mark: Yes. No, I’m not looking for me. I’m looking for the buyer. Let’s say the actual, when a buyer comes to Cornwall to buy and looking at properties, what are they looking to make on it?
Barb: It depends on how long he holds it.
Paul: No, no, he’s saying that if a buyer goes into Cornwall to buy a property, what is he looking to make on it?
Barb: Minimum would be cash flow coverage.
Mark: So how much?
Paul: It’s really hard Mark. I don’t know. Really, I don’t know the Cornwall market at all.
Mark: It is in Ottawa.
Steve: —but an agent would help him.
Paul: Well, in Ottawa it all depends where you buy too. That’s a hard question. If you’re buying in the Glib, it’s a much better return on your investment. If you’re buying in Vanier, it’s not a great return on your investment but you’re very cash flow positive. I can’t put a number on that. I’m sorry, Mark, I can’t.
Barb: I think that’s the information he was looking for, though. It’s just specific to the Cornwall market.
Steve: It’s specific to each investment, right?
Paul: —to each investment, what you’re buying, where you’re buying, how much you’re buying, location, things like that. It’s really hard to tell. I’m sorry I can’t help you out on that, Mark.
Steve: Okay, let’s go to Oxford Mills and say hello, Allen. Hello, Allen.
Barb: Hi, Allen.
Allen: Hi. Hi, how are you?
Allen: I have a question. If you were to add a garage to a rental property, there’s lots of space, lots of room to build a garage but the investment or the cost of building a garage, does it raise the property value?
Paul: Obviously you’re talking about a detached garage, correct?
Allen: Correct, yes.
Barb: I wouldn’t think dollar for dollar.
Paul: No, it wouldn’t be dollar for dollar for sure. I mean, if you’re going to build a garage to sell your house, I wouldn’t suggest it, but if you’re going to build it to utilize the garage, to sell down the road, five, ten, fifteen years from now, then great, yes, you’ll definitely get some value. I would think that what will it cost you to build that garage, have you got a quote on that?
Allen: I don’t know. I’m guessing between 10 and 15.
Paul: Ten and fifteen.
Allen: Well built two-car garage.
Paul: I think you’re light there. I think you would probably going to pay more like 20 to 30 on a detached garage depending on how big you do the garage and whether it’s insulated and things like that.
Paul: You’re not going to get the money back but it definitely helps to have a detached garage. If you’re going to build it make sure it’s definitely a double, don’t just do a single detached garage because there’s no value to that at all.
Allen: Right. Basically it would be selling a feature and I will get the use of it over the years.
Paul: Absolutely, you’ll get the use of it over the years and yes, it would definitely help sell the property. How much, you know, if you put your house against a similar house that had a garage you’re probably looking at maybe extra seven, eight, ten thousand dollars in extra on that.
Barb: It’s actually an interesting point. Many, many people wait until they sell their house to do the improvements to sell it when really they can do them earlier and enjoy them and then they’re there when they go to sell it.
Steve: For sure.
Paul: It is even like a finished basement. Someone will finish a basement in order to sell their house. The only time a finished basement is of value is if you don’t have a main floor family
room, you have a smaller square footage, that basement becomes very valuable. I’ve seen people with big homes, finish their basement for a selling feature, it’s not. If you have enough space on your main floor, you don’t need a finished basement.
Steve: No but it does hide the cracks in the foundation.
Paul: Yes it does.
Allen: I wish they could point when the real estate people would say
Paul: Unspoiled, yes.
Steve: Unspoiled basement and gleaming hardwood floors.
Steve: Thanks, Allen.
Barb: Thanks Allen.
Paul: You know the funny thing about the unspoiled basement, the reason they say that because there’s lots of people with finished basements that don’t don’t any value. In fact, they hurt value because they’re very compartmentalized, you know, they have different rooms, it’s all broken up.
Paul: Yes, and that’s not a value.
Paul: When you say an unspoiled basement what it means is you can go in there and finish it the way you want it.
Steve: —or leave it.
Paul: —or leave it, yes, depending on the size of the house.
Barb: Happy birthday to Alex Polk, her birthday was on the fifth, and
Rob Murphy, one of our regional partners, his birthday is
today. Today’s the 7th?
Paul: Something like that.
Steve: Today is the 7th.
Barb: Happy birthday, Rob. To our manager of administration Diane Lowe, on Friday the 13th. Happy birthday, Diane.
Steve: We have a Friday the 13th coming up.
Paul: Oh, we do scary stuff.
Steve: Paul, anything else?
Paul: No, no. I just want to once again thank Mark and Kathy Dickie from Tim Horton’s who donated the Timbits and coffee and that for that unbelievable blood drive we had yesterday.
Steve: The other Tim Horton’s as well.
Paul: Yes, absolutely.
Barb: The other one.
Paul: Thank you Jocelyn who organized the entire—
Steve: She’s a machine.
Paul: Yes, she is. I hope she’s not listening though
Steve: You should really take care of her.
Paul: I think I do.
Steve: The computer radio show is next.
Barb: Have a great weekend.
Steve: Have a great weekend.