Canada Number One Part One

If you are a non-Canadian resident looking for a mortgage, there are some helpful tips to keep in mind. When you apply for the loan, the lender will run a full and complete check on your credit history and income. Of your gross income, 40% should cover all commitments in addition to the proposed new payments your loan will accrue. If you are self-employed, they tend to take the average net income for your last three years.  Mortgage lenders also tend to discount potential future earnings such as rental income. Instead, they focus on what you currently earn and what that allows you to pay.

As the holder of the title, the ultimate responsibility for the property is yours. And although you are in a position to influence what happens to your property once you’re put your name on the title and moved in, title insurance protects you against problems and claims that arise from issues previous to you moving in. With title insurance, you pay a one-time premium to a title insurance company and they defend you against defects and/or fraudulent issues that result from something prior to you buying the home. There are two types of policies – one that protects the owner against losses and one that protects the lender against fraudulent mortgages.

There are different title companies out there to choose from. After signing a contract with one of them, you as the owner are protected as long as you have an interest in the property. Using Chicago Title Canada as an example, title insurance protects you against issues arising from:

  • The unmarketability of the land
  • Lack of a right of access
  • Someone else has an interest in the title
  • A document is not properly signed, sealed or delivered
  • Forgery, Fraud, duress, incompetence or impersonation
  • Future frauds and forgeries affecting title
  • Defective registration of a document
  • Restrictive covenants limiting the use of the Land
  • Liens arising from mortgages, taxes, utilities, judgements or condominium charges
  • Builders’ Liens
  • Rights of possession arising from leases, options, family law or homestead rights
  • Easements over the Land
  • Enforced removal of existing structures because they encroach onto adjoining land or easements, or because they violate municipal by-laws

* The house cannot be used as a single family residence because it violates a restriction or zoning by-law

In the market for real estate but not totally sure about where to buy it? Here are some reasons why buying real estate in Canada is a good decision:

  • High quality of Canadian property gives you a good chance of long term value.
  • High quantity of properties gives you the advantage of choice.
  • Both of these add up to increased value for your price.
  • Purchase and loan processes are made easy

With so many Canadians living close to the American border, they face tough decisions regarding buying in Canada or the U.S.  Americans living close to the Canadian border are in the same situation. Here are some  reasons to buy real estate in Canada if you’re a non-resident:

  • Property value is less expensive than in the US, meaning the value of your dollar is higher overall.
  • Compared to the U.S., the wide open space of Canada is a welcome respite.
  • A lack of overgrowth means available properties still retain their original splendid flavor
  • Canada is an increasingly popular investment destination, meaning your property value is going only one way – up.

The fact that you’re in the market for a home of your own has already been decided, but deciding on what type of home is right for you is an important next step. Do you buy a brand new home in a new development? Do you buy a pre-occupied home in an established neighbourhood? What about a remodel, a house that needs some work? Sure it’s cheaper, but do you have the time and inclination to put in the necessary work? What about a recreational home? This might pertain to you if you are looking for a weekend retreat or simply a secondary investment opportunity. There is more than one kind of home to buy and deciding which is right for you and your needs is a very important first step.

If you’re leaning towards buying an older home, there are advantages and disadvantages to consider.  An older home has an established neighbourhood with a sense of style and personality already evident. The landscaping of the neighbourhood as well as your own home are already at full growth as well, meaning you don’t have to wonder what it will look like in the future other than normal growth patterns. Older homes in established neighbourhoods tend to be closer to necessities like shopping, banking and such. However, this proximity potentially means you might have to pay a larger price as the surrounding property values have risen over the years. A great benefit of buying an older home is that there is no GST associated with the purchase.

You’ve checked everything out and you’re leaning towards buying a newer home in a new development. As with an older home, there are advantages and disadvantages associated with new homes.  A newer home comes with newer features and appliances which gives you longer use but in the event of malfunctions, new features tend to have warranties. While older homes have an established look and feel requiring no immediate attention, the fresh appearance in a new development means more work but it also means you have a direct influence on what your personal area will look like.

Brand new developments tends to be on the outskirts of town, but you get entry level pricing and your resale value will be larger than if you were to buy an older home in a pre-established area.  While you have to pay GST on new purchases, most new homes are usually protected under the New Home Warranty Program, which protects you against problems that arise after the completion of the sale.

When buying a new home in Ontario, there is a good chance it is protected under the New Home Warranty Program (NHWP). The NHWP protects you from problems associated with the actual purchase and construction of your home.  Here is an example of the monetary protection that the NHWP gives you:

  • $100,000 towards construction defects
  • $5,000 towards delays in completion
  • $40,000 maximum protection towards your deposit
  • $5,000 maximum for delayed closing        

The NHWP provides you with $100,000 protection towards construction defects. What kind of construction defects? The Ontario NHWP Act dictates the house should be:

  • Constructed in a workmanlike manner
  • Free from material defects
  • Fit for habitation
  • Constructed in accordance with the Building Code
  • Free of major structural defects, defined as defects resulting in failure of load bearing portions of the building or that alter the building’s use as intended.

The Ontario NHWP allows the builder to delay the closing of the property if they give enough notice to the purchaser.

  • Delays of 15 days need at least 65 days prior to original closing date
  • Delays less than 15 days require 35 days notice.
  • Delays longer than 120 days, regardless of notice, and the purchaser has the option of terminating the agreement within 10 days of the 120 day period.

**Notices not needed for delays caused by strike, fire, flood, act of God or civil insurrection.

**If proper notice is not given, the builder must cover your costs up to $100 per day after 5 days up to but not over $5,000.

Hopefully, there is nothing wrong with the purchase or construction of your home, but if there is, it is important that you file your claim properly to receive the necessary protection you deserve. If your builder does not resolve your claims satisfactorily, you can request the NHWP compensate you directly or step in and help resolve your dispute with the builder. Keep in mind that the Ontario NHWP is there to help, and although you hope you never need them, don’t hesitate to call on them if necessary.

If you need help from the Ontario NHWP, following a few guidelines can be the difference between getting your claim resolved or not. Your request must be submitted in writing with as much detail as absolutely possible so there’s no room for confusion. Also, it’s always a good idea to keep a copy of this letter for your records. Use registered mail so you can get a receipt because if something happens to your letter and you don’t have proof that you sent it, your claim can be denied. Claims for major construction defects can be made up to seven years, while lesser defects have a time limit of two years. If you don’t want to use registered mail, you can deliver the letter in person and have someone in the office stamp confirmation on your copy of the letter. 

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