If you own a house and aren’t sure if you should invest emotionally in your property, you’re not alone.

Our house was built in 1995 with a double garage, sunroom and around 2500sq feet total.

We bought this house in 2009, and it was the same as when the owner had it built.

Nothing was changed, and there were lots of issues that weren’t taken care of.

The mouse problem was taken care of, but the mess they left was not. Otherwise, the house was perfect for the two of us.

Nothing inside the home was unusable, but it was older looking. Pink carpet, linoleum floors with cracks does show it’s age but we aren’t too worried about that right now.

In the 14 years she lived in the house, she did nothing apart from some crazy painter painting the walls Kermit green in the kitchen. Plus, he painted all of the electrical outlets to match.

I can show you if you want because nothing has changed as we still live with Kermit.

Birth Of Paper Millionaires

Both Mrs. CBB and I have been discussing how much people are paying for homes in our area.

We were joking around saying we’re all millionaires now. Big deal, right? There’s nowhere to go, and if we do, we’ll end up with a mortgage and long travel times to work.

It’s mind-blowing seeing how many houses in our neighbourhood are selling for and over the asking price.

First, there’s no way I’d bother buying or selling real estate at this time unless we were moving out of the country.

I’m not joking, and you likely have this happening in your city where houses are selling $100k or more over asking.

Paper Millionaires with nowhere to go.

Invest Emotionally And Stay Where We Are

Perhaps I find a home in the middle of nowhere close to my employer that is cheap, with a property that I can fix up, we’d consider it.

The problem is commute time, school bus availability, and whether I have the time to renovate.

Lastly, I want to enjoy my life at my age and not continue renovating house after house.

Since our son came along, I’ve been buying materials but slowly getting work done around our house.

We were torn between staying in this house forever or moving to another property when our son is older.

He may or may not be living with us for a while to save money for a vehicle and other items but mostly to stash cash.

Since we live in the Greater Toronto Area, there are plenty of universities and colleges to choose.

Then again, he might not attend these schools and want to move away or out of the country to study.

The problem with life is we can’t predict what our future will look like, so decisions need to be made.

When it comes to investing emotionally in our home, we needed to talk about it as a couple.

Ok, let’s get into what we discussed and what options we’ve put on the table for us.

Invest Emotionally Or Sell It As Is

There’s a buyer for every house, and for the most part, that is true; from hoarding to filth, someone will pay.

Right now, it’s a seller’s market with real estate, and every property is a turnkey property.

That means someone will buy it even if the house is overpriced or whether they pay over the asking price.

Even our real estate agent is sending out memos in the mail, emailing, and we even had a realtor leave a tag on our door.

The real estate agent wanted to know whether we were interested in selling and if they could meet with us.

I was like, what? She was like, who? We were like, no!

Now is the time realtors are earning big bucks, and they will market and go door to door if they have to.

My point is real estate is hot, and many agents have their heads buried into the ground with buyers and sellers.

We Buy Homes For Cash

I can’t recall if I told you about our other neighbour next door selling her home, but she did.

There was no for sale sign, nothing. I thought it was a bit sketchy, but we found out what she had done.

She told us over the fence that she sold the home to the electricity pole advertisement “We buy houses for Cash.”

I always laugh when I see that, but these buyers are cashing in, and there is a team of them.

Stop Discussing Real Estate Inside Or Outside Homes

Yes, we’re nosey, but we have Arlo Pro cameras outside so we can hear and see everything.

I was not impressed with the comment I won’t repeat because it’s racist that upset us both.

When our mobile phone beeps, we look to see who’s outside, so we look. That’s what the camera is used for, so keep private info away from the property.

If Mrs. CBB and I are out for a stroll, we play a game to see how many or doorbell cameras we can spot.

They are everywhere; however, we mostly see the Ring doorbell in our neighbourhood, which is popular.

The moral of that comment is to talk business somewhere else.

• Inside a vehicle
• Over the phone
• Email
• Coffee Shop

Never discuss money either because now you’ve just given the owners information they shouldn’t have.

Within months now, both of our neighbours on the right and left have sold their homes.

The lady on the right became a hoarder after her husband passed away a few years back.

She let the house go and could not keep it up even with her adult son living with her.

On numerous occasions, Mrs. CBB asked her if she’s like some help, and she didn’t want anyone in her home.

The buyers will come and rip everything out as it’s original to the house 1997 and flip it.

This is another reason we began chatting about whether to invest emotionally in our home or do the very basics.

I’m excited to see what happens, and I’ll share if I know any information as they go along.

Invest Emotionally And Move Out Of Country

My buddy and his wife, who moved on the left of us, did minimal renovations and sold it for $800k.

They purchased the home a bit over $300k in 2010, just a year after us.

When they finally sold the house, our friend told us that the money would leave them mortgage-free in their new country.

Our friend only renovated what needed to be repaired, and nothing more was put into the house.

They made a handsome profit on the home, and it secured their debt-free future in another country.

Invest Emotionally When You Get The Keys

Every day the new owner’s father is renovating the flooring, which was wood, but they are changing it, I guess.

The wife is painting the kitchen cabinets and adding new handles and nobs to them on Amazon Canada.

They are also replacing the countertop with granite which we all know is expensive.

This is where I stop and ask myself, should we renovate the entire kitchen properly?

Why put granite countertops with old cabinets that are oak doors and melamine boxes?

The house is functional and clean, so they do nothing that needs to be done right away.

Since they borrowed money from their family, I’d say they have a pretty big debt to pay back.

People Do What Makes Them Happy For A Price

Anyways, it’s their home but watching what new homeowners do allows us to overthink whether we should invest emotionally in our home.

During a conversation with them, they are both in their 30’s. He works full-time, and she has a stay-at-home business.

They also mentioned they would like kids in the future once they are settled in.

When we bought our home, we did not invest emotionally into it as we wanted to pay off our mortgage.

I know everyone is different; however, it’s nice to consider other perspectives about renovations and why they invest emotionally so quickly.

Invest Emotionally On The Small Stuff

We’re about 12 years ahead of them, and I’ve finished the back and front landscaping, installed a new wood fence, new roof, deck (but I’m redoing it) and the upper level of our house.

• Painted garage door
• Sealed the driveway
• New Outside lights and ground lights on a timer
• FIxed the parging around the entire house
• Regraded the side of the house so the rain to go intstead of puddling in one spot. I dug it all up myself, created a trench and added lots of grass seed.
• Washed the windows inside and out
• Basic remodel of the walls in our sunroom and added tiles to the floor (it was just concrete before)
• New fans in all of the rooms
• Gutted the upper bathroom which was opening a can of worms
• Put new vents all over the house since they weren’t even vented out and one had a birds nest inside
• Removed all of the insulation, cleaned loads of mouse poop, reinsulated and inspected by the city.
• New Thermostat
• Arlo Pro Cameras and a Ring doorbell
• Purchased new greenery, shrubs, mulch, weed barrier and stones for our rock garden etc
• Paving stones, sand, new rock steps and massive rocks to hold the soil up along with 3 stone steps on the side, .

It’s all the small stuff that can cause significant problems that we decided to tackle first.

Even though I’ve mentioned it seems easy enough, we purchased other items as I did the work myself.

Fix What Needs Fixing First

I wouldn’t say that we didn’t invest emotionally but rather fixed what could have turned into an expensive problem.

Oh, I painted the house, put a new door on, and replaced all the window sealants.

If you consider what we’ve done, you’ll notice more general maintenance to save us money.

We believe that taking care of the house’s shell and the property first is essential than a new kitchen.

Emotional Investing For Our House

Below are projects I have to complete to update our current home.

• Rip up the carpets in the dining room, livingroom and our master bedroom and replace with hardwood
• Gut the master bathroom and rebuild it including heated floors
• Gut the kitchen and install a new kitchen with an island, drop lights and pot lights
• Tile the front hallway as there are a few broken tiles and the grout is black instead of white.
• Livingroom, dining room and kitchen, hallway, bathroom and master I’ll take the OSD out and put in plywood.
• Getting roller blinds for the house or curtains as we can’t stand blinds and how they collect dust.
• Add insulation up to 60 in the attic which is probably a bit over the top but it will cut down on the bills
• Paint the house again
• Finish the basement likely with carpet (I’d love suggestions)
• 4 Piece bathroom, laundry room, bedroom, cold room, storage room, office
• Gym for our weights, bike, rowing machine, treadmill etc.
• New windows but we still have years as they are in great shape.
• Install a new sunroom that is all-season
• Add French Doors into the sunroom
• Install a gas line for the stove and possibly wall ovens
• Roof installed 2010 so we’re good for a while
• Add a new fan or light which is 24 ft ceiling (any suggestions comment below)
• Gas fireplace install in the basement
• All new appliances for the kitchen apart from the Dacor gas stove which we have.

I’m sure there will be more but as you can see we will invest emotionally in this house if we renovate from top to bottom.

After our conversation, we decided that we love our house, and it’s on a quiet street close to all amenities, including high school for our son.

Yes, we will buy quality products and invest our money into our forever home.

Tell Me About Your New House Purchase

So I want to hear from all of you who own a house. What were some of the first projects you took on when you moved in?

Would you invest in a house only if you plan on staying in it or invest as if you would sell?

What would you do differently that you never thought of when you first bought your house?

Please leave me your comments below. We appreciate your feedback as this will be a massive project for me and any trades I need to call in.

Yes, we will get all the proper permits.

Mr. CBB

CBB Posts Of The Week

• What Is ETC and Why You Should Invest In It for 2021
• Investing and Everything You Need to Know
• Stuffed Jalapeno Peppers
• Long-Term Care Home Expenses You Need To Consider
• How To Stop Pretending You Are Financially Stable
• Budgeting Problems We Struggled With

Support CBB and I’ll continue working to bring you the best information in frugal living and finance.

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Let’s PIN together.

Mr. CBB’s Thought Corner

Saturday Google Giggles

These are keywords that readers typed into their search engine and landed on this blog.

I get quite a few of these every day and pick some of the best to feature right here.

• What aisle is the ketchup in at Food Basics – Clean-up on aisle 3. Condiments aisle? See if there is a sign up top the row or ask an associate.
• Should we save money by eating less? – That’s an option especially if you buy too much food or find you are wasting it. Talk to your doctor who may reccomend a dietician.
• My mother wants to know how much money I have – If it’s your money do what you want but if you are living rent-free and are under the age of 18, you should listen to your mom.
• Does the keto diet work? – It sure does as long as you are committed to it.

That’s all for this Saturday, CBB Friends.

www.canadianbudgetbinder@yahoo.ca Subject: Send me any photos of renovations you’ve had done that you invested emotionally in your home.

Be Well,

Mr. CBB

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The post Should You Invest Emotionally In Your Property? appeared first on Canadian Budget Binder.

Being the new neighbours is sometimes awkward because you don’t know anyone on your street.

We’ve been living in our house since 2009, and both of our neighbours were here before us.

When we moved in, the couple next door came over and introduced themselves to us.

It was a great chat on a summer afternoon on the front porch, which turned into a BBQ dinner.

I ended up being close friends with the guy on the left of us as we would help each other when needed.

For example, if he went on vacation with his wife, we would care for his cat and feed our fish.

On numerous occasions, we’d both be in the backyard with our charcoal BBQ, drinking a beer.

We’d yap about what was new and anything general that was happening in the country.

Overall, he was a great friend, and his wife was charming. Sadly they just sold their house and moved to Japan.

Before they left, they told us a bit about our new neighbours who would be moving in.

He also gave us a cat tree stand, a BIG JOE chair our son loves and a $600 snowblower.

Great people, and it was s sad time for us both.

Today, I want to talk about ways you can introduce yourself to new neighbours and perhaps bring them a small gift.

New Neighbours On The Right Of Us

We slowly got to know the neighbours on the right side of us, but they were very kept to themselves.

Unfortunately, the husband/father passed away shortly after we moved in.

He was the man who would keep the house running and try to hide what was happening.

It wasn’t long before we found out what was happening, as many emergency vehicles would show up for the son.

His wife was a hoarder and loved to shop when she was in a manic state, which included two big purchases.

I never asked about those scary times we witnessed, but financially our neighbour was mortgage-free.

Over the years, as we got to know the new neighbours, we had many pleasant conversations.

She was a PSW and very soft-spoken but tried to avoid situations where anyone would be invited over.

We would bring her lots of tomatoes and rhubarb in the summer because we couldn’t keep up eating them.

She loved the little gifts, and we were glad they made her smile.

Her house sold for $700,000 cash as-is, later resold to a couple for $755,000 as-is.

Overall, if they had cleaned out the house, our neighbours could have sold it for close to a million dollars.

That was never going to happen, and now we are just seeing why she was a new neighbour who was distant.

New Neighbours Cleaning Up The Mess

So far, the home’s new owners have filled three massive bins and figure they will need six.

They are almost gutting the house as it smelled the cat urine as there were four cats and one dog.

It wasn’t until moving day that Mrs. CBB went to say goodbye to her, and she handed us two freshly baked butter tarts.

Related: Homemade Keto Butter Tarts

Her daughter had a box of them, and she wanted to thank us for all the help over the years.

It was a tearful moment because the family had gone through but starting a new life was best.

She also told me to take the ladder off her husband’s wall and keep them.

It is worth a few hundred dollars, but she figured our new neighbours would toss them in the bin.

New Neighbours On Both Sides Of Us

Both of our neighbours sold their houses and have now moved within months of each other.

Two months ago we introduced ourselves to our new neighbours on the left of us.

They are a younger couple in their 30’s with no kids and struggled to buy a house.

First, they could not find one in their price range, and when they did, it was getting sold $100,000 over asking.

To buy a home, they had to borrow money from their parents to get into the market.

Prices of houses everywhere are so far out of reach for anyone at the moment, and it’s not slowing down.

According to Re/Max’s housing market outlook report published Wednesday, sale prices are projected to increase by 9.2 per cent on average across the country in 2022.

CTV News Canada

A former Canadian Mortgage and Housing association CEO says that we’re not in a housing bubble.

“If demand is going up and supply is not, prices will go up, that’s not a bubble. So it’s a question of what the future brings and whether there will be supply and demand coming back into balance and that’s a crystal ball question.”

Remax Canada

Last week Mrs. CBB made a Cherry Bundt Cake and brought it over to our new neighbours on the left.

We included a note with the cake to say welcome to the neighbourhood, and if they needed anything, ask.

They were thrilled to get the cake and later told us it was delicious and wanted the recipe.

Little things like that make us smile.

Currently, our new neighbours on the left are renovating their home with new flooring, paint and flooring.

There were some promises of beers and BBQ in our conversation, which was good.

Welcome Our New Neighbours On The Right

Just a few days ago, our new neighbours on the right sort of moved in.

They stayed a short-term rental as they sold their condo out of the city and needed somewhere to stay.

After the closing, we finally got a glimpse of our new neighbours and realized they had their work cut out for them.

After walking our son to school, they introduced themselves to us when we walked outside.

We were off to a good start as they were very friendly and learned how wrong the house was inside.

On the first clean-up day, they filled the bin in an hour, and a second was on the way.

One of the bedrooms upstairs took hours to clean, but they wanted one room to sleep.

There was so much stuff, most of which could have been sold, but they had no time.

We had no interest in anything after we pledged to get rid of what we didn’t need in this house.

When Mrs. CBB and I pass, we don’t want our son left to clean out a house.

I offered to help them any way I could, and if they needed anything, just to let us know.

It was nice when the husband laughed and said. “I think we’re all going to get along.”

Gifts For Our New Neighbours On The Left

There was no bundt cake involved in this scenario but something completely different.

Since many family members were helping to clear out the house, they were parking on the street.

Currently, we are not allowed to park on the road overnight unless we call in the by-law for a permit.

Homeowners and renters are only allowed ten permit numbers per year to park on the road.

I did for our new neighbours to offer them to park in our driveway since we have an extra spot.

A ticket for parking on the road during the winter is something you don’t want as it’s pricey.

They were SO happy, and so were we. That small gesture was a way for us to welcome them.

We’re still working on something for them since they work day and night on the house.

Perhaps I’ll make Italian meatballs and pasta and bring it over for them with garlic bread.

Types Of Gifts To Give New Neighbours

Firstly, I want to say that having new neighbours could mean anyone on your street.

It doesn’t have to be who lives on the right or the left of you or in an apartment building.

The idea is to welcome the neighbours to the street and offer any help if you’re available.

For both of our neighbours, we let them know that there is an app for our entire neighbourhood.

The app is excellent because everyone chats about situations such as break-ins, free stuff, needed stuff and events.

Let’s talk about ten gifts you can give to your new neighbours after moving in.

Bake A Dessert For Your New Neighbours

Cherry cheesecake is one of the most popular welcome gifts for new neighbours that we would give. One CBB fan says she brings her new neighbours an apple crisp which is a great idea.

We’ve made banana cake, kimchi, rhubarb crisp and various types of cookies and cakes.

• Cherry Cheesecake
• Chocolate Chip Cookies
• Scookies
• Biscotti
• Rum Oatmeal Raisin Cookies
• Old Fashioned Oatmeal Cookies

Look on Pinterest as well as you’ll find loads of recipe ideas. You can also check out my Free Recipe Depot, where I keep all of my blog recipes.

Parking Spot

If you have extra space in your driveway, offer your new neighbours a spot to park, especially in the winter.

We offered our extra spot since they have two vehicles and a big bin in their driveway.

During the summer, parking on the road is permitted, but the gesture of offerings may be a big gift,

Shovel Snow

We have a new snowblower thanks to our friends who moved to Japan. Since our new neighbours are moving in and it’s snowing, I’ll make sure to take care of their driveway and sidewalk for them.

An older gentleman across the street from us takes his snowblower out and takes care of the sidewalks.

He can’t do it all as we have about 50 houses on our street, but he does the best he can.

The plow came around one day, and I had to go to work.

It just so happened that he was outside with his snowblower, and he came over to say hi.

He asked if I would like the end of the driveway taken care of to leave.

I gracefully said that would be excellent, sir. That was the first time I had met him, and I’m glad I did.

He was such a kind man that both Mrs. CBB and I made him and his wife the best banana loaf and brought it over.

Plants or Flowers

 I never have, but my next door neighbour did bring us one when we moved in. She brought us a plant.

Stefanie P from CBB Facebook

Small easy to manage plants like a money tree or succulents with a welcome letter or card are sure to make your neighbour smile.

At Christmas, I bring a card and some baked goodies. I have always has pleasant neighbours. In return we have received knitted items for our kids, garden vegetables at harvest and home made wine.

Kim T from CBB Facebook

We tend to make a few Christmas cookies over the holidays, along with Potato Donuts.

Our favourites are coconut balls, chocolate peanut butter balls, biscotti and snowballs.

We’ve often gifted a small plate of treats to our neighbours, and they loved them.

Fruit and Vegetables Basket

We have loads of tomatoes, rhubarb, green peppers, and herbs during the summer months.

If you garden and have an abundance of extras, put a lovely basket together and bring them to your neighbour.

Wine and Preserves

 

Bringing wine or preserves to your new neighbours is a fantastic gesture even if they don’t drink wine.

It’s more about the idea of welcoming them to the neighbourhood and saying hello.

My father-in-law made lots of wine and would give it to the neighbours new or established.

I don’t make wine but I love to make jam preserves and pickled beets which are my favourite.

Any type of preserve whether made or purchased is something nice to give to your neighbour.

Below is a Strawberry preserve that we make each summer after picking strawberries from the fields.

Related: Mulberry Jam

 

Welcome Card or Handwritten Note

A letter welcome to your new neighbours is fantastic as it costs you nothing but paper and a pen.

If you have some fancy writing paper and envelopes that would really jazz up the look. 

Leaving a handwritten note in an envelope at their door is sure to make them smile and feel welcomed.

Offer Your Help Moving In

If you see that your new neighbours have a big load to cleanout of a house or moving to offer your help.

Not everyone can afford to hire movers which can get pricey and two extra hands would be a blessing.

Bring Coffee, Tea, Donuts

 

If you notice your new neighbours are not quite moved in yet perhaps they would enjoy homemade donuts.

They are easy to make or you can stop by a donut shop to pick up a dozen along with coffee and tea with all the extras on the side.

Recipe for Homemade yeast donuts

Snack Box Of Goodies 

We’ve used Urth Box Organic Products and love the variety of snacks that arrive. 

Urthbox also ships to the USA and Canada which makes for easy ordering. 

Gifting New Neighbours Is Different Today

I believe too many people overthink the meaning of bringing a gift to welcome new neighbours.

It doesn’t have to be anything to eat, and perhaps society should start thinking of kindness,

Back in the 1950s that’s what people did in my neighbourhood. But somewhere in the 1960s that pretty much faded away. I do have one neighbour who has popped over a couple of times with a large casserole for no particular reason at all. 

Thad T – CBB Facebook

As Thad points out, back in the ’50s, this was what people did for new neighbours and older neighbours.

I’m not sure why it faded away, but it only takes a small bit of time to do something nice for someone.

If you’re worried about allergies or food dislikes, write a welcome letter or buy a welcome card.

Never expect anything in return, and don’t be grumpy because nobody brought you a welcome gift.

Our new neighbours are great, and we hope to get to know them both and perhaps have a few laughs.

One last idea before I go is that if you can knit perhaps knit indoor slippers for the family. 

Discussion: Have you ever received or given a gift to new neighbours?

Please feel free to leave me your comments below. 

MR.CBB 

The post Should You Bring A Gift To New Neighbours? appeared first on Canadian Budget Binder.

Relocating to a new city or town is nothing but a real estate war zone for buyers.

Many people’s dreams are crushed as they are unable to purchase a home.

There is little confidence that couples or single buyers will ever win a bid in the midst of the fire.

Being house poor at any age is not where you want to be especially if you lose it all.

Today I want to talk about relocating to a lower cost of living and if that opportunity is still alive.

• Buying A Home at a young age
• Relocating to save money
• Downsizing is it possible?

Relocating To Canada

As you may know, relocating to Canada from the UK in 2007 just gone 30 years old was a massive move for me.

I sold everything I owned, and the rest went into a shared container travelling by boat to Ontario.

The best part was how the pound was worth more than double in Canada, but that was short-lived.

I’m a risk-taker, and I was pushing the limits but ended up swapping currency at $1.65.

Hey, I learned a lesson.

It was better than nothing, and I still have a few thousand pounds in my UK bank account.

Relocating meant I had to sell my two-bedroom, one-bath house with no basement or garage for top price.

I bought the 600sq ft semi-detached house for $57,000 and sold it five years later for 157,000 pounds.

Related: Buying My First Property So Young, Was it worth it?

Yes, it was worth it in many good ways since it helped us become debt-free in 5 years in Canada.

At the time, my ex-girlfriend in the UK got a market value of 30,000 pounds before I renovated.

Basically, I bought her out of the house, and she went on her way.

My dad and I spruced up the paint, gave the garden a haircut and blow-dry and installed a tiny Ikea kitchen.

The woman who owns my home tried to sell it once over the last 16 years, but it didn’t sell.

If she were to sell today, she’d likely have to sell it for less than what she paid me for it.

Interest Rates And Relocating

No one wants to hear that, and unfortunately, this could be the case in Canada if interest rates go up.

Over the past year, housing prices have gone up by 40%, but our incomes have not.

Mrs. CBB said that her physiotherapist just got engaged and married later this year.

The two of them are 27 and 29 years old and worked through University, so they had little debt.

They both have great jobs and live at home in Burlington, Ontario and aren’t sure if they can afford a house.

They are not alone because the dream of having a great career, buying a house and starting a family is dismal.

When our five years closed mortgage interest rate was 4.1 %, we were excited it was so low.

My sister-in-law was in awe of how high the interest rate was for us in 2009.

Odd isn’t how that happens?

Houses in Canada, including townhomes, detached, semi-detached and condos, are so overpriced at the moment it’s all money wars.

House Prices Are Affecting Everyone In Canada

It’s not just one generation that’s exhausted; it’s all generations who are struggling to call a place home.

Related: Housing market delaying major life milestones for some young Ontarians

Homes are selling for hundreds of thousands of dollars overprice in our area with people relocating from Toronto.

For example, A house just came up for sale a street over and listed for 1.4 million dollars.

It’s 2000 sq feet with a larger yard than us and close to the school and other amenities.

Mrs. CBB and I are betting it will sell for $1.6 million, so we’ll have to wait and see.

From what we can tell from the photos, nothing has been updated in the house since it was built.

At the time of purchase in 1995 cost homebuyers in the area between 150k to 250k.

Take it and run has been a laughing joke with the seniors in our area. But where do they go?

Ontario Buyers Removing Conditions From Offers

Some buyers put in massive bids without ever stepping foot in the house with no inspection.

Should you ditch the home inspection in a buyers market?

Well, that’s up to you and if you’re willing to pay for any defects with the home.

Home inspectors are losing business because your offer gets thrown into the bin if you add a home inspector as a condition.

Related: Ontario housing market, so red hot most buyers are skipping the inspection

Unfortunately, real estate creates pure financial hell for people who need somewhere to live.

A two-bedroom basement apartment in our city goes for $1750 a month plus 30% of the utilities.

How long will this continue because there has to be a point where it ends or collapses?

It happened in the UK, and it can happen in Canada, and it was a dark time for everyone.

I have UK friends who will never own a house based on poor financial choices in their younger years.

They are called life-long renters, where the homeowner gets rich, and the renter pays the bills.

Granted, we do know a single man who loves renting and plans to rent forever because it’s stress-free.

Relocating Just To Afford Housing Costs

Our neighbours, for example, moved from Toronto so they could buy a cheaper home and even then, they bought high.

They are two working adults in their 30’s with no kids, and they were up against 25 other potential buyers.

The only reason they won the bid was not for the offer but for writing a buyer’s letter to the homeowner.

Our friends who owned the house told us the new owners had to get financial help with the downpayment from their parents.

The neighbour on the right of us was a hoarder, and she sold her house for $700,000 to those people who buy homes for cash.

They turned around and sold the house so fast for $750,000 as is, and the paperwork went right into the buyer’s name.

If they fix it up now that all the hoard is gone, they can turn around and sell it for over one million dollars.

Again, where do they go? In the housing wars for another round? No way, it ain’t happening.

The cash buyer walks away with a tidy profit, although I don’t know all the ins and outs of this type of system in Ontario.

Choosing A Home Or Starting A Family

The husband next door on the left of us drives to Toronto as he works in finance, and with the costs of gas at $1.57 a litre, that’s pricey.

Ontario’s gas prices are expected to rise into the summer, possibly hitting $1.75 to $1.80 a litre.

His wife works from home as a baker sharing her creations on her website, which saves on gas and wear and tear on her vehicle.

They are great neighbours; however, you could hear the tremble in their voices when they talk about relocating outside of downtown Toronto.

Gone are the days of the excitement of first-time homebuyers who win with their offer because it’s not as fun.

When the prices are as high as they are now, homebuyers pray that nothing happens.

Currently, they don’t even know if they can afford to have a child with the extra expenses.

Pre-Budget A Mortgage And The Stress Test

Personally, I don’t think that mortgage interest rates will stay as low are they are forever.

This is another reason I urged my readers to trial a few months of a budget where the rent was a mortgage.

Related: Test a mortgage using your monthly budget before you buy

It takes lots of stress away if they could do it with different interest rates going up or down and wiggle room.

A stress test is never a bad thing; it’s probably the best thing you could ever go through before getting the go-ahead to buy.

Related: The Canadian Mortgage Stress Test in 2022

Example from Loans Canada

Let’s say you live in Ontario and have an annual household income of $100,000, and will be putting a $50,000 down payment.

Plus, you were able to qualify for a 2.5% mortgage rate, which has a 5-year term, amortized over 25 years.

How much mortgage would you be able to afford? 

According to the CMHC mortgage affordability calculator, you’ll be able to qualify for a home valued up to $637,329* under the 5.25% qualifying rate. 

If you’re not ready, keep saving until you can get that 20% down on what you can afford.

There’s never a rush to own a house unless you are homeless, but even then, nothing is guaranteed.

I can’t recall what news I was watching last week, but a woman who lives out of her car buys a gym membership to work out, shower and get ready for work.

She can’t seem to catch a break buying a home as most Canadians feel the burn of sky-high prices.

Then again, this video on TikTok might be the answer to why apartment buildings are not appealing.

I do realize that not all complexes are like this but it’s certainly worth doing some homework before renting.

@_kylene when I tell you this is not the worst of it …… Part 2? #fyp #toronto ♬ Monkeys Spinning Monkeys – Kevin MacLeod & Kevin The Monkey

The only part that wasn’t explained was why she struggled to rent an apartment. Perhaps I missed that part in the news.

The point is, it happens, and no matter where they work, their car is what they call home.

Relocating To Parents Basement

These days you get to choose a roof over your head or moving home to live with parents to have a child.

That’s exactly what friends of ours did who live in our neighbourhood.

The couple relocated from Mississauga to our city to start a family, but the only catch was money.

Fortunately for them, his parents have a bungalow with a basement apartment they moved into.

Years later, they now have three small children and pay a small amount of money to live there.

It almost seems that some people get lucky and are able to get their dream but backwards.

By the way, they are both nearing their 30’s and told us there’s no way they could afford to buy a home with the current pricing situation.

Relocating To A Small Town Is Now Our Dream

There was a time when Mrs. CBB and I considered relocating to a small town to lower our cost of living.

We bought our current home in 2009 for $265,000 with an $85,000 down payment leaving us a mortgage of $180,000.

Our home is 1460sq feet on a lot 31x 132 and a 1000 sq ft unfinished basement in the Greater Toronto Area.

At the time, Mrs. CBB sold the 2100sq ft home she owned with her ex. Relocating to a room rental was her best option.

She didn’t need an apartment or to buy a new home, so a co-worker had a relative looking to rent her basement.

Perfect and she took it.

The prices, however, were far too much for her to justify getting one, so she rented a large basement.

It had a large bedroom, bathroom with shower, laundry, a refrigerator, free wi-fi and use of the upper kitchen.

The price was only $400 a month, which she could handle, and it was a 3-minute drive away from her job.

Overall Thoughts On Relocating To Buy A Home

The housing options were endless during the financial crash in 2008/2009 just after I moved to Canada.

This was the time I said to Mrs. CBB that we needed to hustle and find ourselves a house.

I’m almost certain we looked at over 70 homes until we found the right one at the right price.

If we didn’t have to move today we wouldn’t.

There’s no way I’d put ourselves in debt to buy a slightly larger home.

I do feel for the new home buyers or people making career moves or having to move for their job.

It’s not chump change either it’s hundreds of thousands of dollars to get an extra 500 sq feet and slightly larger property.

As for anyone struggling to buy a house, start thinking about renting if you can’t stay where you are.

It’s better to rent than it is to get in over your head with a mortgage you can’t pay, even if a stress test tells you that you’ll be ok.

Relocating or buying a first home right now is gut-wrenching and I feel for everyone in this position.

Discussion: What are your thoughts about the massive house prices in Canada? Where do you think the cheapest place is to live in Canada? Are there any jobs in your field of work?

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First of all, every house needs renovations, whether it’s a new build, flipped house or around for years.

While the real estate market in Canada is Super Hot are you willing to pay for an overpriced home that needs renovations?

Financing a fixer-upper home seems ideal, but know the money facts before you jump into renovations.

When I moved to Canada in 2007, I have to be honest and say that home prices were low compared to the UK.

We even joked that we could buy two or three homes in the city she was brought up in.

You get a basement that I had never seen before, so I thought it was pretty cool when I visited Mrs. CBB’s house.

Unfortunately, she sold the house because it was too big to maintain and work full-time.

It was a new home with an unfinished basement, so it needed some renovations.

You could buy a house for $75,000 and get someone else to pay the mortgage.

Im 2005, Mrs. CBB bought the house for $265,000 with an $80,000 downpayment leaving a $185,000 mortgage.

That same house in 2022 is selling for nearly two million dollars which is crazy even thinking about it.

We said that she should have kept the house and paid off her ex-fiance several times.

Although looking back is nice, there’s not much you can do but learn from missed opportunities.

Today, I want to discuss whether buying a house that needs renovations is a smart financial move.

However, does a flipped house or new build sound financially savvy even though there might be bones in the closet?

Room Rental vs. House Renovations

She decided to rent a partially finished basement room in a 1970s back split.

Although she considered purchasing an older home, they all needed house renovations.

Alternatively, buying a condo made her feel like she was living in an apartment again.

Her idea was to be debt-free, including her mortgage, as fast as possible, so she didn’t have the worries, so many people had.

That was a pretty big goal to set, but you have no idea how frugal Mrs. CBB can be.

The problem is that homes all come with problems that cost money, and it never ends.

One day, it’s the toilet backed up, the roof is leaking, the stove quits working, etc.

Having a home maintenance budget and a plan is essential to saving money to pay for emergencies or a yearly renovation project.

Being house poor was scary for her, so she decided to rent instead to figure out her life.

Living The Room Rental Life

It wasn’t a bedroom but what one might consider a second living room in the basement.

I don’t think the basement room was legal, but the owner was a single mom of two and needed the money.

We took a big risk, especially if there was a fire and we couldn’t get out. Don’t be like us.

Sadly we did not have tenants’ insurance which could have ended badly if there was a fire, break-in or damage.

Need House Renovations? Call Mr.CBB

When I was visiting Canada from the UK, I did a few house renovations for free because I didn’t have to pay extra rent,

If I stayed for four months, I would shovel and complete simple repairs, resulting in house renovations.

First on the agenda was to put a door on our bedroom for privacy and protect our belongings.

We picked up a used door at Habitat For Humanity to replace the sliding accordion-type privacy door.

Yes, we paid for the door, but it wasn’t much, and I had no intentions of asking her for $50.

I added a lock, and the owner had a key if she needed it as the electrical box was on the wall.

Mrs. CBB chose to rent a room because she wasn’t ready to buy another home, plus she was working non-stop.

Over the years, there were no less than 400 hours of overtime which meant work, sleep, eat, repeat.

Her fun was running on the treadmill, grocery shopping, sleeping and playing sports in the summer.

It was the perfect life for her, plus she was increasing her savings for a downpayment on her next home.

And then, I came along to ruin it all, ha, ha.

Not really, but living in that basement room was a bit stuffy for both of us.

It was either sweltering heat in the summer or freezing in the winter.

Before I moved in, the agreed rent was $400 a month, then $500 when I moved in permanently,

The owner then asked me to start doing more renovations around the house as if I was her husband.

Finally, she increased the room rental to $600, and then we began our house hunting search.

I feel as if she wasn’t happy that I wasn’t going to renovate her entire house for free.

We were already married and ready to get the heck out of hell by that time.

Cheap House Renovations

I’m not the type of guy that argues with people, so I shut my mouth and agreed to help her.

This bought us time to look for a new house with our realtor, which took months.

For example, I ripped out the basement bathroom and built a new one with the budget she gave me.

There’s not much you can do with a few hundred dollars, but I made it work. Scary but true.

I’ll be honest and say whoever buys that house will probably have to rip it out and start over.

It’s not because I didn’t know how to do home renovations but because it was all cheap material.

The quality was as basic as it comes, and I’m not a plumber or tile guy, but I did it for her.

We also needed time, so I could find a job which ultimately sent me back to school to learn something new.

While house hunting, it occurred to us that we’d rather have house renovations over someone’s shady work.

Paying for a house that looks fancy but is just hiding problems didn’t interest us.

Home Buying Is Stressful

Due to a career change, our friends are currently looking for a home close to Windsor, Ontario.

Although he hasn’t been offered the job yet, they wanted to see what was in the real estate market.

Sadly, like anyone looking to purchase a home, the prices are astronomical and unattainable for many people.

I’ve heard of a few people I know looking to buy, but without the large downpayment, they anticipated.

Almost everyone who owns a detached home is a millionaire on paper or close to it.

We can’t believe what’s happening in the Ontario real estate market and are glad we weren’t looking to buy.

It doesn’t matter if you live in a shed, as it would still cost you a million dollars just for the property.

Would You Buy A House In 2022?

One of my readers sent me an email wanting to know if I would purchase a house that needs renovations?

I was honest and told him there was no way I’d even consider buying a house right now.

However, if he chose to purchase an overpriced home, the choice was his.

I wouldn’t suggest taking out loans for renovations or rolling it into the mortgage, but that’s my opinion.

Confidently I couldn’t offer him the insight to even win a house bid. You’d have to be lucky or pay near double over asking price.

Waiting To Renovate

Even if you find a home that needs renovations, can they wait, or are they needed before you move in?

I see homebuyers who renovate the house from top to bottom to make it livable.

That approach never bothered us, as it was more important to pay off our mortgage fast.

Nothing in our house was a major problem that we couldn’t fix, so we’ve semi-waited to renovate.

We’ve been in our house since 2009, and I’ve completed a few easy house renovations.

Replacing all the outlets and floor vents in our home and the bathroom exhaust fans.

Alongside the renovations, I completed a house makeover in some areas, such as the sunroom.

The entire sunroom will be coming down one day, but for the time being, I made it functional.

I wanted to tackle what was needed first and then tackle house renovations that would increase the home’s value.

Renovations I’ve Tackled Since 2009

Renovation costs vary from contractor to contractor, city to city, so it’s always good to get a few estimates.

• Full Bathroom Gut Renovations Average cost bathroom estimates (upstairs $15,000, ensuite $30,000)
• Basement Renovations but only removing the old mice-infested insulation and replacing it.
• Although I’m planning a home addition, I repaired our Three Seasons Sunroom’s new tile and screen door. The sunroom remodel was quoted for $25,000, but I’ll be doing it independently.
• Staircase renovation from oak to dark hardwood sanded the railings and spindles. The spindles are white, and the railing was stained dark wood and sealed.
• New Wood Fence quoted $12,000, paid $1000, as did all the neighbours, and we did the work.
• I built a new deck a year after moving in, but I’ll do a full gut and rebuild soon as it’s needed.
• Remodelled the entire front gardens, new sod, paved walkway, rock steps and retaining wall. (The neighbours called me Fred Flintstone because I didn’t rent any machinery to move the rocks.)
• Painted the garage door
• Installed a new front door with a pretty iron insert
• Replaced all new door and closet hardware in the house
• We purchased a $10,000 stove for $1000 Dacor brand
• I found a store model stainless Thermador Stove Extractor for $750 regular $2500
• Installed a camera doorbell and cameras around the home
• Replaced all new vents outside the home and took all the fuzz and nests out. (ugh)
• Put new sod in the back garden and create flower beds, shrubs, and solar hanging lights along the fence.
• Installed custom-made blinds for the entire house and our sunroom.

I’m certain there are lots more, but I’m getting there slowly but surely as we plan to stay here for good.

With prices the way they are, the financial burn is real, and if interest rates go up, there will be big problems.

We’re already plagued with increased utility bills, petrol and groceries, not to mention renovation materials.

House Renovations Done Right Cost Big Bucks

A couple we know bought a small bungalow for $900,000 last year at the beginning of the war of the houses.

They own a business, have three small children and are struggling financially.

The home came with no back fence, and of course, they bought a dog but didn’t consider that carefully.

When looking to buy real estate, it’s a smart idea to create a house list of wants vs. needs.

See if you can get possible estimates for the costs, such as a wood fence.

Although it’s a rough estimate, unless you know the property size, at least you’ll have an idea of costs.

Needless to say, with the photo he sent me of his make-shift fence, I wasn’t sure to laugh or cry.

He made the fence out of wood skids which their dog could easily jump over if given the opportunity.

When I see him next, I’ll ask him to get the holes dug and offer to help him build the fence for free.

House That Needs Renovations Needs Considerations

Decide to buy a house that either needs renovations or not based on real numbers.

Don’t just look at how much the mortgage and property taxes or you’re just asking for disaster.

• Create A Mock Budget that includes a mortgage payment.
• List basic house renovations you need and see if you can get a rough estimate.
• Don’t be afraid to rent an apartment if you’re not ready to buy a house
• Be very careful with flipped houses
• Try not to skip the home inspection if you don’t know what you’re looking for. This condition may mean you don’t win a bid. Most buyers today are doing without the inspection to buy a home.
• Consider a condo, townhome or semi-detached as a first home instead of marching into a detached.
• Don’t let others sway your decision because they won’t be paying the bills.
• Ask lots of questions, whether it be to local tradesmen and women, about home renovation costs and scenarios, house insurance, property taxes, renovation paperwork, city permits for renovations and the type of materials used.
• If you are skipping the inspection, see if you can bring someone to look at the house with you, especially if they have a keen eye for spotting problems.
• Your first home may need renovations, but that’s ok; you can work on them as you go along.
• Don’t try to impress anyone by buying a home out of your financial league, even if the bank says you can afford it.

This is the reality for many home buyers today who take the maximum amount the bank offers for a mortgage with as little as 5% down.

On top of that, it’s a struggle even to save 20% down to avoid CMHC fees for a million-dollar home.

No stress at all, right? If buying a house is stressful, perhaps you’re not ready so take your time.

The mindset about wasting money on rent may be the better option instead of losing a home you can barely afford.

Are You Prepared To Take On Home Renovations?

Considering these ten ideals, are you prepared to be a homeowner?

1. Needs vs. Wants
2. Renovation and house maintenance Skills
3. Urgency
4. Current Affordability and Future Possibility of Interest Increase
5. Money for house renovations you can’t do yourself
6. Realistic Monthly Budget
7. Having Children or Have Children
8. Living on One Income or One Income and Maternity Leave Pay
9. Possibility of a Second Income
10. Proximity to your Business or Employer

Personally, if we were to buy a house in this overpriced market, I’d opt for a house that has not been renovated.

Discussion: Would you buy a home in 2022 that needs renovations, is fully renovated by house flippers, partially finished by the owners or buy brand new?

Please leave your comments below as this is a hot topic, and I want to know what you think about real estate today vs. a few years back.

Mr.CBB

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You’d be surprised how you can generate rental income from your primary home.

Many new and existing homeowners with a mortgage in Canada are facing a historic market correction that will cripple the market.

Today I wanted to discuss ways to generate extra money using your home.

There are both pros and cons to generating rental income, which I want to discuss today.

Canada’s Interest Rate Hike

The Bank of Canada’s interest rate hike of 1% — rising from 1.5% to 2.5% — earlier this month has sent a shockwave across the market, indicative of the bank taking a much more aggressive approach to consumer inflation and the rampant growth in real estate prices.

More interest rate hikes are expected through the end of 2022.

Daily Hive

When this happens, homeowners who overpaid for a house due to a seller’s market will owe more than the home is worth.

Over the past two years, there was no shortage of ridiculous home prices in Canada, but people bought into it.

Some homeowners took the money and ran or poured their equity into a bigger overpriced home.

Doing so will likely lose some or all of the money when the market correction happens.

Couple this with rising food costs, utility and transportation costs and Canadians will feel a financial tug.

It is massive for some and not so much for those who own a home without a mortgage.

Even so, everyone still has to pay for increased prices on just about everything in Canada due to inflation.

Late Mortgage Payments

Being house poor is not something anyone signs up for; however, not all buyers consider the costs of owning a home.

There’s more than a mortgage to pay when you buy a house, so don’t walk in blindly to the biggest purchase of your life.

Plop new or existing debt on a mortgage, and you’ve done a banana split.

The ice cream might melt faster than you can eat it, and before you know it, you’ve wasted time and money.

If you’re unable to meet your monthly mortgage payment, you have options.

One of those options laid out in your mortgage agreement could be one missed mortgage payment allowance.

Let your bank or mortgage lender know you’ll need to use your lifeline as you are short on money.

Don’t wait until the day your mortgage payment is due to find out if your policy covers a missed cost.

You’ll need to get to figuring out how to increase your net income or face potential mortgage default.

Nobody wants that to happen and have their mortgage company take possession of their home.

Types Of Insurance For Homeowners

If a homeowner does not put in a 20% downpayment, then mortgage loan insurance is necessary by the Canadian Housing and Mortgage Corporation (CHMC).

However, if a homeowner defaults on a payment, the mortgage insurance is for the lender and not the homeowner.

Mortgage life insurance, on the hand, is optional and will pay down a mortgage or what remains in the event the homeowner dies.

Term life insurance is the option we chose when we bought our first home, which pays the beneficiary the total amount of the house.

Home insurance covers you and your family; however, if you rent a room, basement apartment, or other parts of your property, you must inform your insurance company.

Every insurance company is different, as are their policies, so it’s best to shop around.

Your home insurance company may deem your home a business while using parts of it as a rental.

If the homeowner is generating income from the home or property, you need upgraded protection with a different insurance policy.

The downfall for homeowners is that their insurance company will have a potential price increase.

Rental Income Could Be Your Answer

The good news is that you may generate more rental income than increased insurance premium costs.

In the situations below, before jumping in and listing your property for rent, it’s best to talk to your insurance company first.

If you are a tenant who rents a room or apartment in a home again, it’s best to talk to an insurance company.

Although tenant’s insurance is not mandatory, I encourage anyone who rents to buy this insurance in the event something happens while living in the home.

Ways To Generate Rental Income With Your Home

Now to the fun part, where I discuss some cool ways to earn rental income with your home.

As mentioned above, before you engage in any of the ideas below, you must talk to your home insurance company.

It pays to be truthful with your insurance company because if someone is hurt or dies on your property, your policy may not cover it.

You can also get sued if something of this nature happens, whether you have the proper home insurance or not.

Room Rental

I’ve discussed over the years that we did rent rooms in our house, which in hindsight was great for the money but not the bother.

Having someone in your house means putting a lock on your bedroom doors and valuables in a fireproof safe.

The most lucrative room rental was the one-month homestay from Red Leaf Canada, which has students who come from overseas.

Although the money was tax-free, we still needed to inform our insurance company, so they were aware.

It was an educational experience for the child and our family and was a fun time for all.

A room rental can fetch up to $1000 a month or more, depending on where you live in Canada.

Garage Rental

If you have the space in your garage to accommodate a vehicle, you could capitalize on the space to earn rental income.

Most vehicle owners looking for garage storage do so because the car they own is vintage or valuable.

Be sure to consider the costs of your home insurance and vehicle insurance company.

Consider if a vehicle renting space in your garage is stolen from your and the owner sues you.

If your insurance company is not aware of the arrangement they won’t cover it. When this happens you may have to pay out of pocket based on the court ruling.

Some homeowners own farmland and allow RV storage over the winter for a fee.

It’s a great way to earn rental income from a large property or farmland, provided your insurance company allows it.

Driveway Rental

During the winter months, when cities need vehicles to be parked in a driveway so the snowplow can come through is a great time to rent your driveway.

You’ll find no shortage of people who need a driveway to park their vehicle, mainly when city by-law officers will issue a fine.

The downside is that you will have an extra vehicle in your driveway.

How much should you charge to rent a space on your driveway?

It depends on how it will impact your house insurance, but typically I’ve seen $100 a month as reasonable.

Kitchen Rental

If you’re fortunate to have a large kitchen with lots of space to bake or cook, you can rent your kitchen.

Selling food from home is another way that people can earn money on the side.

In our area, you can buy spring rolls, roti, and kimchi from an array of cultural cuisine.

How much money should you rent for your kitchen space?

Again, talk to your house insurance agent to see policy and price changes if allowed.

Ensure you’re still covered if your kitchen renters burn your house down that.

Always ensure that you have a fire extinguisher and smoke alarms in working order in the space.

Party Rental

For homeowners with a more oversized backyard, why not rent it to someone who wants to host a party.

The type of party I’m talking about is a bridal shower, retirement party, baptism party, birthday party etc.

Keep your neighbours in mind if you plan to earn rental income this way, so you aren’t disturbing them.

Pool Rental

A pool party is a tricky way to earn rental income, especially with the odds of potential drowning or slipping.

Your insurance company can give you the go-ahead to earn rental income on a seasonal basis.

Mrs. CBB and I were at a pool party last month, a rental pool in the back of someone’s yard.

The renovations to the yard cost the owners $250,000, and they rent their entire yard and pool by the hour.

Out front is a portable washroom, so nobody needs to go into the home, a first-aid kit, floatation devices, and life jackets.

Most people who rent the pool do so for private swimming lessons and pay $65 an hour plus the cost of the trainer.

The downside is that it’s not your home.

Gardening Space Rental

We participate in a community garden on city property where the water is free, but we still have to pay for the plot of land.

For one plot, buyers pay $40, which includes the city water and free compost. With any extra money, the volunteer who organizes the garden purchases soil and other plants such as flowers and berries.

These community garden plots get taken very fast each year, so if you don’t get a space, you’ll have to source another.

Homeowners with big backyards that are not used for a garden may want to earn rental income.

When doing so, things are the increased water cost, grass removal for a garden, privacy, and higher home insurance costs.

If you have a rain barrel to offset water costs, you may want to keep that for personal use.

Overall Thoughts On Rental Income

If it were us and we were struggling to pay the mortgage, bills, debt and other essential needs, I’d consider it.

It may seem more hassle than it’s worth and you’re right it can be a pain in the backside.

What it would boil down to for us is how bad we are in trouble financially.

Also, if our house insurance does not cover what we plan to earn rental income from then, it’s a bust.

It’s important to consider all aspects of earning rental income with your home and insurance company.

Discussion: Have you ever earned rental income with your home using any of the above suggestions? Please share your thoughts and comments below.

Thanks for reading,

Mr. CBB

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A mortgage deferral is only one of many programs Canadians can explore if they struggle to pay their mortgage and house expenses.

A recent 2021 Ipsos survey suggested that 1/3 of Canadians live house poor.

In simple terms being house poor is when someone owns too big of a house and can’t afford to live in it.

Today I’ll guide a financially strapped couple after buying an overpriced pandemic home.

I will go over what a mortgage deferral program is, how to apply, budgeting tips, credit scores, mortgage insurance, and life insurance.

Mortgage Deferral

What is a mortgage deferral?

A mortgage deferral is for homeowners who are struggling to pay the mortgage.

The good news is there is help in Canada with the mortgage deferral program.

Through a mortgage deferral program, a homeowner works with their lender to delay payments for a specified time.

It’s supposed to be the most exciting time when you finally win the bid on a house, even if it’s not really what you both wanted.

Unfortunately, some people who jumped into the market during the height of overly priced homes might struggle to juggle the bills.

Couple Struggling With Their Mortgage Payment

There’s more to owning a house than a mortgage payment, and this couple I’ll call Tony and Rina (to protect their privacy), are finding out the hard way.

Dear Mr. CBB,

Unfortunately, this isn’t going to be a happy email, and I’m saddened to seek out help for my family.

My name is Tony, and I’m married to my wife, Rina, to whom we have a 3-year-old son.

Recently we purchased a home after struggling to win a bid, so we took whatever we could get.

In previous relationships, we had homes, so we thought we understood home ownership.

Unfortunately, we already feel the financial pressure of owning our 1000-square-foot bungalow.

We bid on the house because we couldn’t find anything else and needed somewhere to live.

Sadly, like most home buyers during this mess, a seller’s market had no conditions meaning no home inspection.

Looking back, we made a big mistake, but we can’t go back, but we can move forward.

We put down 20% when we bought our house, so we didn’t have to get mortgage loan insurance.

Last month the facility I worked at for five years shut down indefinitely, leaving me without a job.

I heard the pandemic, prices and a lack of applicants for specialized roles hurt the company.

Currently, my wife works part-time at a dental office and picks up an extra shift when she can.

In the meantime, while I wait for employment insurance (EI), her money pays the bills, which we supplement with our emergency savings.

Our debt repayment plan, not including the mortgage, is high since we weren’t the best with our finances.

We pay the minimum payment on two credit cards; when combined, we owe $7,355.42.

I also stay home and take care of our son instead of him going to daycare on the days she works.

Until I get my EI, we face falling into mortgage arrears with our bank lender.

We are short $1275 monthly which would cover our mortgage and property taxes.

We’ve lived in this house for four years and have never been in this financial position before.

What do you suggest that we should do first?

Thanks,

Paul from Ontario

Responding To Paul

Hi Paul,

I’ve listed as much as possible about getting accepted into a mortgage deferral program.

I trust this will help you focus on paying off your credit cards.

One last suggestion is that you may be able to complete a credit card balance transfer.

Find a credit card that meets your needs and accepts balance transfers.

You could get both credit card debts combined into one credit card with 0% interest or something less than what you have now.

Thanks for the email.

Mr. CBB

Call Your Mortgage Lender

When discussing the possibility of getting a mortgage with a bank or mortgage broker, have them consult with you about a mortgage deferral program and whether they offer it.

If you are confident that you won’t have enough money in the bank to pay for your mortgage, call the bank.

It’s best to let them know your current situation and see if there is anything they can do to help.

Who Can Apply For A Mortgage Deferral Program?

When we had our mortgage, the bank offered us one free month without penalty for skipping a payment.

However, we could have qualified for a longer mortgage deferral provided we met the banks’ criteria.

• You have lost your job due to Covid-19.
• Your income has decreased significantly because of Covid-19
• You’ve been in good standing with paying your mortgage on time each month
• You live in your primary residence or your non-principal home.
• Your mortgage is either insured or uninsured.

Other names you might hear for the program are a mortgage deferral program or mortgage break.

Successful homeowners applying for a mortgage deferral will not see a credit score change.

The bank or institution that holds your mortgage will contact the credit bureau on your behalf.

Lenders will let the credit bureau know that it’s not a non-payment it’s a mortgage deferral which means no lost credit score points.

Although we never used the bonus month, it was nice to know that it was there in an emergency.

You can find more information about mortgage deferrals at Canada.ca.

I’d also call Employment Insurance (EI) to double-check the process of receiving your EI benefits.

Employment Insurance may have available resources for you if you explain your financial situation.

I’m not 100% certain, but it’s worth a shot.

Calculate A Simple Home Budget

If you have not calculated a simple home budget, I suggest doing so.

You must be honest and document everything you know or think you will spend each year.

I’d start by reading my 10-Step Mini Budgeting Series for beginner basic budgeting knowledge.

From there, you can decide if you want to use my free budget excel spreadsheet (we use this) or a printable paper budget.

Other informative budgeting posts that might interest you are:

• How To Budget For Short-Term Savings
• Are You Forgetting These Budget List Expenses?
• How To Handle Money Successfully
• What Does A Sample Budget Look Like?
• How Many Income Streams Should I Have?
• Consequences Of Not Using A Budget
• How A Budget Bootcamp Works
• 6 Starter Tips For Building An Emergency Savings Fund
• How To Fix Your Money Problems
• What Is Considered Bad Debt?
• How To Start Selling Everything When In A Financial Crisis

Mortgage Payment Protection Scotia Bank

Mortgage protection is optional coverage for which mortgage holders can apply at the bank that holds their loan.

Since mortgage protection is optional, even if you have life insurance, reviewing your options is a good idea.

Before we get into that, I want to discuss employer life insurance, term life insurance and mortgage insurance.

I’ve heard numerous times from people that they don’t need life insurance as their employee benefits cover them.

Although your employer might offer insurance, it doesn’t mean it will fit your needs, as each situation is different.

For example, an employer’s life insurance policy might pay a certain amount, such as $50,000.

Other employers may offer 70%, 80% or more of your salary upon death.

Power Of Attorney And Password Protection

Whether single or married, you should always appoint someone to look after personal affairs upon your death.

For example, do you have a legal Will and a power of attorney (POA) chosen?

You’ll need to leave passwords and other important information for your POA.

Using a password protector app is one of the best things you can do for your POA.

We use Keeper Security to protect our passwords and stay safe online.

You can include the password with your legal Will or let the POA know what it is.

When your POA has to take care of your affairs, they will have all of the information needed.

If paying $500 for a legal Will is too much money, you don’t need one to be covered.

Three popular online Will kits in Canada are Willful, Epilogue Will Kit and Canadian Legal Wills.

Epilogue is a simple, fast, and affordable way for Canadians to create their Will and Powers of Attorney online.

Another popular online Will Kit provider in Canada is Canadian Legal Wills. Canada’s #1 provider of online Wills, Power of Attorney, and Living Wills.,

Willful is Canada’s favourite do-it-yourself online will platform that breaks down the estate planning process into simple steps.

You can create your last will and power of attorney documents in 20 minutes or less.

Term Life Insurance vs. Mortgage Insurance

Let’s discuss the difference between Term Life Insurance and Mortgage Insurance.

An example is if someone owned a home, held Term Life Insurance, and died.

The Term Life Insurance is optional and will pay the beneficiary named on the insurance document the amount stated.

The insurance policy might state that it is for $800,000, which is paid once the insurance company is satisfied with the death.

Mortgage Insurance must be purchased when someone does not put a 20% downpayment on a mortgage.

Mortgage Insurance, Mortgage Loan Insurance and Mortgage Default insurance protect the lender, so they get their money back.

Related: Sun Life Go gives people the flexibility to help meet health and financial needs with convenient access to insurance coverage.

Even if you put 20% down on your mortgage, the lender or broker may ask if you still want it.

Most often, individuals with a low credit score or working for themselves will find the bank checks their credit score.

Related: Get your Free Credit Score and a $1 Credit Report

Death And Mortgage Insurance

If the homeowner was to pass away, the mortgage insurance pays off the remainder of the mortgage loan.

Money from a mortgage loan is paid to the bank where the homeowner took the mortgage and then relieved the mortgage.

So, if you put the minimum 5% down $25,000 on a $500,000 mortgage, you would need mortgage insurance which is factored into the loan balance.

To avoid paying for mortgage insurance, you would need to put $125,000 down on the $500,000, which is 20%.

I did some sleuthing at Scotia Bank to understand what protection they were offering to their mortgage customers.

Mortgage insurance is transferrable or portable, which means you can take the coverage to your new home if you move.

Mortgage Deferral Program

How do I defer my mortgage payment with TD Banks?

TD bank offers a mortgage deferral program but on a case-by-case basis.

We are working with TD customers on a case-by-case basis, providing financial relief to those who need it. This includes up to a six-month payment deferral for mortgages.

TD Bank

Remember that the bank will add mortgage interest to your loan if you accept a mortgage deferral program.

Accepting any mortgage deferral program doesn’t mean you get free mortgage relief.

Once the term is up for your deferral, the bank and homeowner will discuss repayment.

Other Options Besides A Mortgage Deferral Program

A bank doesn’t want homeowners losing their homes, so they have options.

If you think about it, a bank stands to make more money from the homeowner than if they had to repossess the house and sell it.

Amortization Extension

If you don’t qualify for a mortgage deferral, you can ask your lender about extending the amortization period.

When your bank increases the amount of time it takes you to repay your mortgage, it stretches out.

Doing so means you pay a smaller monthly mortgage; however, the mortgage will cost you more in the long run.

Skipping a payment is what we were offered automatically from our mortgage lender.

Variable Interest Rate To A Fixed Rate

Swapping a variable rate mortgage to a fixed rate mortgage, so you know exactly what you need to pay each month.

With a variable mortgage, the amount will change monthly, so costs go up and down.

Interest-only payments are a way to reduce mortgage payments based on your lender’s approval.

Payment Relief Program

When Mrs. CBB had OSAP and no job, she applied to the Royal Bank, and they offered her a payment relief program.

For one year or until she found a job, she only had to pay the interest on the loan each month.

If your mortgage lender offers it, I’d probably use this option as a last resort.

If a homeowner goes this route, they are still on the hook for the missed payments.

Discussion: Have you ever had to use a mortgage deferral program, and how did that work for you?

Please type your answer in the comment section below, and I’ll reply to each comment.

Thanks for stopping by to read this blog post, and hopefully, subscribe using the form below.

Mr. CBB

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The post How To Apply For A Mortgage Deferral appeared first on Canadian Budget Binder.

Local moving companies in our city have been busy this past year with the increase in house prices.

Many homeowners who rent to students have decided to quit the landlord role and sell their inventory.

What’s interesting is that while chatting to parents at our son’s school, all but one has decided on moving.

When I asked them why they wanted to sell their 2800sq ft home, they told us they wanted a home with a pool.

Fair enough, but in my mind, I thought there was no way I’d sell just because I had no pool.

Unfortunately, you can’t fight people’s reasoning when the moving bug grabs their attention.

Over the past ten years, Mrs. CBB and I have gone back and forth about moving to a home with a more significant property.

We have in-depth conversations about moving forward during our nightly walk around the neighbourhood.

What’s interesting is that we look at houses and point out what we like and don’t like about them.

However, are we letting our wants get in the way of our needs?

We had to ask ourselves this question, and the decision was easy.

We had narrowed it down to five fundamentals of why we are staying put.

Today, I want to briefly discuss our reasons for not moving and putting our house on the market.

Moving To A New House Wants vs. Needs

In 2009 we rented a room to get ahead with our savings and ease responsibility.

Since I was in school and Mrs. CBB was working and child-free, it was an easy decision to make.

I spent most of my days researching the Canadian housing market, mainly where we live.

Nonetheless, that might sound boring, but one of the smartest financial moves we’ve made in Canada.

With the market crash in 2008-2009, we made our move as homes for sale were saturating the market.

Although our investments took a nose-dive, we felt confident that this was our opportunity to become homeowners.

Their jaw drops when we tell our new neighbours how much we bought our house for in 2009.

Their reactions were the same as ours when we found out how much the original owners paid for houses in our area.

It’s not uncommon as a first reaction, although it’s essential to consider time and market increases.

Moving House Won’t Make You Rich

No housing market is relative in pricing when moving from one house to the next, but not everyone does.

While at our son’s soccer practice, Mrs. CBB overheard two men in their 30s chatting about the one million dollar home.

The conversation revolved around how one of the men now owned a million-dollar house as if that made him rich.

Unfortunately, with the ups and downs of the housing market, what a house can sell for is only a number on paper.

Again, this is another reason a net worth number is only an estimate of financial health.

Moving Up, Moving Down or Moving On

Years ago, we included the value of our home in our net worth update and still do.

We haven’t moved the price because it doesn’t matter. After all, we need somewhere to live.

If we were to divorce the market value and what the house would sell for is another story.

Whether renting, buying a home or buying out, decisions about housing are essential.

The point is that the money will often become tied up in a place needed to live unless you tap into equity.

Taking out a home equity line of credit is a consideration, although not one either of us would take.

Although we are not getting divorced, it’s worth discussing the topic together.

One financial adviser says she’s done financial planning for separating couples who can’t afford to move out to begin with, so both parties remain in the home. Others end up in tiny condos with no room for the kids

Toronto’s hot housing market is making divorce even messier — here’s how splitting couples can cope

Keep in mind with a messy divorce, and all conversations can take a jump out the window.

My Ex-Girlfriend Moving On Earned Me Money

Luckily, I bought my ex out of our home as she was moving on, and I cashed in big by moving to Canada over two years.

I renovated to update the 600 sq ft house in the UK and sold it for top dollar, which has not moved in 13 years.

There was a time years ago when my old house was on the market but never sold.

Using this as a positive example isn’t the best; however, it’s the truth about the housing market.

What a house was worth yesterday turns overnight into a positive or a negative based on the market.

Moving to another country where my money went further helped increase our net worth but was a unique situation.

Reasons Why We Have No Plans On Moving

There are many reasons why we’ve decided to stay put in our family home and not sell.

We’ve had many discussions about the pros and cons of moving, especially during this massive spike in house prices.

Over the past year, I’ve had more conversations about buying and selling houses and affordability.

How many people bought massively overpriced homes? I don’t know the answer, but I guess quite a few.

Related: Relocating Moving To A Lower Cost Of Living

Also, landlords are evicting tenants to sell their rentals to cash in on the craziness.

For those people hunting for a rental, the pricing in our Ontario city is outrageous.

Homeowners leasing basement apartments are asking thousands of dollars for one or two-bedroom rentals.

Finding a room to rent is just as ludicrous, with some near $1000 or more each month.

Moving To Affordable Housing Is Difficult

With the pandemic closing up, most of the Canadian economy is losing jobs and businesses; it truly is a nightmare.

Unfortunately, Canadians with a spare room or finished basement may rent a room if money is tight.

Another thing to look out for is rental scams on the news costing unsuspecting Canadians big bucks.

Moving is certainly not something we plan to jump into, at least not until our son finishes high school.

Related: A wave of buyer’s remorse is washing over London’s cooling real estate market.

Staying Out Of The Real Estate Selling And Moving Game

Below are the reasons we plan to stay in our 2500 sq mortgage-free ft home.

1. Assisting our autistic son until he is ready to move out and for the rest of our lives.
2. House prices are astronomical, although slightly dropping to insane.
3. Our housing wants do not outweigh our needs.
4. Debt-Freedom is better than having a mortgage to pay.
5. The biggest reason is the decision to travel and live life before we die.

Let me explain these below so you get a bit of the picture from our perspective.

Assisting Our Autistic Son

Living in the city was a decision we had to consider since our son’s diagnosis was a few months ago.

Currently, we live six minutes walking to his school, which has been a blessing for our family.

We didn’t consider the need for a school when moving into our home until Mrs. CBB got pregnant.

It has made our life that much easier since Mrs. CBB or I can walk up to the school if needed.

Trust me; there have been times over the past 4 years that he’s needed something or had a medical appointment.

With the high school not too far up the road from the public school, it made sense for us to stay put.

Our son will be able to bike to high school and drive when he gets his Ontario driver’s licence.

Depending on where he studies after high school, living in a college and university city may have benefits.

By then, we hope he will have the confidence to be alone. However, we can’t predict the future.

Until then, we plan to be around for our son as long as he needs us or until we kick the bucket.

I’m just being honest here.

Massive Increase In Housing Prices

With the increase in house prices, it makes no sense to sell and move into a slightly bigger house.

End of story.

Related: Canada is hooked on real estate and needs a detox

Moving Wants vs Needs

Our current home has everything we need apart from an inground pool, a more oversized lot and a walk-out basement.

Other than renovating to update the inside of the house and landscaping the front and back, we are happy here.

Over the years, we have been saving our money to renovate top to bottom, including the basement.

As we are getting older, I don’t want to be moving and renovating for the rest of my life.

During conversations, we realized we didn’t need a pool; we wanted a pool and a walk-out basement with an oversized lot.

We cannot justify another mortgage for those three reasons; besides, we have friends with pools.

Haha! It’s like loving your neighbour’s pet but not wanting to own one.

That’s how we feel about debt.

Mortgage Freedom Trumps Moving

With too many homeowners struggling because they are house poor or jobless, it’s a risk we’re unwilling to take.

As the breadwinner in the family, it would put more pressure on me to have a mortgage again.

No job is ever secure, although having an area of expertise helps to gain easy employment.

For example, our friend is working towards her Personal Support Worker (PSW) certification.

Although it’s only a step toward becoming a registered nurse, the PSW is in high demand.

With health changes to Mrs. CBB since we bought this home and now our son being diagnosed with Autism, the decision was easy.

Living Our Lives By Retiring Early

If you’re in your 40s as we are, you may have noticed the obituaries more than you ever have.

People die before they retire, whether a colleague, friend, family member or neighbour.

Both Mrs. CBB and I decided that I would retire at 55 so we could enjoy retirement.

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CBB Net Worth For The Preceding 12 Months

Scroll close to the bottom if you already know how to calculate your net worth to see the breakdown of our May 2022 net worth.

Net Worth Increases And Decreases

The chart above reflects our net worth increases and decreases throughout 2021-2022.

The past 12 months of our net worth have been a roller coaster.

From May 2021, our net worth has increased and decreased monthly.

As of January 2022, our net worth was stable, but as you can see, starting in January 2022, it has been up and down.

For May 2022, we’ve recovered a bit of our April losses, but we’ve still got a long way to go.

We consider that our savings have decreased due to renovations for 2022.

Let’s hope the pattern doesn’t follow suit with a drop in June; however, there’s not much we can do.

Drop me your comments below:

Discussion: Are you worried about your investments, and have you made any changes?

How To Calculate Your Net Worth

Net worth adds up your assets (what you own) and then removes your liabilities (what you owe), giving you a net worth number.

We like calculating our monthly net worth to know if we are still on track.

Some people calculate it yearly or quarterly, but it’s up to you and how informed you want to stay.

Net Worth is only an estimate, and not everyone uses the same type of figures to tally it up.

Determining Net Worth

How to Determine Net Worth?

Net worth = Assets – Liabilities

Calculate your net worth with our Free Money saving Tool Net worth Calculator (Canadian Budget Binder.

Net Worth Losses And Gains 2022

Brief Update:

Although we had a significant drop in our net worth in April, there was a slight increase in May of $8498.73.

In May, our Pensions, RRSP’s and TFSAs dipped by $19,868.46 and increased by $19,974.14.

Something to keep in mind is that we also contributed to our investments in May to push the increase.

As mentioned, our main bathroom is under renovation, and I’ve been sourcing materials. Spending money on renovations is the main reason for our cash drop.

At this time, we are riding waves like many Canadians, although I’m hesitant to use my RRSP room.

I have around $5000 in RRSP room, but I am holding back, waiting for the world to explode.

Honestly, my gut feeling is holding me back.

Have any of you had second thoughts about increasing your investment deposits?

Mr.CBB

Canadian Budget Binder Net Worth Updates 2022

Click the links below to read our net worth updates for 2022.

• January net worth update 2022
• February net worth update 2022
• March net worth update 2022
• April net worth update 2022

The following net worth report will be in July when we look at our June 2022 net worth figures.

Feel free to comment below.

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The post Moving And Selling Our House Is Finalized: May 2022 Net Worth appeared first on Canadian Budget Binder.

Buying our first home together, we knew there were house updates we needed to make immediately.

Pride of home ownership will always show in the extensive renovations and the small stuff.

Everyone who views a home for sale visualizes what they would change if it were their home.

It’s nice to dream big, but when you buy a home, especially your first home, you’ll learn how expensive it is.

I’m not saying that in a mean way, but there’s no buttering up the truth about considerable costs to renovate.

Today I wanted to share with you simple house updates we made that were inexpensive yet effective.

The idea behind this post is to share with you that a showroom home takes time and money.

Completing renovations too fast will cost a fortune rather than taking time to save the money first.

Small House Updates That Add Value

Yes, a brand new kitchen and updated bathrooms will add value to any home if done correctly.

Often it’s the little things that homeowners don’t think about that add value to a home.

These home updates may not be expensive, but they are practical and show pride in home ownership.

Over the past two years, buyers have blindly bought an overpriced home without an inspection.

Now that interest rates are increasing, house prices are coming down, and sales have stalled.

Related: Housing Prices in Canada Could Drop More Than 12% By Next Year 2023

According to a new report by RBC, Canadians can expect a “historic correction” with both resale activity and home prices “reaching lower levels than anticipated.”

You may worry about rising costs and interest rates if your house is worth less than what you paid.

Focusing on what you can control instead of what you can’t help you see the bigger picture.

Don’t worry about what anyone says if you have an old kitchen, stained carpet or a kitchen nightmare.

What you can do is tackle the small stuff first unless, of course, you need a significant renovation.

Related: Should you invest emotionally in your property?

Rushing House Updates Is Asking For Disaster

With recent inflation highs in Canada and watching interest rates rise, we’re still confident we made the right decision to pay off our mortgage.

The most important lesson we’ve learned over the past 13 years of home ownership is not to rush.

If you want renovations completed before you move in and are willing to dish out the costs, you can.

We did the opposite by fixing what needed completion so we could pay our mortgage quickly.

To become debt-free, including our mortgage, meant sacrificing major renovations for many years.

We’d often pull our renovating card when we were planning on renovating.

Finally, getting into the real estate market but short on cash to do more significant renovation projects is not uncommon.

Visualize Our New Home From 2009

We bought our 1500 sq ft house in 2009 for $265,000 with an unfinished 1000 sq ft basement and double garage, so it needed work.

The lady we purchased the home from was the original owner and chose the colour and designed it herself.

Please close your eyes and imagine the following scenario to see our home surroundings.

• Pink carpets that are now beige
• White carpets with yellow smoke rings around the baseboard
• Crushed downspouts
• The front garden was dirt and weeds
• Hallway tiles that were pink with white grout that is now black
• Kermit green paint throughout, including all of the outlets and vents
• Vinyl kitchen flooring with ripped pieces and cigarette burn marks
• Smoke smell and stains everywhere
• White roller blinds that were now yellowish
• Patterned curtains
• Jacuzzi that sounds like a jet taking off
• Washer and Dryer in the master bathroom closet
• Water softener jammed with disgusting salt goop (not even working)
• Yellow smoke-stained white light fixtures
• Basement Insulation eaten through by mice
• Screendoor window wrong size with an open gap
• We needed a new roof
• Sun damaged vents outside of the home
• Black window sealant, which was once white
• Oak everything
• Massive remote-controlled dining room fan 20 feet above us, full of dust

Pricing Home Updates

Where does anyone begin with a house that needs updating from all directions?

We did have a list of the house updates we needed and wanted to complete.

Some would take more money than others, and with that extra time to complete the job.

However, after having our son in 2014, we decided to take the house updates individually.

Once we knew what needed completion, we priced out the project and started one by one.

The more minor expenses fell under our home renovations budget category each month.

The more extensive house updates we needed to save for, which is why they are taking us the longest.

Wants vs. Needs When Considering House Updates

Any house updates cost money, which meant saving first, so we didn’t create debt.

By this time, we had created our Budget Binder Excel Spreadsheet to help us understand our finances.

Over the years, our budget continued to change, as did our income but not in a good way.

Three months after we bought our house, Mrs. CBB lost her job, but we were still ok to pay the bills.

We had already started to ramp up saving money on groceries using any savings apps we could get our hands on.

Any extra cash came in from the extra efforts we put into paying the mortgage.

After we paid the mortgage, we continued to increase our side income through focus groups and the Canadian Home Stay Program.

We earned a chunk of cash from the program we stashed away to start our house updates.

By this time, we had also saved enough money in our emergency savings account and stashed a few thousand in our fireproof safe.

House Updates That Changed The Look Of Our Home

Upon finishing our wants vs. needs house updates list, we got to work sourcing the best deals.

Almost everything we purchased was online from Amazon Canada, Home Depot, Canadian Tire, Rona, Lowes and Home Hardware.

Anytime we made an online purchase, we ran it through Rakuten to see if there were additional discount codes or savings.

If you like online shopping, I’d 100% suggest signing up for Rakuten and Great Canadian Rebates.

You’ll notice both the interior house updates and exterior updates that changed the look of our home.

Small House Updates Are Just As Important

I know there are more than five simple ways to add value to your home which is why this list is long.

Anything in bold was what we considered to be simple and inexpensive to update our home.

• Wash the walls the best we could to remove smoke damage and smell
• Paint the entire house white apart from the kitchen, basement and bathrooms and master bedroom
• Replaced all of the outlet covers throughout the house
• Scrub and sanitize vinyl flooring and tiles in the front hallway
• I bought new white blinds from Home Depot throughout the house
• Replaced smoke-stained and outdated smoke detectors
• Change the locks and handles on all doors (bought at Canadian Tire)
• Remove and paint all of the entries in the house (white)
• New baseboards were purchased for the entire home from Home Depot
• Replaced all of the lightings in the bedrooms and hallways (Home Depot)
• Painted the garage door grey and replaced the seal
• Installed a new front door with an iron insert panel
• Resealed all of the windows on the outside of the home
• Purchased new downspouts and vents for the outside of the house (Home Depot)
• Installed a new insulated cold room door
• I bought a new water softener (must)
• Wash the windows with soap and water, followed by window cleaner
• Remove all of the mouse poop and insulation into a rented bin for $400. (Pricey Update)
• Cleaned up the weeds and dirt out front and eventually made a beautiful rock garden. I added new shrubs and plants along with a massive rock centre feature. (Pricey Update)
• I built a new deck out back as it was a bit of a drop from the back door. (Pricey Update)
• New wood fence for the entire backyard (I built the fence with two neighbours) (Pricey Update)

For 2023 we’ve been saving for a new deck and pergola, which I will be building. I’ll share the renovation with you once I complete it with photos.

Budgeting For House Updates

Building our deck was the most significant expense we put into our home besides the roof and fence.

As we went on, we’d continue adding to the list of wants vs. needs house updates.

Doing so allowed us to continue putting our money towards the renovations that needed attention.

Budgeting has been the number one key to keeping us on target with our home.

After 13 years, I’ve done many house updates and significant renovations.

• Gutting the upper-level bathroom
• New wood flooring on the upper level
• New roof installed (we hired a company)
• Front patio and walkway
• Basement insulation
• Entire front yard overhaul

All I can say is that the list is never-ending, so we’ve decided not to move.

I was the one who wanted to move more than Mrs. CBB, but I’ve changed my mind.

I have no intentions of spending my retirement years renovating a house when we could be travelling.

More Significant Renovation Projects And Less Is More

I’m working on the master bathroom and can happily say it was worth waiting for the upgrades.

I’ve gutted the entire master bathroom, and like all rooms in this house, I needed to level the floors.

The cool investments for our master bathroom are the deep tub, heated flooring and a heated towel rack.

Together we chose the Ancona Prima Dual XL 12 bar Heated Towel Rack with a wall timer from Amazon Canada.

We decided on white subway tiles from Home Depot and crystal lighting fixtures from Lowes to keep with the theme of the upper-level bathroom.

Completing this project is taking me a few months, and I’m not done yet and will update you soon.

Now that we are getting older, we aim for clean, minimalist home decor and home updates.

We’ve adopted the less is more movement which is already starting to pay off in significant ways, starting with my sanity.

Whether you’re updating to sell your home or to make it your forever home, don’t rush the process.

Have Your Say

Discussion: When you purchased your house, did you complete house updates before you moved in or as time went on? Did you add extra money to your mortgage so you could use it to renovate? If yes, why did you choose this option, and what renovations did you complete?

Please leave me your comments below.

Thanks for stopping by.

Mr. CBB

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Anyone you ask will tell you what they think makes property value decrease in the real estate market.

In reality, there’s always going to be a buyer. However, you might not get the amount of money you anticipated.

I’ve blogged about what increases the value of a home but not property value decrease.

In today’s blog post, I want to discuss what makes property value decrease.

The Raw End Of The Deal

A senior couple was ready to move out of the big city and downsize to a small community where they could rent an apartment.

Unfortunately, they missed the market craze of 2022 by listing their home too late in the game.

Eventually, their house sold, but they lost out on a minimum of $150,000 as buyers panicked as the Bank of Canada increased the interest rates.

Over the past two years in Ontario, we saw a massive increase in house sales, resulting in skewed house prices.

Buyers were taking risks without home inspections, paying hundreds of thousands more than asking or buying site unseen.

Related: Should home buyers do without a home inspection to win the bid on a home?

Property Value Decrease During A Buying Frenzy

What typically is a somewhat stressful house-buying process turned wary for many buyers.

I watched firsthand as a friend lost to bidding wars on homes that needed ridiculous renovations to be livable.

Eventually, he found an overpriced home and sunk $150,000 into renovations and upgrades.

Not only did hoarders previously own the home, but it had pet hair throughout and in the venting system.

There was a distinct odor of burning hair when the furnace was turned on, which would wiggle my nose hairs.

The past two years have skewed house prices tremendously during the massive spike in the seller’s market.

Lots of people out there own more homes than what they can sell them for.

Prices have started decreasing, although mortgage rates are somewhat stable yet unpredictable.

Some people might argue why anyone would want to buy a house during such a buying pandemic.

The only answer I can come up with is that there will always be buyers, no matter what the market determines.

That being said, I wanted to talk about how home buyers that purchased during the craze got the raw end of the deal.

What one would think lowers property value often didn’t come into play, leaving some buyers left with large renovation bills.

In other words, what lowers property value didn’t matter to buyers who wanted to buy any house.

Property Value Determinations

What determines property value is a combined effort of the following five constants in real estate.

Remember that when it’s a buyer’s market, all things are thrown out the window, primarily through bidding wars.

We’ve seen it happen firsthand, so it’s no surprise buyers could end up with a lemon of a house.

Homeowners get a letter from the Municipal Property Assessment Corporation (MPAC) every four years detailing their home’s value.

Although the price is always lower than the market value, it’s an assessment to give homeowners an actual number.

That doesn’t mean that the house should be sold for the MPCA price, as some belief.

Besides MPAC, other factors determine the fair market value of a home when it is put up for sale.

• Local Market /Neighbourhood
• Current Interest Rate and state of the economy
• Condition/Age
• Upgrades/Updates
• Property Size and Livable Space
• Comparable home prices

The leading financial cooperative in North America, Desjardins, released a report on August 28, 2022, stating that house prices in Ontario and Quebec were sinking.

Buyers are waiting on the sidelines, and in some markets where overbidding was rampant, prices are coming back to earth. By the end of next year, prices are expected to tumble 17% in Quebec and 24% in Ontario.

Meanwhile supply shortages, high material costs and rapidly rising interest rates are putting the brakes on new construction and renovation. Look for fewer of these projects in the coming quarters in both provinces.

Read the full pdf – Marketprices will continue to fall in Ontario and Quebec

Related: 5 Small Updates That Might Add Value To Your Home

Local Market/ Neighbourhood

The local market suggests what homes in your neck of the woods are selling for which are comparable.

Almost every real estate agent I’ve had the pleasure to meet would carry previous sale house comparables for their clients.

Again, just because a house sold for $500,000 five months ago doesn’t mean a comparable will sell for a similar or the same.

Market conditions can change in an instant, which we experienced selling the in-law’s property.

The house was a massive bungalow on a huge corner lot with loads of parking in a small Ontario city.

After many bidders and views of the home, it was sold for just over $500,000 at the end of 2021.

Months later, house prices went wild, and we could have sold it for much more if we had hung on just a little bit.

That would have left more money in the bank for a senior who relied heavily on a house sale and her husband’s pension for retirement income.

Renovations and Upgrades

Depending on the home, some factors result in a property value decrease.

For example, when we bought our house in 2009, the price was less than in recent comparables.

Let’s also keep in mind we purchased at the height of the market crash, which flooded us with options.

Decrease Property Value

• The front yard was not landscaped
• 15-year-old carpet and linoleum flooring both had cigarette burn marks
• The roof needed to be redone
• Mice went rampant in the basement insulation
• The current homeowner smoked in the house

Using the needed renovations, we reduced the asking price by $5000.

The relator argued that the home was priced to sell at a comparable price; however, upon inspection, we didn’t have the same sentiment.

I can’t say that the house-buying process in Canada is any better than in the UK, but we certainly don’t pay nearly as much in realtor fees.

When I sold my house in the UK before moving to Canada, I paid the realtor a 1% commission.

There were renovations I had to undertake as they threatened to reduce my property value.

Some people might not be as invested as I was because I wanted to sell for the maximum amount.

I spent a few thousand dollars, and I got max value with my dad’s help.

• New Ikea Kitchen
• Upgraded refrigerator
• New tile flooring
• Updated the bathroom
• New Central Heating/Water System
• Triple Glazed Windows
• Removed wallpaper in the bathroom
• Fully landscaped property

To put into perspective how market value, interest rates, and overall economy can upset a property value, my old house is worth less than what I sold it for in 2007.

Let that sink in.

Mortgage Interest Rates

At the time of writing, according to wowa.ca, interest rates for a 5-year fixed mortgage were between 4.99% and 6.19% from Meridian.

The current best variable mortgage is at 4.69%, meaning it can go up and down based on market rates.

The tangerine bank also has a competitive fixed interest rate of 5.59% in the middle as of October 27, 2022.

Most home buyers opt for a 5-year fixed mortgage as it’s the safer option knowing what their mortgage payments will be.

The fixed and variable rate mortgage will determine how your rates change over time.

We’ve always gone with the 5-year fixed interest rate, which was 4.1% when we bought our home.

A low mortgage payment helped us pay our mortgage off during those five years.

Factors That Could Result In Property Value Decrease

• Area the house is located – Different parts of a city or town offer variable home prices based on comparables.
• No schools or limited schools – self-explanatory
• Limited amenities – stores, gas station, cleaners, doctors, hospital, grocery, highway
• High Crime Area – known area for drug use, break, and other crimes
• Known bad neighbors – wild parties, arrests, domestic disturbances, neighbor spats, etc.
• Home facing an Intersection, garbage dump or apartment building, transformer boxes, and utility lines on property owned by the city.
• Curb Appeal – landscaping, driveway
• Home Maintenence – exterior paint, roof, garage doors, windows
• Garbage or old vehicles, bikes, and machinery surrounding the home
• Much-needed interior repairs – bathroom, kitchen, flooring, painting
• Pool – this is a personal preference, but not everyone wants the responsibility of a collection, although families with kids will pay for a house with a pool. Consider the pool’s state and whether it needs repairs and has been maintained by the current owners.

Related: Can an inground pool increase the value of a home?

Should you invest emotionally in your property? The answer depends on whether you plan to live in the house forever.

Often when homeowners know that the home is not their forever home, they’ll find cheap renovations or little to no upgrades.

Always be wary of what lurks behind a renovated home and whether permits were pulled.

Some home sellers will complete quick and sometimes shady renovations before their house hits the market.

Related: Should I renovate my home before I sell it?

Overall Thoughts

Whether you are a home buyer or a home seller, knowing what can reduce property value is essential.

Buying that lemon will cost you a fortune but selling a lemon will also lose you lots of money.

Pick your battles and hire the right people to inspect the jobs to ensure they are done right.

Before you sign on the dotted line, get to know the neighborhood to see if it feels like a place you could live.

Sellers get your house’s maximum amount based on current market conditions by getting it ready to sell.

Mr. CBB

Thanks for stopping by to read.

Discussion: What actions you need to take around your home that might decrease property value if you sell today?

Please leave me your comments below.

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Estimated reading time: 6 minutes

Knowing the differences between term life insurance and mortgage insurance is critical for a first-time home buyer, new Canadian, or current homeowner.

Before Buying Our First Canadian Home

Before we purchased our first home in Ontario, we promised ourselves that we’d be prepared financially for the unknown.

We knew our journey would have obstacles and thought our path could significantly change if we didn’t think ahead.

After nearly three years of renting a room and two years of marriage, we finally purchased our first home together.

It was my first home in Canada, so I researched as much as possible about the buying process.

I wasn’t aware of the difference between term life insurance, mortgage loan insurance, and mortgage insurance.

Before signing our mortgage papers, I’m glad we researched alternative options like term life insurance.

However, if you put down less than 20% of your mortgage, you must purchase mortgage loan insurance.

You may also need to purchase mortgage loan insurance if you have poor credit or are self-employed.

How We Prepared For Our Future

Besides education about term life insurance and mortgage insurance, we took other steps to pave our way into the future.

You can’t fight fire without water; when there’s a fire, and there always is, it’s essential to be prepared.

Purchased a family home on one income of $265,000 @ 4.3% interest and a down payment of $85,000 or 32%.

We invested in a 25-year term life insurance policy for $450,000 for each of us.

Quit smoking to reduce our life insurance policy payments and still smoke-free.

We paid off our mortgage in five years with a remainder of 20 years of coverage under our term-life insurance policy.

Term Life Insurance vs. Mortgage Insurance

Let’s discuss the difference between the term Life Insurance and Mortgage Insurance.

Term life insurance will pay the total amount of the policy, whereas mortgage insurance only pays the remainder of the mortgage owing.

An example is if someone owned a home, held Term Life Insurance, and died.

The Term Life Insurance is optional and will pay the beneficiary named on the insurance document the amount stated.

The insurance policy might state that it is for $800,000, paid once the insurance company is satisfied with the death.

Mortgage Insurance must be purchased when someone does not put a 20% downpayment on a mortgage.

Mortgage Insurance, Mortgage Loan Insurance, and Mortgage Default insurance protect the lender, so they get their money back.

Even if you put 20% down on your mortgage, the lender or broker may ask if you still want it.

Most often, individuals with a low credit score or working for themselves will find the bank checks their credit score.

Related: Get your Free Credit Score and a $1 Credit Report

Cost Of Term Life Insurance

Term life insurance has always been affordable for Mrs. CBB and me, especially after we quit smoking.

Below are the results from using the PolicyMe quote widget, which I tested to see how much my life insurance policy would cost.

At my age, 47, and non-smoker, the best starting cost of term life insurance would be $89.03/month.

*Quotes are based on our customer’s average coverage amount and policy length of $500,000 over 20 years.

PolicyMe Bonus:

The PolicyMe website has a more in-depth family life insurance calculator, which is also pretty cool.

Here are the results of my filling in our personal information based on our income, non-smokers, monthly budget, no mortgage, and zero debt.

• $100,000 in coverage over ten years, $15.62/mth
• $300,000 in coverage over ten years, $33.91/mth (even more coverage)

We added up the total amount of money that your family will spend if they don’t change their current lifestyle and subtracted out all the money that will be available to your family in the future.

Your recommended coverage is needed to make up the difference.

* When we project forward expenses and income, we add on inflation to make sure your family can afford to pay their bills as prices increase over time

** The numbers you see are all “present values”, a fancy statistical technique that is used to describe how much a future sum of money is worth today

Mortgage Insurance If You Die

Mortgage insurance, or mortgage protection insurance, is optional and does not factor into whether one qualifies for a mortgage.

This type of insurance is used for illness, job loss, injury/disability, critical illness, or death.

If the homeowner were to pass away, the mortgage insurance would pay off the remainder of the mortgage loan.

Money from a mortgage loan is paid to the bank where the homeowner took the mortgage and then relieved the mortgage.

So, if you put the minimum 5% down $25,000 on a $500,000 mortgage, you would need mortgage insurance which is factored into the loan balance.

To avoid paying for mortgage insurance, you would need to put $125,000 down on the $500,000, which is 20%.

I did some sleuthing at Scotia Bank to understand what protection they were offering to their mortgage customers.

Canadian mortgage insurance is transferrable or portable, so you can take the coverage to your new home if you move.

Related: How to port a mortgage in Canada

PolicyMe Term Life Insurance

A Canadian company such as PolicyMe can help you with an affordable term life insurance policy and save you up to 20%.

Money can buy peace of mind if you’re prepared to take steps toward securing your tomorrow.

Check out PolicyMe and how the entire process can be done online in the comfort of your home.

Discussion: Before getting one, did you know the difference between mortgage protection insurance and term life insurance?

Please share your comments below.

Thanks for stopping by to read.

Mr. CBB

• PolicyMe Digital Life Insurance Q and A
• Is It Better To Buy Life Insurance or Fund Your Retirement?
• 12 Ways To Save Big Money On Car Insurance
• Importance Of Tenants Insurance When Renting
• The Ultimate Guide: Canadian Insurance Products

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The post Mortgage Life Insurance vs. Term Life Insurance Differences In Canada appeared first on Canadian Budget Binder.

Estimated reading time: 8 minutes

Working with mortgage lenders and brokers in Canada is the focus of today’s guide.

Your mortgage is one of, if not the biggest, financial commitments you will ever make.

When dealing with this money, you want to ensure it’s being spent as effectively as possible.

Thankfully, there are a myriad of experts out there who are trained to help you throughout the process.

Mortgage Process Key Players

You’ll encounter two key players through the real estate process: mortgage lenders and mortgage brokers.

Based on these titles, you may assume their roles are similar or interchangeable.

However, each professional performs two distinct and necessary functions in the mortgage process.

Understanding the difference between a mortgage lender and a broker is crucial before moving through the mortgage process.

This article will help demystify these roles, providing clear distinctions between mortgage lenders and brokers and helping you decide which option best serves your needs.

What is a Mortgage Lender?

Almost every homeowner has been in contact with a mortgage lender in some capacity, as they are the key to securing the necessary financing to support your home purchase.

A lender can be any financial source provider, but banks and credit unions are the most common.

Private lending corporations, individuals with significant capital investments in mortgage lending as a portfolio addition, and other B lenders.

Mortgage lenders decide whether to approve loans based on various criteria, including the borrower’s creditworthiness, financial history, employment status, and the value of the purchased property.

The lender manages the fund provision for the sale directly to the home seller and services the loan by collecting payments from the borrower over an extended period.

Mortgage lenders are the entities that take on the financial risk, providing the necessary capital for individuals to purchase a property.

If a borrower defaults on the loan, the lender faces a loss, which is why general approval processes are often stringent and thorough.

What is a Mortgage Broker?

As has been established, lenders have a lot of capital.

As a homebuyer, you need access to that capital, but you sometimes need to know which lender to contact or what type of mortgage is right for you.

That’s where mortgage brokers come in.

Rather than being the source of capital themselves, these professionals broker the lending of mortgage loans by facilitating relations between the borrower and the lender.

Brokers work independently or within a firm to guide clients through the mortgage process.

The best brokers have access to a wide variety of loan products and a network of lenders, which allows them to shop around and find mortgage loan options that best fit their client’s needs and financial circumstances.

A vital feature of a strong mortgage broker is someone who can negotiate better terms for your mortgage through their network and knowledge of product options.

Overall, mortgage brokers provide a valuable service to homebuyers by simplifying the mortgage process and potentially improving the terms of your mortgage loan.

Direct Mortgage Lenders vs. Using Mortgage Brokers

After reading about the differences between lenders and brokers, you may still wonder what the value of working with a mortgage broker is.

Beyond everything, you do have the option to work directly with lenders yourself, avoiding the middleman.

However, choosing the right professionals to partner with throughout the mortgage shopping process will help diminish stress and save you time and money.

Mortgage Lenders vs. Brokers Comparison Chart

Here is a quick comparison of service offerings when you’re working directly with mortgage lenders vs. using a broker as an intermediary, so you can fully understand how complimentary these professional services can be to one another.

Value of a Broker

Most Canadians get mortgages and go through a lender.

On the other hand, only about 30% of Canadian homeowners go through a mortgage broker to assist them through the mortgage process.

This means that a considerable part of the population needs to unlock the full potential of the mortgage process as they go through it.  

Consider this: If a home is listed at $500,000 without a mortgage broker, you may take the first mortgage rate you’re approved for.

Let’s say the rate you lock is 4.5% with a 5-year term – you will pay about $97,452 in interest payments over those five years.

Instead, let’s say you choose to work with a mortgage broker, and that broker negotiates your rate down to 4.4% interest, just 1% less.

Over that same 5-year term, you will pay over $2,000 less in fees because your broker could negotiate and compare rates on your behalf.

Personal Considerations

Working with a mortgage broker is helpful to everyone entering the mortgage arena, but there are some specific personal circumstances where a broker is particularly beneficial.

The home buying process is inherently stressful, but for first-time homebuyers, that stress level is dialled up to the extremes.

One study showed that a third of first-time home buyers “shed tears” during home buying at some point.

Apart from providing first-timers with valuable industry connections, a mortgage broker can also help guide them through the mortgage process.

It often helps to access a readily available resource to send you information and the next steps in the process. 

Minimum Credit Score

Banks, Canada’s most commonly used mortgage lenders, generally require a minimum credit score of 600 to qualify for a mortgage loan.

Unfortunately, if you’ve got a low credit score, it can be exceedingly difficult to be approved for a mortgage loan with an A lender.

That’s where a mortgage broker can come in and provide the assistance you need to get the best mortgage possible for your situation.

Often, a bad credit mortgage or a near-prime mortgage can be the right option for these individuals, working directly with a mortgage broker to achieve the needed loan.

If you’re looking to refinance your current mortgage rate and find a better deal, a mortgage broker is a great resource to help.

They can provide you with access to additional resources and contacts that you otherwise may not have thought of, and they often have experience specifically with specialized refinancing programs.

Getting mortgage financing and buying a home is a time-consuming process.

A mortgage broker can benefit anyone who does not feel they have enough time for it.

Mortgage brokers handle much of the legwork concerning the lending process, including gathering necessary documents, pulling your credit history, verifying your income and employment, and submitting the loan application to lenders on your behalf.

They can save the average home buyer a ton of time. 

Using The Right Mortgage Specialists

Working with the right professionals is very important during the mortgage process.

Without a mortgage lender, you won’t be able to achieve the funding you need for your home.

Without a mortgage broker, you won’t access the same mortgage resources and rate savings as other homebuyers.

When used in tandem with one another, lenders and brokers can be highly beneficial to every homebuyer.

Knowing the difference between these two vital industry professionals is the first step as you embark on your mortgage journey.

Check out the Chris Allard Mortgage Team if you’d like to start working with a mortgage broker.

About The Author

Chris Allard is the Lead Mortgage Broker at Chris Allard Mortgage Team. Chris and his team of mortgage agent professionals assist borrowers with their mortgage needs throughout the greater Ottawa area and beyond. Recognized as one Canada’s top 75 mortgage brokers, Chris is dedicated to advancing knowledge and resources. He was a finalist at the Canadian Mortgage Awards last year and is a DLC Hall of Fame member.

• Top 3 First-Time Home Buyer Mistakes!
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Estimated reading time: 9 minutes

Traditional life milestones lead many Canadians into desperately seeking home ownership debt.

With stretched house prices and a weak affordability rate, maybe buying a home now is not the best option.

According to Stats Canada, in July 2023, Canadians owe $1.85 for every dollar of disposable income.

With the decline in household disposable income, it’s no wonder Canadians aren’t sure which way to go.

Life Progression Towards Home Ownership

From a young age, our parents tell us that getting a good education is essential.

You must work hard to earn a good salary, get married, have children, and buy a house to build lasting memories.

Many of you today remember that being said to you at some point.

It may not have been your parents, but we have to understand that it’s a timeline almost engrained in our minds.

Debt is not something to take lightly, as money should be used as a tool, not a means to fit into standardized ideations.

For example, Molly is getting married and is planning on buying a house and having a baby as soon as possible.

Molly is doing so well after graduating from University as a registered nurse and falling in love with Dr. Paul.

They will be one happy family once the baby arrives and move into their new home.

Unfortunately, life is not a fairytale, nor should we treat it as one unless we have the cash to back it up.

Going into debt to create a glass slipper and coach riding off into the sunset is old-school thinking.

Homeownership is a thing of the past as it’s out of reach for many Canadians who have given up or moved on to other housing ventures.

Home Ownership Can Be Stressful

An email from a CBB reader made me consider writing about how desperate some people are to jump into home ownership debt.

Years ago, I wrote a post about being house-poor and why it’s not worth the false prestige that some people think follows.

A money mindset shift happens from generation to generation based on what has been learned inside and outside the home.

Although Canadians have heard about the perils of not getting in over their heads financially, many still do.

It’s a matter of understanding the mathematics and long-term effects of mortgage and consumer debt.

With high inflation and rising interest rates, home ownership debt is not a wise investment.

Not Desperate To Own A House

Dear Mr. CBB,

Why are some people so desperate to be homeowners that they’d pay way over the asking price to become one and omit an inspection? I can’t wrap my head around that.

In my lifetime, I’ve owned a townhouse and a larger house with a rental basement suite, neither of which I paid over asking nor had inspections.

Being a homeowner is stressful, so I’ve been happily renting for nearly ten years since I sold the last house.

I’m not ruling out home ownership in the future, but I’m not desperate enough to own a house that I’d offer $150,000 over asking.

Maybe not even $5,000 over!

If money is no object and people are desperate to own a house or that specific house, they would pay over asking.

I would not, but perhaps that’s a post you could write, as you have some insight into people who’ve done this.

Cheryl

Prestige Of Home Ownership In Canada

Do you own a home or rent? I can’t tell you how often I’ve been asked that question since arriving in Canada.

Self-made millionaire Grant Cardone says, ‘Don’t buy a home—unless you can afford to waste money.

• Costs eat up profits – Home maintenance costs of a minimum of 1% yearly after property taxes, interest rates, and real estate fees.
• No Cash Flow Market- Where the homeowner depends on the market.

Cardone says only buy when you find a trophy home selling under market value and has a profitable exit.

For example, a home on our street with a market value of $845,000 just sold for $790,000 under the asking price because the sellers needed out fast.

They purchased a home out of province for a career move and took the first offer they got after a weekend of an open house viewing.

It’s a case of our loss, your gain.

Societal Demands For Owning A Home

Everyone wants to know if you’ve ventured into the land of home ownership as if it’s something only well-off people do.

That statement can be silly or valid, depending on where you came from before the home ownership venture.

Understanding finance is all about perspective and how much value is placed on needs vs. wants.

Owning a home doesn’t make you look cool or that you’ve made it in life.

On one hand, it tells me that you probably have a lot of debt and stress or little to no financial burden.

Honestly, though, who cares?

By definition of our financial understanding, we had lots of mortgage debt, and every time we turned around, something needed attention in the house.

Home maintenance costs alone are enough to bankrupt someone if they aren’t prepared for the unexpected.

The first big purchase we saved for was a new roof that cost us $5600, a massive expense without savings.

At times, we’d wonder if we were better off renting longer and buying a house that didn’t need updating.

It was a battle of the home ownership debt wars, although it worked out in our favour as we didn’t engage in the wild bidding wars of 2021-2022.

Buying A Home Using Government Programs

What about first-time buyers using their RRSPs with the Home Buyers Plan when they must start paying it back?

Added financial stress to an already depressed system is a recipe for disaster.

The Home Buyers’ Plan (HBP) program allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or a related person with a disability.

Canada.ca

Tax-Free First Home Savings Account

In Budget 2022, the government proposed the introduction of the Tax-Free First Home Savings Account (FHSA).

This is a fantastic way to save for a down payment on a home to get into the Canadian market. It can also work with the HBP, depending on eligibility.

This new registered plan allows prospective first-time home buyers to save $40,000 on a tax-free basis.

Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, and withdrawals to purchase a first home—including from investment income—would be non-taxable, like a Tax-Free Savings Account (TFSA). – Canada.ca

Also, the money is not required to be repaid as it is with the Home Buyers Plan.

Home Ownership Debt vs. Rental Debt

There would have been no chance we’d move from our one-bedroom basement rental to pay astronomical pricing to purchase a home in today’s market.

But why are so many people doing so?

I guess the availability of rentals and paying high rent doesn’t make sense since it could pay for a mortgage.

Fair enough, but that’s not where expenses end when owning a home.

Rental prices have increased so much that some people have to choose between eating or a roof over their heads.

Strange enough, visitors to a food bank or shopping thrifty aren’t just renters; they are homeowners who struggle to make ends meet.

Broken System and Fine Line Living

There’s a break in the system, not just an imbalance that needs to be fixed.

Low-interest rates drove the housing market, and Canadians took on home ownership debt by the horns.

The Bank of Canada is pulling in the reigns, and many homeowners are in for a rough ride.

That means that landlords have to take into consideration rent increases to pay their bills.

It’s the circle of debt which affects everyone.

The Ontario rent increase guideline for 2024 is 2.5%, and the maximum a landlord can increase most tenants’ rent during a year without the approval of the Landlord and Tenant Board.

Pleading With The Bank Of Canada

B.C.’s premier has sent a letter to the Governor of the Bank of Canada urging him to reconsider a possible interest rate hike in September, as he says “people in B.C. are hurting.”

The last rate hike on July 12 brought the BoC’s key interest rate up by a quarter of a percentage point, to five per cent — the highest it’s been in more than two decades.

“The danger of further unnecessary rate increases is not just to homeowners with mortgages as they renew or lock in at higher rates.

Renters, young people, seniors, families, and small business owners burdened with car loan payments of lines of credit who were just starting to find their feet after COVID are being pushed to the brink.”

Vancouver City News

Buy Now Pay Later Home Ownership Debt

As interest rates increase, Canadians who can’t afford their mortgage are in a pickle.

The bank says buyers can afford a mortgage amount today, with little to no consideration about future affordability.

Who is responsible for doing the mortgage math before buying a house?

Don’t bet on the bank, as they are in the business of making money.

Our neighbour, for example, a couple in their 30’s, bought their first home for $800,000 on a variable-interest mortgage.

They only purchased the home because the variable rate fit their financial picture.

Visions of owning a home can often cloud the future, where people face problems.

The owner told me casually that they can’t renovate this year because their extra cash will pay the mortgage.

Oh, and his wife is pregnant, which means they can’t afford more expenses.

I have to give them credit for having emergency savings as it’s buying them time to develop a longer-term solution.

According to a recent study by Ipsos Reid, Eight in ten (80%, +3 pts) agree that it is possible to be financially secure and not own a home, and 46% (+3 pts) feel owning a home is less important now than it was 25 years ago.

Home Ownership Debt With Family

When we bought our home in 2009, I could carry the mortgage on my income and saved Mrs. CBB’s.

If we hadn’t and continued renting, we likely would have saved enough to put a downpayment on a home, but affordability and options would be slim.

However, there are options if you’re fortunate to have in-laws who want to jump into home ownership debt with you.

Unfortunately, that was not the case for us in 2009, but thankfully, we had the crop pick.

The Ipsos Reid survey results also state that while owning a home on one income (or even two) may no longer be feasible for many Canadians, half (51%, no change) say they would consider co-ownership with family or friends to afford a home.

Although many of you might have red flags and alarm bells, this shared home ownership arrangement is common.

Our friends bought a bungalow with the in-laws living on the main level while they pay half the mortgage residing in the basement.

I’d consider this arrangement if it were my only option besides renting as a low-cost ownership option.

You’d still own half the home and build shared equity; however, it gets tricky if someone needs out.

• What if your parents move into a nursing home or long-term care facility?
• Could you afford to pay the entire mortgage if one or both of your parents pass away?
• Do you have a plan B just in case everything falls to pieces?

Some older people don’t have work pensions, and a chunk of retirement money would be the sale of their home and the government.

I think it’s a housing arrangement that needs to be considered, not just for current affordability but for any future financial hiccups.

Is Home Ownership Debt Worth The Hassle?

Not many people can pay cash to buy a home without the stress of having a mortgage.

Is home ownership debt worth the hassle? Sure, if you’re prepared for any downfalls.

Also, it’s essential to consider more than whether you can afford a home.

Based on these two questions, coupled with rising interest rates, inflated house prices, and job security, I’d probably hold off now.

We waited to jump into the housing market, and there’s not a day when we’re not thankful for our decisions.

Do what works for you and not what society or old-fashioned timelines tell you to do.

Things aren’t the same as it was, and options come with that change, beginning with what YOU need.

Discussion: What advice would you give someone looking to buy into the world of home ownership debt?

Leave your comments below.

Thanks for reading,

Mr. CBB

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The post Are You Desperately Seeking Home Ownership Debt? appeared first on Canadian Budget Binder.