Quotations by Douglas Gray

Condominiums generally sell more slowly than single-family houses. [2006] - Douglas Gray

If you are considering investing in a condominium, it is important to consider the advantages and disadvantages of the different types of condominiums, for example, apartment, conversion, or townhouse. You must ascertain whether rental units are permitted in a development and you should know the mix of tenants and owner/occupiers. [2006] - Douglas Gray

Finding an occupant for a condominium apartment is relatively easy in many major Canadian cities because of low vacancy rates. [2006] - Douglas Gray

If you are looking for higher appreciation (resale value), the purchase of the least expensive unit in a luxury condominium/townhouse complex generally offers a more financially attractive return than the purchase of the largest unit in a modestly priced development, assuming the price is the same. A townhouse condominium generally appreciates faster than an apartment condominium. [2006] - Douglas Gray

Issues that are important to you need to be clarified before you buy your condo, for example, whether you can keep a pet, rent your condo, or operate a home business. Age restrictions may also be in place, since some communities do not allow children to reside there. [2006] - Douglas Gray

If you are buying an older condominium, you should check to see what percentage of the monthly payment is being allocated toward Contingency Reserve Fund, as there is a higher risk of needing to use the fund in older buildings than in new developments. In older buildings, the fund should likely be 25% or more, depending on the circumstances. In most cases you are not entitled to a refund of your contribution to the reserve fund when you sell your unit, or have it calculated on the purchase and sale statement of adjustments. [2006] - Douglas Gray

When you are getting a mortgage, for example, you may wish to have a six-month open mortgage if you think interest rates are decreasing, and then convert it into a three- or five-year closed mortgage when you see that interest rates are heading up. [2006] - Douglas Gray

In general terms, conventional lenders (e.g., banks, trust companies, and credit unions) tend to be fairly competitive in the rates they charge for mortgages. A private mortgage lender generally wants a greater profit and therefore will charge more. [2006] - Douglas Gray

The lowest risk/no risk customer could receive the prime rate of interest (lowest) from a loan. Higher-risk businesses (a borrower who has few assets, has only recently become employed or is self-employed, or has a spotty credit record) could be paying prime +1% to prime +8%, if they can get any funds at all. [2006] - Douglas Gray

Some mortgage documents state very clearly that the whole premises cannot be rented out. This is fairly common with CMHC residential mortgages, as they are generally granted for the benefit of the owner/occupier and not for investment or rental purposes. [2006] - Douglas Gray

Occasionally a lender may require mortgages be insured. For example, if the property is older or is smaller than is normally required by the policy of the lender, or if it is located in a rural or a run-down area, then the mortgage may be required to be insured with the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada. CMHC is a federal Crown corporation, whereas Genworth is a private corporation. [2006] - Douglas Gray

If you are unable to raise the necessary 25% funding to complete the purchase of the home, then a high-ratio mortgage may be available to you. This is a conventional mortgage which exceeds the 75% limit. By law, these mortgages must be insured, and they are available only through approved lenders that are accepted by CMHC or Genworth Financial. [2006] - Douglas Gray

Some lenders charge a processing fee or set-up fee for their administrative expenses in the processing of your mortgage application. Avoid paying this type of fee if at all possible. [2006] - Douglas Gray

The lender will obtain its own appraiser to determine the value of the security for mortgage purposes. The necessary fee is either paid by the borrower to the lender in advance at the time of application, or is taken from the mortgage proceeds by the lender. In a competitive marketplace, you can negotiate directly with the lender, or through the mortgage broker, to have the fee waived and absorbed by the lender. [2006] - Douglas Gray

The Home Buyers Plan (HBP) allows you to withdraw up to $20,000 from your RRSP to buy or build a qualifying home. This is permitted under CRA policy. Generally, you can participate in the HBP only once in your lifetime, as it is designed for first-time home buyer. You do not have to include the withdrawn amounts in your income, and the RRSP issuer will not withhold tax on these amounts.Under the HBP, you have to repay the withdrawal to your RRSP within a period of not more than 15 years. Generally, you will have to repay a minimum amount to your RRSP each year, e.g. 1/15 of the withdrawn amount, until you have repaid the full amount you withdrew. If in any year you do not repay the amount you have to repay for that year, the amount you do not repay will be included in your taxable income for that year. [2006] - Douglas Gray

Highly desirable locations will generally go up in price more quickly and consistently. Property that offers a stunning view tends to escalate the most, for obvious reasons. Waterfront property is desirable due to its limited supply and high demand. [2006] - Douglas Gray

Certain times of year are traditionally slow months for residential real estate sales (November through February and sometimes March, depending on the weather), hence prices decline. [2006] - Douglas Gray

If you don't have a buyer broker relationship in writing, the listing broker has the primary duty to the vendor, and the broker whom you otherwise use is technically a sub-agent of the listing broker. In both these scenarios, the agents legally represent the interests of the vendor. [2006] - Douglas Gray

Make sure that you put a condition in your offer that says "subject to purchaser obtaining a home inspection satisfactory to the purchaser within X days of acceptance of the offer. In addition to the need for a home inspection, you might also be able to obtain a "vendor's disclosure statement." [2006] - Douglas Gray

It is important to obtain a qualified and independent inspector. Avoid someone who has a contractor business on the side and may hope to get the repair business from you. Their advice could be self-serving and biased. Check with your local Better Business Bureau to see if there have been any complaints against the company that you are considering. Home inspection fees range from approximately $200 to $400 or more, depending on the expertise required and the nature of the inspection, the size of the home, its age and condition, your geographic area, the nature of inspection service requested, and other variables. It normally takes a minimum of three hours to do a thorough inspection. [2006] - Douglas Gray