Only wrap your palms before the cold weather begins (in Vancouver this is usually the middle of November) and remove it just before the weather warms up (in Vancouver this would be February). If one leaves the wrapping on too long you risk rotting the plants in the warmer weather of spring.

Step by step instructions from Cedar Rim Nursery here..

This Saturday from 11am to 6pm at Ralph's Market in Murrayville..it's a family friendly event with craft fair, food/wine and entertainment! More details here: Langley Food Truck Festival

#food #street #foodie #market #festival 

It’s not unusual to find you owe some money to the Canada Revenue Agency (CRA) after filing your personal tax returns. Especially if you have neglected doing them for a few years. And like any other unexpected expense, you need to tighten your belt buckle, work even harder and try to find ways to eliminate the debt before you run up lots of interest charges and late payment penalties.

You may find other immediate obligations are more pressing, so if you’re not able to settle the tax debt right away, it is best to stay in touch with CRA and let them know your plan to reduce and eliminate the debt. They do have some flexibility. (This is a good way to manage all debt, not just tax debt.)

Occasionally we encounter homeowners whose tax debt is so large it cannot be readily paid through the normal course of life. The end result is a debt that can’t be negotiated away, with a creditor you can’t afford to ignore.

In recent months, we have dealt with several homeowners who found themselves in this predicament. In these instances, the smallest CRA debt was $40,700 and the largest more than $200,000. In each case, the debtor also owed money elsewhere – and had significant credit card balances and other unsecured debt. The size of the problem was way beyond the norm.

This seems to happen more often to small business owners and self-employed individuals. Regular folks are not immune though; we recently met a family with an unexpected $32,000 tax debt incurred as a result of selling an investment property and triggering a taxable capital gain.

You might think all these folks could just tap into their personal line of credit or take out a loan to pay this off, but these solutions were not available to them.

Fortunately, if you own a home and have decent equity, sometimes a creative mortgage financing solution can help clean things up, even if the amounts due are substantial, bank accounts have been garnished or even liens have been placed on your property.

Ways home equity can be used to pay very large CRA arrears

Keep in mind, when there is a large CRA debt, very few traditional lenders want to complete a mortgage refinance before the debt is remedied. In such a predicament, there are several ways home equity can be used to pay off CRA debt:

1. If you already have a Home Equity Line of Credit (HELOC), and there is sufficient room to pay the tax debt, this can make tons of sense. You basically just write a cheque and be done with it. The interest rate is probably around prime + 0.5%, and that might be as good as it gets in these situations. This will solve the immediate problem; then you need a plan to reduce your HELOC balance by saving aggressively and paying it down. Or, ultimately you may decide it makes sense to refinance and roll the HELOC balance into your mortgage.
2. Borrow money from a family member or close friend, pay the debt, then consider refinancing your mortgage and repay your benefactor.
3. Borrow money from a private second mortgage lender, pay the debt, then refinance down the road. The length of time you wait to refinance depends on the strength of the file, which lender currently holds your first mortgage and when that mortgage is set to mature. A few “B lenders” have second-position financing options, which may suit this approach.
4. Refinance the first mortgage to a “B lender” (alternative lender). The new mortgage amount is ideally large enough to clear CRA completely, and cover all fees and other debts.
5. When there’s insufficient equity to pay CRA in full, it may be time for a negotiated settlement. My own experiences along these lines involve trustees who will file a consumer proposal on behalf of the debtor. Others report they’ve had success with skilled tax accountants.

The right solution will depend on the circumstances of each situation. It’s also important to note there are circumstances where homeowners will not be good candidates for eventual traditional lending no matter how we solve the immediate problem. This often happens when:

• Their income doesn’t meet the stress test qualification rules and they may need to work with alternative lenders allowing higher debt service ratios
• They’re self-employed with income that’s difficult to verify by traditional methods
• Their personal credit history has shut the door to traditional lenders (e.g., multiple insolvencies or recent late mortgage payments)

So, let’s examine the scenarios where each of these approaches is most appropriate.

Scenario 1. Homeowner’s finances and credit are in good shape. The only issue is a large CRA debt where no traditional lender wants to complete a mortgage refinance before the debt is remedied.

This lack of interest by traditional lenders is common when there’s a large CRA debt. CRA is a very powerful creditor which, in some instances, can take preference over all other creditors. This means we need to fix the CRA problem first, and then find the right loan to get the costs as low as possible.

The cheapest solution is to consider asking a family member or close friend if they’ll lend you the money for a short period of time (option 2 above). Funds may only be required for a month or two. If you go this route, your real estate lawyer should be involved to protect your benefactor’s interests. As soon as you can prove to an institutional lender that there’s no tax debt owing, it’s then possible to refinance the traditional way, and pay back your emergency loan hero.

Scenario 2. If you don’t have someone who can bail you out via a loan, then you would move to the second option, which is working with an experienced mortgage broker who can find a suitable lender willing to grant you a second mortgage. Ideally, that mortgage will be open without prepayment penalty. That’s hard to find with a private mortgage, so if the terms would not allow the loan to be open immediately, then having it open after a few months is also a good option. As with the first option, once you have proof of payment for CRA arrears, you should be in fine shape to refinance your primary mortgage with your current lender. That may save prepayment penalties too, depending on your lender.

Scenario 3.Not only is there CRA debt, but the credit history is weak, resulting in a low score. It will take time to bring the file back to traditional lender status. In this case, your best option is to refinance the mortgage with an alternative lender, or first secure a second mortgage for a year or two. Our goal in this scenario is to determine what kind of lender will take on your deal once the situation is fixed; and we will recommend the lowest cost and least painful overall approach.

Scenario 4. CRA tax arrears and other unsecured debt exceeds the amount of equity that can be extracted. Keep in mind, though, if the CRA has already placed a lien on your home, you are unlikely to be able to negotiate a discounted settlement with them.

In this scenario, the homeowners might work with a trustee to negotiate the terms of a consumer proposal. At that point, all unsecured debts, including the CRA debt, are packaged together, and most proposals agree to repay a certain amount of money (usually $x per month) to all creditors over the next five years. With no further interest costs and late payment penalties.

Once the proposal has been accepted by the creditors, it might be possible that a mortgage broker experienced in this sort of lending can arrange a second mortgage to complete a lump-sum payout of the consumer proposal, or even refinance directly to an alternative lender to pay the reduced debt amount

The takeaway

As you can see, when you own your own home there are many options to address the issue of large CRA tax arrears impacting your borrowing power. Obviously, some real estate markets lend themselves to this approach better than others – the more equity you have in your home, the more likely one of these solutions might work.

The key is to deal with the issue ASAP. This situation will not work itself out and CRA will not give up. Oftentimes indecision and paralysis make the situation worse than it ever needed to be.

During the process, it is best to stay in contact with your CRA case officer, and explain you are looking at different ways to raise capital to settle your debt. The process can be painful, but having the right experts on your side will make all the difference.

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Thanks to tighter mortgage qualification rules and higher-priced real estate—particularly in the greater Vancouver and Toronto areas—it’s not always easy to qualify for a mortgage on your own merits.

You may very well have a great job, a decent income, a husky down payment and perfect credit, but that still may not be enough.

When a lender crunches the numbers, their calculations may indicate too much of your income is needed to service core homeownership expenses such as your mortgage payment, property taxes, heating and condo maintenance fees (if applicable).

In mortgage-speak, this means your debt service ratios are too high and you will need some extra help to qualify. But you do have options.

A co-signer can make all the difference

A mortgage co-signer can come in handy for many reasons, including when applicants have a soft or blemished credit history. But these days, it seems insufficient income supporting the mortgage application is the primary culprit.

We naturally tend to think of co-signers as parents. But there are also instances where children co-sign for their retired/unemployed parents. Siblings and spouses often help out too. It’s also possible for more than one person to co-sign a mortgage. A co-signer is likely to be approved when the lender is satisfied he/she will help lessen the risk associated with loan repayment.

Under the microscope

When you bring a co-signer into the picture, you are also taking their entire personal finances into consideration. It’s not just a simple matter of checking their credit.

Your mortgage lender is going to need a full application from them in order to grasp their financial picture, including information on all properties they own, any debts they are servicing and all of their own housing obligations. Your co-signer will go through the wringer much like you have.

What makes a strong co-signer?

The lender’s focus is mainly centred around a co-signer’s income coupled with a decent credit history. Some people think that if they have tons of equity in their home (high net worth) they will be great co-signers. But if they are primarily relying on CPP and OAS while living mortgage free, this is not going to help you qualify for a mortgage.

The best co-signer will offer strengths you currently lack when filling out a mortgage application on your own. For instance, if your income is preventing you from qualifying, find a co-signer with strong income. Or, if your issue is insufficient credit, bring a co-signer on board who has healthy credit.

Co-signer options

There are typically two different ways a co-signer can take shape:

1. The co-signer becomes a co-borrower. This is like having a partner or spouse buy the home alongside a primary applicant. This involves adding the support of another person’s credit history and income to the application. The co-signer is placed on the title of the home and the lender considers this person equally responsible for the debt if the mortgage goes into default.
2. The co-signer becomes a guarantor. In this scenario, he/she is backing the loan and vouching you’ll pay it back on time. The guarantor is responsible for the loan if it goes into default. Not many lenders process applications with guarantors, as they prefer all parties to share in the ownership. But some people want to avoid co-ownership for tax or estate planning purposes (more on this later).

Nine things to keep in mind as a co-signee

1. It is a rare privilege to find someone who is willing to co-sign for you. Make sure you are deserving of their trust and support.
2. It is NOT your responsibility to co-sign for anyone. Carefully think about the character and stability of the people asking for your help, and if there is any chance you may need your own financial flexibility down the road, think twice before possibly shooting yourself in the foot.
3. Ask for copies of all paperwork and be sure you fully understand the terms before signing.
4. If you co-sign or act as a guarantor, you are entrusting your personal credit history to the primary borrowers. Late payments hurt both of you, so I recommend you have full access to all mortgage and tax account information to spot signs of trouble the instant they occur.
5. Understand your legal, tax and even your estate’s position when considering becoming a co-signer. You are taking on a potentially large obligation that could cripple you financially if the borrower(s) cannot payA prudent co-signer may insist the primary applicants have disability insurance protecting the mortgage payments in the event of an income disruption due to poor health. Some will also insist on life insurance.
6. A prudent co-signer may insist the primary applicants have disability insurance protecting the mortgage payments in the event of an income disruption due to poor health. Some will also insist on life insurance.
7. Try to understand upfront how many years the co-borrower agreement will be in place, and whether you can change things mid-term if the borrower becomes able to assume the original mortgage on their own.
8. There can be implications with respect to your personal income taxes. You may accumulate an obligation to pay capital gains taxes down the road. This should be discussed this with your tax accountant.
9. Co-signing impacts Land Transfer Tax Rebates for first-time homebuyers. The rebate amount is reduced based on the percentage of ownership attributed to the co-signer.

Tips from a real estate lawyer

We spoke with Gord Mohan, an Ontario real estate lawyer, for unique insights based on his 22 years of experience.

There's always lots to consider, particularly if you're a first-time home buyer. In addition to helping you find your dream home, your REALTOR® can also help you navigate the new stress test rules and requirements. 

Start by downloading a copy of the Homebuyers' Road Map—a guide covering virtually every aspect related to buying a home. Then, to get an idea of what you might be able to afford, our mortgage calculators includes interest rate risk in its parameters, assuring your estimates will pass the mortgage stress test.

Armed with a little know-how and backed by the support and expertise of your REALTOR®, you'll be on your way to holding the keys to your new home in no time!  

A $5,000 non‑refundable income tax credit on a qualifying home. The credit provides up to $750 in tax relief to assist first‑time buyers with purchase costs. 

Check it our here: First-Time Home Buyers' (FTHB) Tax Credit

Sure, you can afford your home now, but what if mortgage rates go up?

Low interest rates and mortgages have been a fact of life in Canada for some time now. At the time of publication, the 5-year average mortgage rate has hovered around 5% for nearly a decade. This is a far cry from late 1981 when mortgage rates were as much as 21%.

New mortgage rules

In 2017, the Office of the Superintendent of Financial Institutions (OSFI) took steps to help protect lenders and home buyers alike against future interest rate increases. Since January 1, 2018, new mortgages are subject to comparison with higher interest rates than the one issued at the time of the mortgage. Homeowners must be able to afford a mortgage at the Bank of Canada's current five-year average posted rate or at an interest rate that's 2% above what they're currently applying for, whichever rate is highest.

Why OFSI made the move

Perhaps motivated by the foreclosure crisis in the United States, the OSFI felt Canadian consumers needed protection from forces deemed outside of homeowners' control.

The effect of the stress test means you may not qualify for the home you desire. If you're targeting a home with a $700,000 mortgage, for example, you may only qualify for about $550,000 under the new stress test rules. This could make a big difference in your choice of neighbourhoods in certain markets. 

Working the stress test process

The new mortgage rules don't have to be a barrier, however. First, there are ways around the stress test standard, which only applies to federally–regulated lenders. Credit unions, which are regulated at the provincial level, are exempt from stress test provisions. The same is true for private lenders. Alternatively, adding a co-signer to your mortgage can increase your mortgage target, even with the stress test rule in place.

How REALTORS® help

There's always lots to consider, particularly if you're a first-time home buyer. In addition to helping you find your dream home, your REALTOR® can also help you navigate the new stress test rules and requirements.

Start by downloading a copy of the Homebuyers' Road Map—a guide covering virtually every aspect related to buying a home. Then, to get an idea of what you might be able to afford, our mortgage calculators includes interest rate risk in its parameters, assuring your estimates will pass the mortgage stress test.

Armed with a little know-how and backed by the support and expertise of your REALTOR®, you'll be on your way to holding the keys to your new home in no time!  

The International Monetary Fund (IMF) has weighed in on Canada’s housing market, saying it would be “ill-advised” to stimulate housing activity by easing the mortgage stress test.

In a report released by IMF staff this week following an official visit to Canada, the IMF noted the government has been under pressure to “ease macroprudential policy or introduce new initiatives” that would support increased housing activity.

“This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities,” the report reads.

Last week, Conservative Party leader Andrew Scheer said he would eliminate the stress test on mortgage switches at renewal, and consider re-introducing 30-year amortizations for insured mortgages if his party is elected in October.

Research released last month by TD Economics estimated that the B-20 regulations (stress test) resulted in 40,000 fewer home sales in 2018. Similar research from Benjamin Tal, CIBC’s Deputy Chief Economist,  estimated the stress test is responsible for an 8% decline in new mortgages started in 2018, translating into a $15 billion drop in lending activity.

Meanwhile on Thursday, CMHC CEO Evan Siddall said the stress test is “doing what it is supposed to do,” he wrote in a letter dated to the Standing Committee on Finance.

“The mortgage stress test is exactly the kind of policy we need to protect our economy,” Siddall wrote, saying calls from industry groups such as Mortgage Professionals Canada, the Canadian Home Builders Association and the Ontario Real Estate Association to ease the stress test would add to housing demand and price inflation of 1-2% in the larger cities.

“My job is to advise you against this reckless myopia and protect our economy from potentially tragic consequences,” he said.

Earlier this month, Bank of Canada Governor Stephen Poloz called on banks and other lenders to start pushing longer-term mortgages. Last week, HSBC responded by offering a record-low 10-year fixed rate of 2.99%.

That means the peace of mind of knowing mortgage payments won’t change for 10 years can be had for just a quarter-point premium above HSBC’s own 5-year fixed rate special.

In a recent post, RateSpy.com’s Rob McLister called HSBC’s 2.99% 10-year fixed rate offer “simply remarkable.”

But despite the competitive pricing for long-term rate stability, he cautioned that decade-long mortgages still aren’t for everyone, especially if 5-year fixed rates continue to fall.

While someone with a 10-year fixed rate could switch into a lower 5-year rate should rates drop, that would entail penalties—three months’ interest if the switch is made after the first five years of the 10-year mortgage, or a more onerous interest rate differential (IRD) penalty if the mortgage is broken in the first five years.

“That risk, and the small market-implied odds of meaningfully higher rates in five years, are largely why 5-year mortgages still have the edge over 10-year terms, for most people,” McLister wrote.

In a previous interview, Ratehub co-founder James Laird told Canadian Mortgage Trends that 10-year rates are most suited for those who are most risk-averse, as it allows them to set their budget over a longer horizon and reduces the risk of renewing into higher rates, given that renewals are more frequent with shorter mortgage terms.

“The 10-year fixed rate is an insurance policy, so if you’re really, really concerned about rates rising, and really want to take the risk out of your borrowing, it’s that type of consumer,” he said. But he noted that BoC Governor Poloz himself indicated that rates weren’t likely to make any major moves for an extended period of time. “That is not a good reason to go with a longer term. That’s justification for taking a variable rate or a short term.”