Curtis Leibel 780-438-2500

CMHC or Canadian Mortgage and Housing Corp is Canadas major housing agency.  If you intend on purchasing a house and are planning on putting less than 20% down you will be subject to CMHC fees (or other providers).  These fees go towards insuring the mortgage as to protect the lenders against default and foreclosure.

Although it may seem initially that these fees are not necessary and only result in greater expenses for first time homebuyers, the reality is that these fees also help to keep interest rates lower as the risk of the bank losing money on mortgages is greatly reduced.

What can you expect to pay?  Well it is actually a sliding scale depending on the amount of down payment you have (more for only 5%, less for 19,99% down).  The cost of providing this insurance just rose in June 2015 to between 0.6%-3.6% of the total mortgage.

For an example – the average purchase price for a home in Edmonton is currently 347,000.  At 5% down and amortized over 25 years, your mortgage would be $329,650 – this amount of mortgage would come with an insurance premium of $11,867.40.

Here is a handy calculator on the CMHC website to figure out what you may owe on your mortgage: http://www.cmhc-schl.gc.ca/en/co/buho/buho_023.cfm

NOTE – you will not have to pay these fees right up front.  They are usually tacked right on to your mortgage payments and amortized throughout the term of the mortgage

When looking to purchase a condo one of things you will need to consider is parking.  There are many different options that vary between condos – you will want to know if it is covered/uncovered, underground, leased, assigned, titled, powered, single/double/tandem etc….

Here are some things you may want to consider investigating before proceeding with a purchase:

Assigned parking – make sure to do your due diligence to ensure it is actually assigned at that it will be transferred to the new owner.  It would be prudent to have the condo board write a letter confirming that it will in fact be transferred to you.

Titled parking – This is easy to confirm.  Have your Realtor pull the title of the property.  If it is titled it will be listed here.  Also realize that you will most likely have to pay property taxes on the parking stall in addition to the condo unit

Leased – If leased, how much and for how long?  Will you be able to renew the lease as a different owner?

Powered – check to see if there is a plug for your stall.  Also ensure in the condo documents that you are not responsible for the energy fees for the plug (most often it comes from condo fees).

Condo plan – If the parking stall is legal and part of the property it must on the condo plan – which have to be provided as part of the condo documents package

Most importantly – when viewing the property try and find the stall/s in person so you can identify exactly where it is and what shape it is in.

I have a beautiful half duplex for sale in the up and coming community of Laurel.  If you are tired of the seeing the same style duplex over and over, you will be blown away by this one.  The upgrades total over $45,000 and include (but are not limited to) :

– dark hardwood

– custom cabinets

– quartz countertops

– undermount sink

– double door fridge with water dispenser

– natural gas stove

– slow close pullout cabinets

– hidden pantry

– raised bowl sinks

– rain shower head and spray unit

– front load washer and dryer

– oversized 65 gallon water tank

– retractable screen doors on front and back.

-detached double garage, fully landscaped and fully fenced

The list goes on an on!  Come check out this modern one of kind duplex and you will not be disappointed.

Many listings come on the market today with the caveat “GST may be applicable”.  Basically this a lazy way to say you may have to pay GST, but I don’t know for sure.

First of all, it is entirely the sellers responsibility to determine whether or not GST is to be paid.  However, even as a buyer, it is in your best interest to do some research and make sure what the seller has determined is correct, otherwise future issues may arise during conveyencing.

On the surface you can expect to pay GST on the sale of any brand new home or commercial property and buildings, commercial land, and farm land.

On the other hand, any USED residential complexes (including anything lived in, mobile properties and multi family dwellings) are exempt from GST.

Personal use property is also usually exempt from GST – this includes vacant residential lot for personal use, recreational property with a cabin, or a rural property that has never been used commercially.

The biggest grey area for GST is usually around farm land.  If there is any revenue generated from the farm land (pasture or crops) than GST applies – however only to the revenue generating portion (not the house and the land that it resides on).

So – as long as you are purchasing or selling a USED home, GST is not applicable.  However in any other scenario it would be prudent to have you and your Realtor do some further research into the topic, regardless of whether you are on the buying or selling end.

The Alberta Real Estate Board defines it as:

A Home Owners Association (HOA) is created by the developer of a community.  Functions vary, but many HOA’s monitor architectural guidelines or provide maintenance services for the amenities the municipality will not maintain.

More and more communities are beginning to adopt an HOA.  It is important to know if where you are buying will have an HOA because there is a fee that comes with it (Although normally quite nominal ~ $100/year).  Nevertheless, the best way to tell if a community has a HOA is to get your Realtor to pull title on the property you are interested in purchasing.  If there is one, there will be an encumbrance on the home listed right on the certificate.

I generally hear mixed reviews from clients with regard to having a Home Owners Association.  Communities with a HOA have higher aesthetic appeal due to the restrictive architectural guidelines.  However you could be subjected to uncontested fee increases and may need to seek approval for any additions/changes to your property.  Either way is important to have your Realtor do the research to determine how a HOA may or may effect you and your new home.

There are many different costs that buyers may incur when purchasing a home – property inspections, appraisals, legal fees and Real Estate transfer fees among others.  Well, as of July 1st, expect to see buyers costs rise as transfer fees are set to quadruple.

Currently, Alberta’s land transfer fees are among the lowest in Canada.  Presently sitting at about 0.02% of the cost of the purchase, fees are now set to rise to 0.12%.  So how much extra can you expect to pay?

Assuming a $500,000 home with a $400,000 mortgage:

Land title registration:

Prior to July 1st 2015 – $150                    After July 1st 2015 – $675

Mortgage Registration;

Prior to July 1st 2015 – $130                    After July 1st 2015 – $555

So, an average home purchase in the city of Edmonton after July 1st 2015 will cost about $1230 in registration fees – almost $1000 more than it was previously.  Not that it makes it an easier pill to swallow, but even with this substantial hike, Albertas fees still remain significantly lower than other big markets such as Vancouver and Toronto.

So if you were thinking of buying a home in the near future it might be a good idea to start looking.  A closing date of June.30 or earlier will save you $1000.

When taking possession of your new home/condo, you usually have some ideas on how to make it your own.  This could be anything from changing some light fixtures, repainting or even entire kitchen renovations.  If you live in a condo, it is important to know what you can and cant do before tearing walls apart.

Now every condo board is slightly different in how they deal with this, so it is important to thoroughly read through the condo bylaws as well as talk to the Board of Directors to get an understanding of the process your condo conforms to.   More often than not you will need written permission from the Board before proceeding.

Most bylaws will include a clause along the following lines:

“owners shall not make structural, mechanical or electrical alterations to the owners unit or to the common property without the prior written consent of the board”.

If a renovation is done improperly or doesn’t have the approval of the Board, the condo corporation has the authority to charge back all costs associated with returning the condo to its original state.

As an example – some things that are generally considered just decorative and don’t need board approval may include painting and changing light fixtures.  Others that are generally assumed to be renovations and thus need approval may include bathroom vanity replacement, electrical upgrades and hardwood flooring installation.

It is important to stress that every condo corporation has slightly different bylaws and procedures when it comes to renovations, so it is imperative you inquire and do the necessary research before proceeding.

When purchasing a new home, it is a good idea to include a property inspection condition.  It gives you a chance to bring in a professional  to examine the property thoroughly in order to find any defects.  A lot of new buyers don’t know what to expect from this and can often be overwhelmed with the amount of items that may need fixing/proper maintenance.  Here is a list of things that seem to come up in almost every inspection:  (Keep in mind that most of these come up in older houses, because the current standards have since changed)

1) Grading – over time, ground will settle and erode.  This can be made worse by poor landscaping, plugged eavestroughs, wind exposure, etc.  This can lead to huge water problems in the future if not addressed, however it is a very easy remedy to rebuild the grade if you are aware of it.

2) Frost free hose bibs – outdoor taps that prevent freezing and burst pipes inside the house.

3) GFCI plugs – any plugs nowadays that are within arms length of sink or water supply should be a special GFCI plug which can stop the current and reduce the risk of shock.

4) Caulking – over time caulk can shrink and crack and lose its effectiveness.  In heavy use areas it should be replaced every 5 to 10 years

5) Grout – same concerns as with the caulking

6) Shingles – Although the shingles may only be 5 years old, there may be areas of wear which are in much worse condition.  Valleys will see the most damage, as well as areas which are missing connectors from one roof level to another lower level.

7) Hot water tank – The age can usually be found in the serial number.  Most tanks are usually missing a discharge tube which should be inserted to reduce the risk of scalding should there be a malfunction.

8) Dryer venting – a lot of Dryers are vented to the exterior through a plastic tube which can be a fire hazard

9) Smoke detectors/carbon monoxide detectors – all newer furnaces require a carbon monoxide detector be installed.  As well, a lot of smoke detectors will have dead batteries or be located in poor positions.

10) Stove venting – a lot of older stovetops are not properly vented to the exterior.

This is a list of things that will most likely come up (among many others) when completing an inspection on an older house.  It is important to not become overwhelmed by the list, but to understand it is merely suggestions in order to get your house up into tip top shape.  The majority of these items are cheap easy fixes that just require a little care and attention over the years.

One thing that I always recommend to buyers when purchasing a property is pulling title on it before writing an offer.  Numerous items may show up; restrictive covenants , encumbrances, and liens – lets take a brief look at a liens here.

A property lien is defined as a legal claim on a tract of real estate granting the holder a specified amount of money upon the sale of the property.  Liens are often registered against a property acting as collateral for owed money.

There are many types of liens, the most common being mortgages.   Other liens you may potentially come across: from the city (property taxes oweing), Canada Revenue Agency (personal taxes oweing), Condo corporation (condo fees), lenders of second mortgages, or construction/renovation liens.

Any lien other than a mortgage could raise some red flags as to the ability of the owner to sell the property.  It is important to note the price you are purchasing the property vs. what is oweing against the property in order to avoid any headaches or delays down the road when transferring the property.

“Financing” condition and “Property Inspection” condition tend to be the 2 most common conditions on purchase contracts in Alberta.   You can do a lot to help your lending potential (increase income, decrease expenses) but ultimately the lender has the final say on what you can or can not be approved before.

I bring this up, because sometimes there are other circumstances that may affect lending ability specifically when purchasing a condo.

Size of the unit is often a concern.  In fact, if the unit is under 500 sq ft, certain lenders may not approve the lending and thus result in the termination of the purchase. It is important to clarify this with your lender before putting an offer in.

Condo documents can also play a role in approval.  Buildings that have been subject to special assessments, or could be subject to one in the future, may be disapproved by the lender.  It is always a good idea to go through the condo documents with extra scrutiny just for your own purposes as well to avoid unexpected costs in the future.

Another thing they may look at is percentage of owners residing in property vs. renters.  If there is a disproportionate number the lender may see this as a negative.

The unfortunate thing when purchasing a condo is that often these things can be out of your control, so it is up to the lender to decide whether or not they approve of your purchase.  The best thing to do is to give them as much information as possible and the necessary time to examine everything sufficiently.