Buying a house can be an exciting, but complex process. So when you embark on your journey, one of your first stops should be familiarizing yourself with the lingo.


We've curated helpful information from our Homebuyers' Road Map and Tips for Buyers, to share with you some of the most important terminology a new buyer needs to know—from pre-purchase to post-purchase.


Before you buy

First things first, you need to find yourself a REALTOR®. A REALTOR® can bring you peace of mind thanks to their experience and professionalism. From helping you find a home that meets your needs and price range, to negotiating your purchase price, directing you through complex contracts, a REALTOR® is an important part of your home buying journey. 

While it's exciting to start visiting open houses, you must first determine how much a mortgage lender is willing to let you borrow to purchase your first home. Your mortgage is a loan that can help you cover the cost of buying a home. How much you're able to borrow will depend on factors including your total current debt, monthly household income, how long you’ve been at your current job and how long it will take you to pay it back: Introducing the amortization period. A longer amortization period means lower monthly payments but higher interest rates. 


Mortgage lenders use Principle, Interest, Taxes and Heating (PITH) as a tool to ensure mortgage affordability by determining the monthly payments that can be made by the home buyer. The REALTOR.ca mortgage affordability calculators can help you perform your own PITH test to estimate affordable mortgage payments.

When taking out a mortgage, home buyers grant the bank a lien on the property. This gives the bank the right to seize your property in the event you don't repay your mortgage.


Types of mortgages: 

  • Fixed-rate mortgage: Your interest rate is locked in for a specified period called a term. Your payments stay the same for the mortgage's term so you will not pay more even if interest rates increase over time.
  • Variable rate mortgage: The rate of interest you pay may change if rates go up or down.
  • Conventional mortgage: Requires a down payment of 20% or more of the property's value. You're not required to get mortgage default insurance with a conventional mortgage.
  • Closed mortgage: The mortgage cannot be paid off early without paying a prepayment charge.
  • Open mortgage: A mortgage that can be paid off at any time during the term, without having to pay a charge. The interest rate for an open mortgage may be higher than for a closed mortgage with the same term.

Now that you know how much you can afford, your REALTOR® can help determine what type of neighbourhood you want to live in and what type of house you want to buy.


Buying a home

You've found your dream home…now what? It's not time to pack your bags just yet. There are many expenses you must consider beyond the purchase price (the price you're willing to pay for the house). 

You need to consider how much of a down payment you can afford. This refers to the initial up-front portion you pay against your home purchase. The larger the down payment, the smaller your mortgage. Are you a first-time home buyer with a Registered Retirement Savings Plan (RRSP) account? You can now withdraw up to $35,000 without paying income tax through the Home Buyers' Plan.


Other factors you may want to consider at this stage are:

  • Property taxes: This annual fee, imposed by the local government, pays for services like public education, local police and libraries. 
  • Home insurance: This is a form of property insurance protecting you financially in the event of damages or losses to your home and its contents. In most cases, you can include these payments in your monthly mortgage payment. 
  • Home inspection: Even if the home appears to be flawless, many home buyers arrange a home inspection as a condition of their purchase. Hiring a professional to inspect the overall condition of the home can cost a few hundred dollars, but can reveal any serious defects.

Now that you have figured out all of the costs associated with your purchase, you're ready to make an offer. An offer to purchase is a formal, legal agreement made between the buyer and seller which often contains certain conditions. This is commonly known as a conditional offer and includes factors that must be met in order for the sale to be successful such as financing terms, appliances and fixtures, inspections and the physical condition of the house. 


Generally, the seller has between 24 and 48 hours to accept, reject or counter-offer. This is known as irrevocability of the offer, the length of time the seller has to consider your offer. 

Once your offer is accepted, you will need to determine your closing costs. This includes your mortgage broker's fee, real estate commissions, moving costs, title insurance—an insurance policy protecting you against challenges related to the title of your home—and more. 


While there's a lot more lingo in the real estate dictionary, hopefully you now have a better understanding before taking plunge into one of the biggest single purchases you’ll ever make. These resources available on REALTOR.ca may also help you along your journey to homeownership:



Source: Realtor.ca/blog

https://www.realtor.ca/blog/postpage/11596/1362/real-estate-terms-cheat-sheet

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The Canadian Real Estate Association says sales were slightly lower than November, but way up year-over-year


The Canadian Real Estate Association says home sales in December were up 22.7 per cent compared with a year ago when sales were relatively quiet.


The association says sales in the final month of 2019 were up compared with a year ago earlier across most of Canada, including all of the largest urban markets.


On a month-over-month basis, home sales in December were down 0.9 per cent.


The decline ended a streak of monthly gains that began last March.


The actual national average price for a home sold in December 2019 was about $517,000, up 9.6 per cent compared with a year earlier.


Excluding the Greater Vancouver and Greater Toronto Area, two of the country's most expensive and active housing markets, the average price of a home sold was about $400,000, up 6.7 per cent compared with December 2018.


The obvious follow-through from this increasingly tight market is that prices are starting to respond," said Douglas Porter, chief economist for BMO Economics.


"The MLS Home Price Index, which adjusts for shifts in the types of homes purchased, rose 3.3 per cent year over year. While that seems mild, it's a big pick-up from the outright declines reported in the first half of the year and is now running at its fastest pace in almost two years."


Source: CBC news https://www.cbc.ca/news/business/december-home-sales-crea-1.5427587

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Have you ever considered building a skating rink in your backyard, but didn't quite know where to start? With so much to think about we spoke with two outdoor rink hobbyists, Devon Kunkel and John Houghton, to see what's needed to accomplish this wintry project.


Since all backyards are different, there's more than one way to create an ice rink. For example, Devon lives in a residential area and used purchased materials to build his, while John's rink receives extra help from Mother Nature thanks to his rural location (his yard partially floods each November). 


Timing and location

While you're waiting impatiently for winter to arrive, determine the rink's size—16 feet wide by 24 feet long, for example. Before the ground freezes solidly (it's OK if just the top half inch of soil begins to harden) is the best time to put your rink's perimeter in place. This also ensures your grass is dormant and avoids smothering it. If you wait until after it snows, you'll have to shovel or hope for a thaw before installing the perimeter.

When choosing your rink's location, consider how water drains from your yard. Avoid an area that will drain towards your home or your neighbours' and remember, flatter is always better. While you want to select a flat area away from your house, you want it to be close so a hose will reach, and where exterior lights can provide adequate coverage for night skating. If there's a slight slope, the 6” high boards should be enough to handle the increased ice depth at the lower end.

Pro tip: Before starting anything, always check with your municipality to determine if any bylaws or restrictions might affect your dream rink. Some municipalities require a permit to build one.

Materials

To start, you'll need rink-building materials, plus a few essentials to maintain your ice. Devon says a good quality hose, rated for winter use and long enough to reach the farthest ice with a spray attachment, is extremely important. A snow scoop and push shovel are ideal to clear snow accumulations. 

Complete rink kits, ranging from $80 to $700 or more, are available through national retailers, but if you'd like to build it yourself, these materials will do the trick for around $200 to $250 (excluding tools):

  • 2” x 6' pressure treated boards (which usually come in 8 foot lengths)
  • 2” x 2' pressure treated boards, cut to 8” lengths and tapered at one end
  • tarps or heavy plastic sheeting — use a single sheet that overlaps the entire area
  • 3” brass wood screws
  • cordless drill
  • mitre or hand saw
  • rubber mallet

Assembly

  1. Measure your area and set your perimeter boards, placing three stakes per 8-foot length.
  2. Beginning with the first board, hammer the stakes two inches deep into the ground.
  3. secure each board to the stakes using two screws per stake, ensuring all boards fit snugly end-to-end.
  4. Stretch and flatten your tarp or plastic sheeting across the area so it covers and overlaps the perimeter.
  5. Use your hose to fill the tarp with water to a minimum depth of two inches. 
  6. Allow the water freeze completely then hit the ice!

Pro tip: If you time your assembly just before a heavy rainfall, Mother Nature will help fill the rink for you.


Accessories

You can't forget about providing a spot to change into your skates. Folding or camp chairs are perfect for this, as you can place the back legs over the boards to keep them secure. Plastic patio chairs are also perfect supports for novice skaters as well, because they have a wide base and slide easily on ice.

If you're a hockey family, nets are a must. If lighting is a concern, this can be solved by installing posts before winter and securing outdoor floodlight fixtures with extension cords. A selection of halogen or energy-efficient LED plug-in outdoor floodlights can be found at your local hardware store, starting from about $50, including fixtures and bulbs. John says snowbanks from shoveling are perfect for the kids to make their own benches and double as natural hockey stick racks.


Maintenance

To keep your ice in tip-top shape, shovel promptly after each snowfall. Snow insulates and can stick to the ice in milder temperatures. Use your hose to evenly cover the ice with water. For best results and to prevent sheet ice—which is thin, brittle layers of ice—Devon recommends using the hose attachment's mist setting because it adheres evenly to the existing ice without creating a separate layer. 

Make sure to store the hose someplace warm after each use and turn off outdoor taps from inside, with the external valve open to avoid freezing pipes.


Spring

The rink ice should melt gradually with the snow each spring. As soon as the ice is thawed you can remove a section of the perimeter to drain the water. Be sure to pull up the tarp before it gets too warm so the ground can dry out and aerate. John says there should be no lasting damage as long as the rink is installed and removed while the grass is dormant.


From planning to takedown, by following these tips, your family is sure to experience hours of active, outdoor enjoyment through the winter. Happy skating!


Source: Gord Brown @ Realtor.ca/blog


https://www.realtor.ca/blog/postpage/11576/1367/build-your-own-backyard-skating-rink

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Jamie Golombek: For one, there's an increase to the basic personal amount Canadians can earn before facing federal income tax

This week, the government announced increases to the basic personal amount for 2020 and subsequent years beyond the normal inflationary adjustment. Let’s review the changes to the BPA and also take a look at some of the new tax numbers coming for 2020.

ANNUAL INFLATION ADJUSTMENT

Each year, most (but not all) income tax and benefit amounts are indexed to inflation. In early December, the Canada Revenue Agency announced that the inflation rate that will be used to index the 2020 tax brackets and amounts will be 1.9 per cent. This rate was calculated by taking the percentage change in the average monthly Consumer Price Index data as reported by Statistics Canada for the 12-month period ended Sept. 30, 2019 relative to the average CPI for the 12-month period ended on Sept. 30, 2018.


Increases to the tax bracket thresholds and various amounts relating to non-refundable credits take effect on Jan. 1, 2020. Increases in amounts for certain benefits, such as the GST/HST credit and Canada Child Benefit, however, only take effect on July 1, 2020. This coincides with the beginning of the program year for these benefit payments, which are income-tested and based on your prior year’s net income, as reported on your 2019 tax return.


TAX BRACKETS FOR 2020

For 2020, we will continue to have five federal income tax brackets, but they will all be indexed to inflation using the 1.9 per cent rate. The 2020 federal brackets will be: zero to $48,535 of income (15 per cent); above $48,535 to $97,069 (20.5 per cent); above $97,069 to $150,473 (26 per cent); above $150,473 to $214,368 (29 per cent); and anything above that being taxed at 33 per cent. Each province also has its own set of provincial tax brackets, most of which have also been indexed to inflation, but using their respective provincial indexation factors.

BASIC PERSONAL AMOUNT (BPA)

The biggest change for 2020 will be to the BPA. The stated purpose behind the BPA is “to help all Canadians cover their most basic needs” by imposing no federal income tax on a certain amount of income that an individual earns. The 1966 report of the Royal Commission on Taxation (known more commonly as the “Carter Commission”) concluded that “the first dollars of income should not be subject to tax.”


The Commission argued that “clearly the fraction of income available for discretionary use is extraordinarily small for a (low-income) family” and noted that “such a family (also) bears sales and property taxes that are disproportionately large relative to its ability to pay.”

The BPA is the mechanism used to ensure that no tax is paid on a certain amount of basic income and is $12,069 for 2019. This means that an individual Canadian taxpayer can earn up to this amount in 2019, before paying any federal income tax.

For taxpayers earning above this amount, the value of the federal credit is calculated by applying the lowest federal personal income tax rate (15 per cent) to the BPA, making it worth $1,810 in 2019. (Because the credit is non-refundable, it’s only worth the maximum amount if you otherwise would have paid that much tax in the year.) In 2017, the most recent tax year for which we have publicly-available data, nearly 27 million taxpayers claimed the BPA.

Each year, the BPA is indexed to inflation, meaning that for 2020, the inflation-adjusted BPA would have been $12,298 (i.e. $12,069 X 101.9 per cent), absent this week’s announcement. On Monday, the government announced that it is moving forward with its proposal contained in the Liberal election platform to increase the BPA, gradually, to $15,000 by 2023. For 2020, the new BPA will be $13,229. It will rise to $13,808 in 2021 and $14,398 in 2022.

But the increase in the BPA won’t apply to everyone as it will be phased out “for wealthy individuals … to ensure that this tax relief goes to the people who need help most.” Specifically, the increase in the BPA would be gradually reduced, on a straight-line basis, for taxpayers with net incomes above $150,473 (the bottom of the fourth tax bracket for 2020) until it has been fully phased out once a taxpayer’s income is over $214,368 (the threshold for the top tax bracket in 2020), to ensure “the wealthiest Canadians would not benefit from this proposed change.” These high-income taxpayers would simply receive the existing BPA, which will continue to be adjusted annually for inflation.

According to the government, the increased BPA translates to lower taxes for close to 20 million Canadians and once fully implemented in 2023, would save individuals nearly $300 in additional taxes beyond the inflation-adjustments annually. It would also relieve an additional 1.1 million Canadians from paying any federal tax. The cost of the increase to the BPA is projected to be $25.2 billion over the next five years.

CANADA PENSION PLAN CONTRIBUTIONS

CPP contribution rates for employees and employers will each increase to 5.25 per cent in 2020, up from 5.1 per cent in 2019. If you’re self-employed, you pay both the employer and employee portions, for a total of 10.5 per cent. The maximum pensionable earnings for 2020 is set at $58,700. The ceiling is calculated according to a legislated formula that takes into account the growth in average weekly wages and salaries in Canada. Quebec employees and employers contribute to the QPP at a slightly higher rate — 5.70 per cent in 2020 (up slightly from 5.55 per cent in 2019).

As a result, the new maximum employer or employee contribution to the plan for 2020 is up slightly to $2,898 ($3,146 in Quebec) and the maximum self-employed contribution is double that, or $5,796 ($6,293 in Quebec).

EI PREMIUM RATE AND MAXIMUM

Employees must also pay employment insurance premiums, with employers paying 1.4 times the amount of the employee’s premiums. For 2020, the EI rate is dropping to 1.58 per cent (from 1.62 per cent) of insurable earnings, up to a 2020 earnings maximum of $54,200. This translates to a maximum employee premium for 2020 of $856.36. For Quebec employees, the maximum employee premium for 2020 is $650.40. EI premium rates are different for residents of Quebec because Quebec administers its own parental insurance plan, which is financed by Quebec workers and their employers.



Source:  Financial Post


https://business.financialpost.com/personal-finance/taxes/these-are-the-tax-changes-you-need-to-know-about-for-2020

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