Do you have a green mortgage and a green home?

Hey everyone, hope Father's Day is off to a good start on this sunny day in Montreal. Today, I got inspired to write about having a green home. Often we all talk about being green by participating in our city's recycling and composting programs. I think we are all pretty green minded but post-recycling and car pooling we're not sure what next.

Personally, I don't think we do enough for the environment nor are living in a sustainable manner. As home owners or future home owners there are three ways you can help your pocket and help the environment, by: either buying an energy efficient home, making energy efficient renovations to your new home or renovate your existing home.

When buying an energy efficient home (or making energy efficient saving renovations), should you meet certain criteria both CMHC and Genworth will refund 10% of your insurance premium. On a mortgage of $200,000 you would save approximately $500 on your premium. According to the Quebec Government, by making these changes you'd save approximately 20% on your energy costs. Furthermore, through the Quebec Government's Novoclimat 2.0 Program you'd receive an additional $1000 in financial assistance. Is saving $1500 upfront and 20% on your energy bills enough? Let's take this discussion a bit further...

As many of your know I like Mike Holmes and the innovative ideas he shares. If you read his website you will see lots of green home ideas, which includes: roofing, heating and cooling, alternative lighting, power, and improving the building envelope. The aspect I find most interesting is water use. Mike talks about greywater, which is "used water that comes from sinks and drains, as well as reclaimed rainwater collected from a home’s roofs." The greywater is then held, filtered and sent back into the house for re-use. The water cannot be used for drinking, showering or bathing but definitely useful for watering the lawn, laundry, washing your car, and flushing toilets.

Mike states there are no Federal or Provincial building guidelines for greywater systems. In addition "Each individual municipality accepts or rejects proposed greywater systems that homeowners might want to install."

I am glad that Mike and people like him are sharing these ideas. I just wish our governments were a bit more ahead of the times by adopting more green building codes and help bring these topics into mainstream discussion.

Reviewing Mike Holmes on renovations and creating value

Mike Holmes is back at with another article that I enjoyed reading entitled, "Fix-ups to push up your property value." In the article, Mike shares how to create value or increase value in your home, which I would add is also applicable to investment properties.

Mike poses the most fundamental question: What does valuable mean? Not every renovation adds value to your property. Sometimes renovations solely make the property more durable or energy efficient (new windows, doors, insulation). I agree with Mike, that these make for a happy homeowner because energy costs can decrease. I think that when it comes to renovations it all depends what your goals are. Perhaps your goal is an income goal or you want to flip the property or perhaps you'd like to renovate, rent and refinance the property to buy more.

Mike's tips are awesome:
1. Don't curb curb appeal
2. Fix roof problems
3. Clean the property before listing

I have some clients that realized that the the cost of renovations don't always translate into 100% market value. This is especially applicable with a purchase plus renovations or refinance plus renovation project financing. Depending on the size of the renovations you're looking at it's worth to have a proper home evaluation to determine present and future value post-renos.

At the moment the vibe I am feeling in the Montreal market is: renovate, maintain and hold your properties. It's a good time the weather a bit of the market storm.Your thoughts?

Reviewing Mike Holmes: "Home Inspections Benefit Buyers and Sellers"

I always try to keep an eye out on articles written by Mike Holmes. This time Mike writes about the benefits of home inspections. Mike's article is actually reprinted in yesterday's Montreal Gazette. It shouldn't come as no surprise that we're in the buying season and that it's a good idea to get a home inspected by a professional before buying. Having said that, Mike also suggests that you have an inspection completed on your own home before listing it for sale.

Mike Holmes at a speaking engagement 

Photograph by: Alex Schuldt/The Holmes Group, Postmedia News

Mike suggestion makes total sense because selling one's own home can be an emotional process and it's a good idea to get an idea of any unforeseen problems you might have with your home. Wouldn't you rather have your inspector catch any issues up front than a potential buyer's inspector? Being more proactive will most likely get you a better sale price in the end. It will be up to you whether you decide to fix an pre-identified problems. Should you not repair any issues in advance of listing then expect your price to negotiated hard once a buyer's inspector finds problems or repairs to be completed.

Mike also suggests that you have your inspection report ready and available for any future buyers (referencing even the contractors used) visiting your home. Here Mike is also very skeptical of inspectors that are referred by real estate agents. He says you want to get an inspector that does the job not one that lightly reviews a home and may not "catch" all problems. A home inspector in such a situation might do this because they want to keep getting referrals from the agent. Last year, I had two purchase transactions where I was shocked that my client's inspectors did not catch some major items and now my clients are now either in court or given up and financing the problems themselves.

Reviewing: Mike Holmes' article "8 Tips for planning a reno in 2014"

Hey everyone. I've been blogging a lot lately about renovations. I came across an article that might be of interest to folks. The Montreal Gazette published an article written by Mike Holme's entitled "8 tips for planning a reno in 2014."

In a nutshell, here are Mikes main renovation tips:

1. Right off the bat, Mike states, "Make decisions before you start. I've said it a million times. It takes longer to plan a renovation than to do it. The more time you spend making decisions before construction starts, the less time will be spent on actual labour, which helps control costs and work schedules."
2.  Find qualified pros: Mike suggest that you not rely on friends or family for recommendations and that you get 10-20 references for any contractor. He says, don't only look at recently completed projects and to check out work sites in progress.
3. Do a background check: Here Mike suggests that you do a background check. Bad contractors change incorporations to cover their tracks. Try speaking with the Better Business Bureau.
4.  Get a detailed contract: Mike states the more detail in the contract the better. It should review and specify every task. 
5.  Set up a payment schedule tied to project milestones: He also recommends that milestones be specified and that stages be completed and inspected before moving onto the next part of the reno.
6.  Discuss changes: Every time there is a change, Mike states, this causes delay and can increase costs. Speak openly with your contractor to ensure whether the change is worth this effort and delay.
7. Know the work schedule: This includes the daily work hours of the workers. Mike states if the workers visit the work site here and there at random hours then this will throw the timeline off track.
8. Should you stay or should you go? Mike suggest that during major renovations you should move out temporarily. Living through construction is never easy especially with young children and a busy work-life schedule. If you stay in your home Mike states that the workers will also spend more time cleaning daily at your expense rather than working faster towards project completion. 

Mike's tips are excellent. Like Mike, I am a huge fan of planning ahead before starting any project. The one part that Mike doesn't mention is financing. Here it's important to know what is your budget and how will you finance the renovation. Your dream project may need to be scaled down if it cannot be financed.

You may have the money in hand which helps tremendously or you may need a mortgage. Your two options here would be: 

(A) Auto-construction financing where the bank will give you a special mortgage that disperses funds (up to five dispersals) for the contractor at various milestones in the project. Here the bank will need to approve your contractor and project plan. 

(B) Refinance and use the net proceeds towards the construction. Here you will be in charge of the all the funds at once. Here the the bank may not need to see plans and budget. In both financing scenarios, it's important to stay on budget as the bank won't give you additional funds once the mortgage is notarized. 

Mike Holmes' magazine on mortgages & the buying process

This past weekend I was reorganizing my chaotic office and came across an old issue of Mike Holmes' magazine. In it there was an interesting article about first time buyers called "The first time home buyer's guide" published in the May 2011 edition. In the article Nathalie Rodriquez outlines a step-by-step process to buying your first home. Some of the content jumps between content relevant to Ontario residents and US citizens hence I have translated the information into what is important in Quebec plus added my two cents.


Save cash to build a down payment nest egg. Clearly this shouldn't be a surprise to anyone. We've discussed this issue on several radio shows and I've blogged about it.

Get a pre-approval letter. I agree a pre-approval is critical as it is an initial review of your finances, credit and ideally creates proper budget for a buying that first property.

• (A) All banks and mortgage insurers in Canada base their income to debt ratio based on your "total debt service ratio" or TDS. The TDS accounts for your gross declared income and takes a walk into the future by accounting for annual future mortgage payments, property taxes, home heating, and all outstanding debts. In short, between 42-44% of your gross income can be diverted to managing these total debts. Clearly the TDS calculation does not account for all household debt and other personal obligations. I like how the article emphasizes other debts and obligations but also future anticipated debts. This is something I always try to explain and drive home to clients that are looking to buy. Buying has to make sense now but also in the future. 

• (B) Another great point the article mentions is that if you have a pre-approval with a bank you are not obligated to stick with them. The only time pre-approval becomes binding is when your mortgage actually becomes notarized. Something not mentioned is that even if you've signed for the mortgage in-branch it isn't binding yet either. I have a client that went to "mortgage signing" at a branch and was so badly taken care of that she walked out and we moved the mortgage to a virtual lender that same day. 

• (C) A pre-approval I will add also is very helpful in that any problem areas such as credit, income taxes owed and filing your taxes can be quickly identified and addressed. Nothing worse than being under a financing deadline for a purchase and losing that dream house because your paperwork wasn't in order.

Work with a realtor and start house hunting. Find the right realtor that genuinely works with you. Don't be shy and interview realtors if you must. Also, Buying your first time house is a contact sport. In other words, get out there and see what you like and don't like. I also like how the article mentions to shop smart.  Do your homework on the property and area, i.e. drive past it during the night, get a feel for the road traffic around, research the quality of schools in the area, check out neighborhood websites. If any major renovations have been completed why not research the permit history.

Order an inspection & make an offer. A proper inspection can take 3 to 4 hours and you should have a report in your hands within a few days. The report should outline any fixes, current problems or even potential future problems. Rodriquez is correct in that both lenders and insurer won't provide a mortgage on a property if there are major issues such as foundation concerns. Given my experience if your inspection report highlights major foundation issues and your go back to the vendor to adjust the price, the bank will probably see the price amendment and they could ask questions. Rodriquez is not a fan of offering more than asking price. I agree that this could go against your pre-approval and all prior budgeting. Second, don't feel pressured by anyone. Keep in mind that there are many other options out there on the market. More and more properties will be put on the market in the coming weeks.

If you've never put in an offer on a house your real estate broker hopefully will help you out. With your inspection completed you may also be able to renegotiate that offer price. Don't be afraid to request a final walk through before closing at notary. Ensure that the property is in the same condition that you saw when you made your initial offer.

Closing & occupancy (aka act of sale or notary). A week or two prior to the closing date on the property your notary will call you to book your appointment and give a check list of things to bring with you (photo ID, certificate of location and proof of property insurance). Some notaries host one meeting for the title and hyothecary loan, while most will split them up into two separate meetings.

Overall Nathalie Rodriquez's article is useful for first time buyers. Some of the article is confusing as she flips between US and Ontario-relevant content. Having said that I like that she distinguishes between going with a bank or mortgage broker. I disagree with her point that through a mortgage broker banks won't be as willing to overlook credit issues. Lastly, I completely disagree with her that through a mortgage broker mortgage terms can be "riskier." As a mortgage broker I look out for my client's interests now but also help them plan for the future. Your not gonna get that experience at the bank.