Green Energy Act

Home-owners will be facing some big changes on the home selling process, if Ontario’s new Green Energy Act is passed through and fully implemented. One of the stipulations of the new Act, is that anyone who is selling their home, will be required to have an Energy Audit on their home.

I wrote about this home Energy Audit process, in a December 6th, 2008 blog entry, not knowing at that time, that this type of Energy Audit would make its way, right into a new Ontario government Act! While the Act has not been implemented yet, there is discussion in the news, that this proposed legislation, will march right through to full approval taking many homeowners by surprise as new requirements are forced on them.

As a homeowner, you might be asking, so what exactly is an Energy Audit anyway?

An Energy Audit is conducted via a visit to your home, by a trained and experienced advisor. The advisor would conduct tests and then document their recommendations on where energy efficiency can be optimized in your home. The advisor would then prepare a final detailed report to the homeowner that would give a detailed list of what changes or upgrades are recommended to make the home more “energy efficient”. The homeowner would then use this report to carefully consider their options. Some examples might be, a recommendation to change older windows and doors, install new improved heating and cooling systems, upgrade insulation, etc. The homeowner could then decide what upgrades they would like to do, based on the report provided.

This news is very fresh and therefore, I am quite sure two things will happen: 1) homeowners will be unhappy about having to disclose energy efficiency reports to interested buyers and will not likely to be happy about facing expensive upgrade costs before they can sell their homes.  Even though grants are available, homeowners must still come up with the money to complete the upgrades.   In a housing market where home values are decreasing and homeowners already facing shrinking available home equity plus the rise in household debt-loads, this will be a new cost that homeowners will not be able to easily absorb.

2) realtors will not like it either as interested buyers walk away from listed homes that just are not up to energy standards in listings where homeowners are unable to invest into needed upgrades to the home.

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent (license # M08005880) with Mortgage Edge in Richmond Hill, Ontario.

Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or visit her website at:  http://www.missmortgage.ca

Ontario Mortgage Brokerage licenses are being revoked or suspended

The Financial Services Commission of Ontario has identified 79 Brokerages that have failed to pass audit inspections for carrying satisfactory E&O insurance coverage.

Please visit the following link to see the Brokerages that failed to comply as of this date:

http://www.fsco.gov.on.ca/english/licensing/mebonline/enforce/mortgage/brokerages/default.asp

FSCO will continue ongoing audits and compliance in the industry, and consumers are thankful for it.

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.

Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Beware of hasty mortgage switches

We are now in an environment of lower interest rates. Perhaps you are the person who is sitting in a mortgage rate at 5.7% and the thought of moving to a mortgage rate of 3.50% has you very tempted. Before you do anything, you must be absolutely sure that your mortgage penalty is not going to be a shocking surprise.

There are two formulas used to calculate a mortgage penalty, the first is the standard three month’s interest penalty, and the second is IRD: Interest Rate Differential.

The following link will show you how these two mortgage penalties are calculated:

http://www.fcac-acfc.gc.ca/eng/publications/mortgages/PenaltyCharges-eng.asp

Banks will sometimes use the IRD calculation, especially in an environment when interest rates are declining. It is very unfortunate that many individuals do not understand this, or have this explained, when they are signing a mortgage contract.

I witnessed, this week, a close neighbour, who visited her bank. She was moved from a 4.6% to a 3.6% mortgage rate. She thought this was a wonderful deal, however, she was required to pay a $5,000 mortgage penalty. I sat down with her, and showed her the amortization schedules based on the two mortgage rates, over five years, and demonstrated that her savings would only be a grand total of $2,000. She had been misled by the banker to focus only on the “great rate” but failed to properly advise the client that the savings on the lower rate were really washed away by the monstrous penalty amount. A move that was probably motivated by a desire to get a new mortgage deal on the books and bump up their sales numbers and at a very serious expense to the client. Others, I am sure, are all happily breaking mortgage contracts, without really understanding the numbers. This neighbour had already signed all of the paperwork with the bank and she hung her head in shame, that she did not contact me first to help her understand the implications of a new mortgage. Be careful you are not lured by the “great rate” especially when there is a handsome penalty associated with the move.

If you are concerned about how your own mortgage will look, with a move to a lower rate, please call me to show you the real numbers.

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 /  Brokerage Lic # 10680

What is a mortgage discharge fee?

I received an email from someone who found my website on the internet, asking me why they were charged a discharge fee, by their bank, when they paid off the full balance of their mortgage. This was a fee that they were surprised to see and they were checking with me to see if that was a valid charge that they had to pay.

I explained to this person that this was most definitely a valid fee and that they should go back to their original mortgage contract/mortgage commitment to read the fine print, listed somewhere in their document. If you refer to the fine-print of your mortgage agreement/commitment, you will see it there listed under a “fees” section and it will list all standard fees borrowers will pay in certain situations, for example, service fees, assignment/transfer fee, processing fee, default charges/missed payment fee, as well as the discharge fee, as well as other possible fees related to the mortgage.

Here are a few situations where you would be required to pay a discharge fee:

1) if you pay off your entire mortgage balance;

2) if you switch from your current bank, to another bank, and register a new mortgage with the new bank.

3) if you sell your home and switch from your current bank to another bank.

The discharge fee is worked out, by your bank, on a simple one page form and it really does seem to be a very excessive fee to pay, for a simple form that may have taken your bank a short time to prepare. Interestingly, the mortgage discharge fee varies from province to province and from lender to lender. Did you know, for example, that in the province of British Columbia, The Financial Institutions Commission (FICOM) which regulates the financial services industry, has stated that a mortgage discharge fee must not exceed $75. You can read about their position at this following link:

http://www.fic.gov.bc.ca/pdf/mortgagebrokers/mb-07-003.pdf

Unfortunately, the Financial Services Commission of Ontario (FSCO) has not created a similar cap on the bank’s mortgage discharge fee in Ontario. While every bank must disclose the discharge fee, in the mortgage contract provided to you, you can also go on-line to see what current published discharge fees are, at any time. Remember, however, that the discharge fee that you see in the mortgage contract you signed, is the fee that you will be charged once there is a need to have a mortgage discharge statement prepared. Bank’s published discharge fees can be viewed at this following link:

http://www.fiscalagents.com/thestar/mtg_disx_sort.shtml

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880

Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.