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TORONTO REAL ESTATE NEWS 2018: TORONTO REAL ESTATE NEWS TODAY IS BUYING A PRE-CONSTRUCTION TORONTO AREA HOME CAN BE RISKY

TORONTO REAL ESTATE NEWS 2018 0
TORONTO REAL ESTATE NEWS 2018 0

Our thoughts and prayers are with the victims and their families of Monday’s horrific attack in the Yonge Finch Sheppard area. Thank you to our brave first responders, and to ordinary Torontonians who did extraordinary things today. Photo courtesy of the Toronto Sun.

TORONTO REAL ESTATE NEWS 2018
TORONTO REAL ESTATE NEWS 2018 photo courtesy of the Toronto Sun

Toronto real estate news 2018: Introduction

There is an unfortunate situation brewing for those who bought a home off plans from a builder in 2017. The market has cooled significantly and the average price of a new construction home in the Toronto region in February 2018 was $1.22 million. A significant drop! So, the Toronto real estate news 2018 is now that buying a pre-construction Toronto area home can be risky.

Toronto real estate news 2018: It used to be burn baby burn!

Until recently, Toronto’s real estate market hasn’t been hot; it’s been an inferno. Houses were selling for way over the asking price and real estate agents in Toronto say bidding wars became the new normal. Buyers were so desperate to get into the market that they were making offers and waving a house inspection.

It wasn’t just the resale market that was on fire. According to building industry statistics, the Toronto region real estate values in February 2017 of a new construction home in the was about $1.5 million. Advertising for real estate investing workshops was everywhere.

Toronto real estate news 2018: What caused this drop in real estate prices?

Two main reasons. First, the Office of the Superintendent of Financial Institutions (OSFI) introduced new, tighter mortgage rules, requiring borrowers with uninsured mortgages to undergo a stress test. As of January 1, 2018, uninsured borrowers must qualify at a new minimum rate – the greater of the Bank of Canada’s five-year benchmark rate, currently at 4.99%, or 200 basis points higher than their mortgage rate.

This new mortgage stress test is for protecting homebuyers to ensure that they don’t buy more house than they can afford – even if the interests rates rise. There were only two real estate markets in Canada on fire; Toronto and Vancouver. So, in Ontario, this new test is also known as the Toronto real estate stress test

Second, the Ontario Liberals introduced its Fair Housing Plan which included a foreign buyers’ tax. Many believe that this plan contributed to the drop in real estate prices and adversely affected middle-class families in mid-transaction.

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toronto real estate news 2018

Toronto real estate news 2018: Some buyers who purchased a pre-construction home at the height of the real estate frenzy are now facing financial ruin

These buyers are now contracted for homes that are no longer worth their purchase prices. They can’t resell the new home contracts because the builders are selling new construction homes for less than they’re asking – just to break even.

Some couldn’t get larger loans to cover the difference in price. If they walk away from their contracts they could lose upwards of $200,000 and risk being sued by the builder. To add insult to injury, they can’t afford the interest rates that alternative lenders are charging. This is a recipe for financial disaster.

This is what today the Toronto real estate news 2018 is.

Toronto real estate news 2018: Are you feeling the pain of possible financial ruin?

Are you facing financial ruin as a result of a cooled down market? Is the pain and stress of too much debt, regardless of the reason unbearable?

The Ira Smith Team can help you return to financial health with immediate action and the right plan. Don’t despair; there is a way out Starting Over, Starting Now. Make an appointment for a free, no obligation consultation. Financial peace of mind and pain-free living is just a call away.

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ALTERNATIVE MORTGAGE LENDERS CANADA REVIEW

Alternative mortgage lenders CanadaAlternative mortgage lenders Canada: Introduction

Alternative mortgage lenders Canada have now made sure that mortgages and loans are no longer the exclusive domain of banks and other brick and mortar financial institutions. Fintechs (financial technology companies) have changed the game in the same way that Uber disrupted the taxi industry. In fact banks who don’t want to be left are changing the way they do business and investing in or partnering with fintechs.

We recently blogged our review of two recent alternative lenders in Canada:

  1. # VIDEO – CREDIT KARMA CANADA REVIEW: IS IT REALLY FREE AND LEGITIMATE? #
  2. #VIDEO- GOOD AND BAD CREDIT LOANS REVIEW CANADA #

Alternative mortgage lenders Canada: Fintechs are a legitimate alternative

We’ve traditionally thought of alternative lenders as shady operators or payday lenders who prey on the most vulnerable. However a new crop of alternative lenders has emerged in the mortgage game – the fintechs. Some are publicly traded companies and perfectly legitimate. They market to the millennials who want everything online and in an instant; and that’s what some of the new fintechs deliver.

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Alternative mortgage lenders Canada: How do the fintechs offering mortgages work?

  • They can register as a broker and have licensed brokers on staff
  • In addition to mortgages they can offer personal loans
  • They work on a fee-based model which gives them upfront revenue without capital requirements or credit risk
  • They receive a commission on mortgages completed through their service

Alternative mortgage lenders Canada: Fintechs technology advantage

Fintechs take advantage of technology to change the mortgage process. They try to create a more personal experience for users (more akin to online banking) and believe that their process of acquiring a mortgage is more transparent than that of traditional financial institutions. Some even give perks such a bottle of champagne to celebrate your new mortgage and/or dinner for meeting payment milestones. Some fintechs offer:

  • A mobile interface where users can compare rates, apply for a mortgage and track their payment progress
  • An interactive dashboard that walks users through the mortgage process
  • The ability to set up things like payment reminders and progress trackers

Alternative mortgage lenders Canada: What does it mean for you?

For one thing, the banks and other financial institutions have competition, and competition always benefits the consumer. Chances are if you’re already indoctrinated in digital and reach for Apple Pay or Android Pay instead of your wallet, you may welcome fintechs into the mortgage scene. But, not all fintechs are created equal. It’s up to you to check them out thoroughly and check out the rates to make sure they are giving you a good deal. You have options when it comes to taking out a mortgage but make sure you do your homework.

Alternative mortgage lenders Canada: What if you have too much debt?

Not all homeowners’ stories have happy endings. If you’ve bitten off more than you can chew or life has thrown you a curve ball and you can’t make the mortgage payments, contact Ira Smith Trustee & Receiver Inc. We’re here to help you solve your debt problems and set you on a path to debt free living Starting Over, Starting Now. All it takes is one phone call to schedule a free, no obligation appointment.

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SHADOW LENDING MARKET: WHY JEWELLERS MAKING MORTGAGE AND CAR LOANS ARE AFRAID OF THE TRUTH

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Picture courtesy of Huffington Post

Jewellers making mortgage and car loans in the shadow lending market are afraid of the truth

If you really knew who you were dealing with for that loan and what the real costs were, and how they felt about you, you certainly would question the wisdom of doing it. Here is what one such jeweller famous for his television commercials said:

He believes some of his customers probably shouldn’t be seeking refinancing to hold on to their homes, but added that if Canadians are going to be so addicted to home ownership, he might as well cash in. “It doesn’t make sense to go to your jeweller for a mortgage or even for a car loan,” he said.”

The shadow lending market Canada and the shadow lending mortgage market Canada

How times have changed! Did you ever think you’d see the day when television commercials featured jewellers offering you mortgages? Yes, there are now a growing number of “alternative lenders” offering mortgages; of course at interest rates well above what traditional financial institutions are charging. One mortgage broker (who was not identified by name) said that although major Canadian lenders offer five-year fixed mortgage rates at about 2.5% to qualified borrowers, rates in the private market range from 7% – 15%. In addition to higher service fees, the market is also weakly regulated, allowing lenders to take advantage of the estimated 20% – 30% of Canadians with limited or no options at traditional financial institutions due to low income or a poor credit score.

The shadow lending market is growing fast

This shadow lending market is growing faster than it can be regulated and preying on the most indebted, vulnerable Canadians. A CIBC report from earlier this year noted that lending by non-commercial bank lenders has doubled since 2012. The Bank of Canada warned about the risks inherent in the shadow banking sector in its most recent Financial System Review last month. The shadow market is estimated at less than 10% of Canada’s mortgage market, much less than the 30% estimated for the pre-crash U.S. market. Low interest rates make it very attractive for people to continue borrowing and pile up debt, making it an ideal climate for the shadow lending market to continue to grow at an ever faster pace.

Why are Canadians falling prey to these shadow lenders?

  • They have multiple mortgages, taking equity out of their homes to cover other debts
  • When they get into financial difficulty, the homes have been used as ATM machines because of the increasing values

Then they fall behind on mortgage payments and are threatened with foreclosure. Mortgages in Canada are considered “full recourse” loans, which means the borrower is responsible for repaying a loan even in the case of the lender taking over and selling the home through power of sale proceedings because you could not keep up the mortgage payments. Canadians who don’t qualify for a bank loan have been forced to refinance in the shadow lending market to avoid losing their home.

I don’t buy jewellery from a trustee

Don’t take financial advice from a television commercial and don’t go to your jeweller for a mortgage or a car loan. Are you plagued by debt problems? Do you have bankruptcy questions? Professional trustees are experts you can count on for sound financial advice regarding insolvency, bankruptcy and bankruptcy alternatives. If you’re having financial difficulties contact Ira Smith Trustee & Receiver Inc. as soon as possible. We’re a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now.

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10 WAYS A PAYDAY LOAN CHARGES ILLEGAL INTEREST

PAYDAY LOAN COMPANIES
PAYDAY LOAN COMPANIES

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There are 10 ways a payday loan charges an illegal interest rate. Payday loan companies (also known as alternative lenders, fringe lenders and high risk lenders) are predators. Payday lenders prey upon the population that can least afford it – people in financial difficulty who don’t qualify for a loan from a traditional financial institution because they deem them too high risk. Some of these predators don’t even have to pay for store fronts as many are payday loan lenders online and issue a payday loan online only.

There is no such thing as the best online payday loan companies

The legal limit for interest rates on a loan is 60% per annum according to the Criminal Code of Canada. So how do online payday loan companies get away with charging way over 60% for payday loans online?

The ten ways payday loan companies charge illegal interest

They get away with it by charging fees instead of calling it interest, however the Criminal Code of Canada considers the following interest, which are all charged on a payday loan:

  1. Interest
  2. Administration fees
  3. Setup fees
  4. Processing fees
  5. Convenience charges
  6. Verification fees
  7. Brokers’ fees
  8. Collection fees
  9. Loan repayment fees
  10. Renewal fees

What does this mean in dollars and cents? Service fees for high risk loans online usually cost $10 to $35 for every $100 borrowed, or 10% to 35% of the amount of the loan. A $300 payday loan, due in two weeks, may cost you between $30 and $105, depending on the fees that apply. This is the amount that you’ll owe in two weeks! Not a per annum interest rate! As you can see in almost all cases these charges by this type of lender only will push the true interest rate for payday loans way above the legal limit of 60% per annum.

Are new payday loan companies regulated?

Alternative lender companies online, or in store fronts, new or old, are privately owned and not regulated by the federal government; however, several provincial governments have taken payday lenders to court over the amount of interest and fees that they charge for these high risk loans. In the U.S. 25 states have passed laws against predatory lending, placing restrictions on high-cost loans.

Can payday loan companies sue you?

The answer is yes, but it will be worth your while to challenge the fees charged by payday loans online (which are actually interest in disguise) and allow yourself to be taken to court. Otherwise the consequences can ruin you financially. There are many cases where when people defend and show they are not intimidated, these companies do not pursue the lawsuit.

There was a recent case in the U.S, where a $1,000 loan ballooned into a $40,000 debt and the worst part was that it was legal. A woman in St. Louis borrowed $1,000 from an alternative loan company and like many, she couldn’t pay it back in time. The lender sued her and even though she agreed to pay it back in instalments, the loan continued to grow at 240% interest. Investigative journalists stepped in and the case settled quietly. Had there been no settlement the $1,000 loan would have ballooned to $40,000.

For more information on the risks of payday loans online please review our blogs on the subject:

What should you do?

There is never a good reason to take out a high risk loans online. There is also no such thing as safe payday loan companies. Contact a professional trustee instead. The Ira Smith team can help. Starting Over, Starting Now you can take the first step towards financial health.

 

Call a Trustee Now!