Go Back  British Expats > Living & Moving Abroad > Canada
Reload this Page >

House Sale Issues - Advice Needed

House Sale Issues - Advice Needed

Old Oct 12th 2010, 9:05 pm
  #1  
Just Joined
Thread Starter
 
Joined: Jan 2010
Posts: 21
The Normans is an unknown quantity at this point
Default House Sale Issues - Advice Needed

Hi All we have some house selling issues and any advice is much appreciated.
We unfortunately met with a couple of estate agents yesterday and due to the current economic climate it doesn't look as though selling our house currently is an option. Their advice has been that although our house is valued at the amount we paid for it, in the current market it will not sell for that amount !?! Also we were advised that we should just ride out the recession for a couple of years then sell up!
As I write this our PR visa's are sat in the passports beside me so obviously my husband and I really don't want to have to wait for 2 years to tie up our UK responsibilities.

We are contemplating renting our house here to get around this. Is anyone else in this position ? Also do you know if having a mortgaged property in the UK will affect our chances of getting a mortgage in Canada? Our plan is to rent initially then once we have built a credit rating to purchase a house in Canada. Obviously I don't want the rental property here in the UK to hold us back.

Thanks
The Normans
The Normans is offline  
Old Oct 12th 2010, 11:47 pm
  #2  
BE Enthusiast
 
Joined: Apr 2009
Location: Lincs, UK
Posts: 366
linz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of lightlinz3112 is a glorious beacon of light
Default Re: House Sale Issues - Advice Needed

Hi

As far as I'm aware, having the rental in the UK shouldn't affect you buying again over there. There are plenty of people that own property overseas. The only thing you may need to look into is the Tax implications, if any, as i am not sure if you would be required to pay tax on the earnings from the rent. Someone on here should be able to answer that for you.

HTH
linz3112 is offline  
Old Oct 12th 2010, 11:57 pm
  #3  
Just Joined
Thread Starter
 
Joined: Jan 2010
Posts: 21
The Normans is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

Thanks that's good news.
Our inlaws are in the position that they are renting and would love to live in our home but at their age just cannot get the mortgage that they would need so the idea on the table is for them to live in our house in the UK and basically cover the mortgage repayments so there would be no profit it in it for us. I like the idea of being able to help them out with somewhere to live and they are obviously helping us by taking away the headache of selling for several years but I was concerned that it would bite us on the behind when we went to buy in Canada. It looks as though it may be a win win situation for us then.

Thanks again
The Normans
The Normans is offline  
Old Oct 13th 2010, 12:07 am
  #4  
Assimilated Pauper
 
dbd33's Avatar
 
Joined: Mar 2005
Location: Ontario
Posts: 40,022
dbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond reputedbd33 has a reputation beyond repute
Default Re: House Sale Issues - Advice Needed

Originally Posted by The Normans
Thanks that's good news.
Our inlaws are in the position that they are renting and would love to live in our home but at their age just cannot get the mortgage that they would need so the idea on the table is for them to live in our house in the UK and basically cover the mortgage repayments so there would be no profit it in it for us. I like the idea of being able to help them out with somewhere to live and they are obviously helping us by taking away the headache of selling for several years but I was concerned that it would bite us on the behind when we went to buy in Canada. It looks as though it may be a win win situation for us then.

Thanks again
The Normans
That'll be a bother due to it not being an arm's length transcation. Have a search for JonboyE's recent posts on this topic.
dbd33 is offline  
Old Oct 13th 2010, 4:53 am
  #5  
Binned by Muderators
 
Joined: Jul 2007
Location: White Rock BC
Posts: 11,686
JonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond repute
Default Re: House Sale Issues - Advice Needed

Originally Posted by The Normans
Also do you know if having a mortgaged property in the UK will affect our chances of getting a mortgage in Canada? Our plan is to rent initially then once we have built a credit rating to purchase a house in Canada. Obviously I don't want the rental property here in the UK to hold us back.
It can. When you apply for a mortgage in Canada the banks will look at your total debt service ratio - the extent to which your income exceeds your commitment to repay debt. They want the housing costs of your main home (mortgage payment, property tax, heating costs and half of any strata fees) to be no more than 32% of your household pre-tax income. They want your housing costs plus all other debt service payments to be no more that 40% of your pre-tax income.

As an example say you earn $80,000 (either one salary or a combination of both salaries - it doesn't matter). You have saved your deposit, found a house you like and calculate that your housing costs will be $2,100 a month. No problem. 80,000/12*.32 is $2,133 so you are on-side and will get a mortgage.

Factor in your UK home. Say the mortgage payments are £500 a month and your rental income is also £500 a month. The bank recalculate the numbers. Your monthly pre-tax income is now (80,000/12) + (500*1.6*2/3) as they only give you credit of 2/3rds of gross rental income to cover voids and other expenses. This leaves $7,200. However, you outgoing commitment is $2,100 as before plus $800 for your UK mortgage for a total of $2,900. This is 40% so making things difficult. Add in a car loan or credit card balance and you will be offside for the Canadian mortgage.

It is not impossible to do but you have to keep an eye on the numbers. It will be a good idea to talk to your bank, and a mortgage broker, as some institutions may have more flexibility than others.

You will pay tax in Canada on any profit you make on the rental of your UK home. Profit is rent received less mortgage interest, house insurance, repairs and maintenance and agents fees (if any). From the rest of your post it sounds like it will not be much. Join the non-resident landlord's scheme with HMRC so the renters do not have to deduct withholding tax on the rent.

dbd33 is right that you have to be careful when renting to relatives. The Canada Revenue Agency (CRA) wants to avoid the situation where Fred buys an "investment" property for $500,000, rents it to his brother for $1 a month yet claims all of the mortgage interest, property tax, insurance etc as a deduction on his tax return. If a similar house down the street rents for $2,000 a month the CRA can deem that Fred actually received this fair market rent and tax him on it. If you are renting to your parents you should have some documentary evidence that the rent you are charging is similar to the rent you would charge anyone else.
JonboyE is offline  
Old Oct 13th 2010, 5:16 am
  #6  
BE Enthusiast
 
Joined: Sep 2003
Location: Christina Lake. BC
Posts: 674
Mike Gas has a brilliant futureMike Gas has a brilliant futureMike Gas has a brilliant futureMike Gas has a brilliant futureMike Gas has a brilliant futureMike Gas has a brilliant futureMike Gas has a brilliant future
Default Re: House Sale Issues - Advice Needed

I do hope you sell your house probably still worth trying despite what your estate agent is saying, it might just be someones ideal home.
Mind you if you are being told it is worth X but you wont sell it for X then you estate agent is misleading you with his appraisal.
Mike Gas is offline  
Old Oct 13th 2010, 7:35 am
  #7  
Just Joined
Thread Starter
 
Joined: Jan 2010
Posts: 21
The Normans is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

Thanks JonboyE that is very informative and helpful. It looks like it may be achievable but would need to be managed quite carefully. We are going to discuss it with a solicitor to see if there is anything else that we have not thought of which would make it difficult and also obviously we want to ensure that we have it all in writing.
The Normans is offline  
Old Oct 13th 2010, 7:49 am
  #8  
Forum Regular
 
snowdogs's Avatar
 
Joined: Oct 2008
Posts: 109
snowdogs is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

you are also obliged to tell your mortgage company you plan on renting out, probably resulting in higher mortgage payments .
snowdogs is offline  
Old Oct 13th 2010, 11:40 am
  #9  
JAJ
Retired
 
JAJ's Avatar
 
Joined: Apr 2004
Posts: 34,649
JAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond reputeJAJ has a reputation beyond repute
Default Re: House Sale Issues - Advice Needed

Originally Posted by The Normans
We unfortunately met with a couple of estate agents yesterday and due to the current economic climate it doesn't look as though selling our house currently is an option. Their advice has been that although our house is valued at the amount we paid for it, in the current market it will not sell for that amount !?!
The value of any property is what it will sell for.
JAJ is offline  
Old Oct 13th 2010, 3:26 pm
  #10  
Forum Regular
 
Joined: Sep 2010
Location: Toronto for just a bit longer
Posts: 32
workhouse is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

Originally Posted by The Normans

We are contemplating renting our house here
Where in the UK is your house?? We need a south - south west coast rental.

Either way, good luck with it.
workhouse is offline  
Old Oct 13th 2010, 4:43 pm
  #11  
Sawdust making harpy
 
mandymoochops's Avatar
 
Joined: Sep 2007
Location: Alberta
Posts: 11,291
mandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond reputemandymoochops has a reputation beyond repute
Default Re: House Sale Issues - Advice Needed

Have you also thought of the implications of the market picking up, wanting to sell and then having to ask your parents in law to leave you said I think that at their age they can't get a mortgage and whilst i'm sure they are very nice people - it wouldn't be hard for it to go tits up with all the emotions at that time.
mandymoochops is offline  
Old Oct 13th 2010, 9:36 pm
  #12  
Just Joined
Thread Starter
 
Joined: Jan 2010
Posts: 21
The Normans is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

sorry workhouse our home is in Scotland so the opposite end of the country to what you require.
Mandymoochops our hope was that if it wouldn't make that much of a difference to our chances of getting a mortgage and tax implications that our inlaws would be able to live out the rest of their days in our house and then after their deaths the house would be sold therefore giving them a home and also something to be able to leave their 4 children after they are gone. I'm going to contact a financial adviser in Ontario today to get their opinion on what kind of situation that would leave us in. I think perhaps I was just hoping that it would be a good solution for all of us my inlaws and my husband and I but unfortunately life isn't always that simple.
The Normans is offline  
Old Oct 13th 2010, 9:45 pm
  #13  
Just Joined
 
Joined: Jul 2010
Posts: 16
D Buck is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

Me and the wife have just sold our house in the Uk to move to canada, we thought about renting it out or leaving it on the market and move to canada hoping it would sell while we were out there.

Renting it out isnt worth the hassle, once you take all the deductions off and the hassle if something goes wrong (i.e boiler, washing machine) its just not worth it.

Also if the tenant knows your not in the country then trying to get rent out of them if they dont pay is another hassle.

We ended up selling our house, but since we needed it gone we took a 15k loss on it. Selling my cars I have took a hit aswell.

We were due in canada in july and are still in the UK now because of the hassle.
The housing market in the UK isnt going to get any better for at least 2 years yet.
D Buck is offline  
Old Oct 13th 2010, 9:55 pm
  #14  
Just Joined
Thread Starter
 
Joined: Jan 2010
Posts: 21
The Normans is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

Sorry to hear that you were in a similar position DBuck. I think you're right that the UK market is not going to get any better for a few years. I know that we probably just have to take the loss on the chin but it frustrates me that after all of the years of planning that go into immigration something completely out of your control can change the game plan. We received our PR visa's in September so obviously are desperate to get going and start the rest of our new lives. I hope you and your wife get out there soon and it will all be worth it.
The Normans is offline  
Old Oct 13th 2010, 10:03 pm
  #15  
Just Joined
 
Joined: Jul 2010
Posts: 16
D Buck is an unknown quantity at this point
Default Re: House Sale Issues - Advice Needed

We are going on a Bunac visa to start and then applying for a LMO/TWP early next year.

This is so we can get our feet in the door and gain some so called canadian experience

The only thing holding us back now is one of my cars which is on ebay and ends on sunday. I have been offered some crap amount of money for it that i might just have to take to get rid of it.
We have no plans to come back to england so everything has to go, same as yourselves really.

But everyday i am losing money by not working in engineering, since we were meant to be there in july I couldnt take on another project as I'd have to leave it early and maybe get a bad name. Also the way the job market is in the UK all the jobs in the north east of england are staff jobs not contract so makes thing even more difficult.
I am just working in a warehouse at the moment as a stop gap, on a wage that is 4-5 times lower than what i am used to.

You just have to take a hit sometimes to do better in the future. Otherwise we will still be here in a years time.

My advice is to take the hit and forget about it, put it in the past and get to canada with no or as little ties as possible.
D Buck is offline  

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.