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British Expats (https://britishexpats.com/forum/)
-   The Maple Leaf (https://britishexpats.com/forum/maple-leaf-98/)
-   -   Buying a house in Canada (https://britishexpats.com/forum/maple-leaf-98/buying-house-canada-700890/)

harris Jan 16th 2011 3:19 am
Buying a house in Canada
 
In the UK, to secure equal ownership of property, the deeds are made out to "Tenants in Common". Is there any such/similar phrase that should be inserted in Canadian house deeds to do just this as two people are paying equal shares? Sad to have to think along these lines, but it does give peace of mind at the start.

JonboyE Jan 16th 2011 5:20 am
Re: Buying a house in Canada
 
Originally Posted by harris (Post 9105596)
In the UK, to secure equal ownership of property, the deeds are made out to "Tenants in Common". Is there any such/similar phrase that should be inserted in Canadian house deeds to do just this as two people are paying equal shares? Sad to have to think along these lines, but it does give peace of mind at the start.
Just the same here. There are two types of joint ownership:

Tenants in common own a specified share of the property that can be sold without affecting the other tenant's interest. When a tenant in common dies their share of the property becomes part of their estate.

Joint tenants share the whole ownership of the property. They cannot trade their share and when one joint tenant dies the surviving tenant(s) automatically assume ownership.

Auld Yin Jan 16th 2011 8:01 am
Re: Buying a house in Canada
 
There could be mortgaging issues with the Tenants in Common registration.

edwinslad Jan 16th 2011 10:46 pm
Re: Buying a house in Canada
 
Changes to mortgage rules are being announced today.

http://www.cbc.ca/canada/story/2011/...e-changes.html

JonboyE Jan 17th 2011 3:51 am
Re: Buying a house in Canada
 
Seems sensible to me.

Alan2005 Jan 17th 2011 4:14 am
Re: Buying a house in Canada
 
Originally Posted by JonboyE (Post 9108060)
Seems sensible to me.
Flaherty unveiled three main changes:

* The maximum amortization period for a government-insured mortgage was lowered from 35 to 30 years.
* The upper limit that Canadians can borrow against their home equity was lowered from 90 per cent to 85 per cent.
* Government insurance backing on home equity lines of credit, or HELOCs, has been removed.
Am I missing something about how the Canadian housing market works - but doesn't the second change potentially knock 50% off the maximum price that a mortgagor can afford. Particularly those who are first time buyers struggling to get a deposit together - i.e. those at the bottom of the pyramid holding it all up.

(I like that the CBC news doesn't even bother with the pretence of CHMC and just comes out and says it's government insurance.)

JonboyE Jan 17th 2011 4:25 am
Re: Buying a house in Canada
 
Originally Posted by Alan2005 (Post 9108106)
Am I missing something about how the Canadian housing market works - but doesn't the second change potentially knock 50% off the maximum price that a mortgagor can afford. Particularly those who are first time buyers struggling to get a deposit together - i.e. those at the bottom of the pyramid holding it all up.
I don't think the second one will affect home buyers, where a 5% down payment is the minimum necessary. AFAIK it is aimed at people refinancing to release cash or create a line of credit.

Alan2005 Jan 17th 2011 4:34 am
Re: Buying a house in Canada
 
Originally Posted by JonboyE (Post 9108138)
I don't think the second one will affect home buyers, where a 5% down payment is the minimum necessary. AFAIK it is aimed at people refinancing to release cash or create a line of credit.
Ah, yes. I missed that bit - apologies.

So it looks like new buyers can be in debt to 95% LTV, but home owners are limited to 85% LTV. Allowing one group arbitrarily to able to incur a higher debt loading than another doesn't make a lot of sense to me - but then I never follow the logic of what these people do.

jimf Jan 17th 2011 4:36 am
Re: Buying a house in Canada
 
Originally Posted by Alan2005 (Post 9108106)
Am I missing something about how the Canadian housing market works - but doesn't the second change potentially knock 50% off the maximum price that a mortgagor can afford. Particularly those who are first time buyers struggling to get a deposit together - i.e. those at the bottom of the pyramid holding it all up.

(I like that the CBC news doesn't even bother with the pretence of CHMC and just comes out and says it's government insurance.)
What does the government insurance cover?

Alan2005 Jan 17th 2011 4:39 am
Re: Buying a house in Canada
 
Originally Posted by jimf (Post 9108163)
What does the government insurance cover?
It protects the banks from the debtor defaulting (this is my understanding at least).

jimf Jan 17th 2011 4:43 am
Re: Buying a house in Canada
 
Originally Posted by Alan2005 (Post 9108170)
It protects the banks from the debtor defaulting.
So the borrower pays the premium and the government (or their insurance company) pays the bank if the borrower defaults? Does the government then come after the borrower for the money?

Sounds like mortgage indemnity guarantee insurance which used to exist in the UK?

Also sounds like risk free business for the Canadian banks.

Auld Yin Jan 17th 2011 4:46 am
Re: Buying a house in Canada
 
Originally Posted by Alan2005 (Post 9108170)
It protects the banks from the debtor defaulting (this is my understanding at least).
That is correct. If the house is repossessed and sold by the lender then any shortage between sold price and outstanding mortgage is paid off by the insurance.

Auld Yin Jan 17th 2011 4:52 am
Re: Buying a house in Canada
 
Originally Posted by jimf (Post 9108175)
So the borrower pays the premium and the government (or their insurance company) pays the bank if the borrower defaults? Does the government then come after the borrower for the money?

Sounds like mortgage indemnity guarrantee insurance which used to exist in the UK?

Also sounds like risk free business for the Canadian banks.
The Government does not look to the defaulter for the shortfall. The borrower/defaulter has purchased the insurance to deal with that.

The purchasing of the insurance by qualifying borrowers is a Government requirement. Banks are not permitted to lend more than 80% LTV without such insurance, so yes, it is virtually risk free lending for the Banks.

jimf Jan 17th 2011 5:02 am
Re: Buying a house in Canada
 
Originally Posted by Auld Yin (Post 9108193)
The Government does not look to the defaulter for the shortfall. The borrower/defaulter has purchased the insurance to deal with that.
The purchasing of the insurance by qualifying borrowers is a Government requirement. Banks are not permitted to lend more than 80% LTV without such insurance, so yes, it is virtually risk free lending for the Banks.
Are you sure about that? It seems to leave the lender and the borrower off the hook with the state carrying the liability.

Alan2005 Jan 17th 2011 5:11 am
Re: Buying a house in Canada
 
Originally Posted by jimf (Post 9108206)
Are you sure about that? It seems to leave the lender and the borrower off the hook with the state carrying the liability.
I think most mortgages are classified as non-recourse debt in Canada. I assume (but don't know for sure) that when the borrower defaults, the house is sold and the bank then goes to CHMC for the difference.


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