The popular ecoENERGY Retrofit program was set to end on June 6, 2011 but has been extended to March 31st, 2012. Successful applicants will receive grants to invest in the energy efficiency of their homes. This can mean reductions in energy bills of up to 20 percent of your current electricity bill. This article will discuss the details of this grant and explain how it benefits homeowners, as well as describe how you can apply for this grant. This will not reduce your mortgage payments but it may reduce your utility bills which, in the end, amounts to the same thing.

The Grant

The ecoENERGY Retrofit program offers successful applicants up to $5,000 toward energy-efficient upgrades to their home. This includes a wide variety of improvements. For instance, you could improve the insulation of your home by working on your attic or upgrade your windows and doors..

Here is a list of the improvements you can make and links to more details on the requirements for each improvement.

Heating systems
Cooling systems
Ventilation systems
Domestic hot water equipment
Insulation
Air sealing
Windows/doors/skylights
Water conservation

You can only receive one grant per improvement. Notice all applicable health and safety measures must be satisfied when installing the upgrades and that all appliances must be certified Energy Star appliances. For more information on Energy Star click here.

Requirements

The program has two main requirements. First you must register with the program before you request an evaluation from a program consultant, and second, you must provide receipts as proof of the purchases you have made to the energy advisor that is supervising your case.

You also must be willing to allow the energy assessor to perform a blower-door test on your home to determine how good, or bad, is the insulation of your home.

Note you must always use a licensed service organization to perform an energy evaluation of your home. These licensed organizations have certified energy advisors who act as a third and impartial party for the grant process.

Application

If you are interested in applying for an ecoENERGY Retrofit grant you must register with the program. Click here if you are a new participant. If you have already benefited from the program but wish to apply again, click here. Note that applicants who have several properties they wish to claim grants for must fill in a new application for each property.

Canada residents who don’t want to buy a house, can’t afford a mortgage or don’t have the credit rating required for a mortgage application approval have a different option. Welcome to Co-operative housing, or as they are also known “co-ops”. Think it sounds strange, maybe a little risky? Well, granted, the term “co-ops”  or co-operative housing is not a marketing bomb and it does have the ring of a soviet work colony. However, cooperative housing is a successful, tried and tested housing option with over 2,000 housing co-ops owned by over 111,000 members, which represent assets of over $5.6 billion.

So what is a co-op?

Cooperative housing comes in a variety of shapes and flavors. You can a find a collection of single-unit townhouses, small buildings with a four to seven units or huge buildings that can hold hundreds of members. What sets aside co-ops from regular housing options is the way the property is organized, owned and managed.

There are two main types of cooperative housing models: the non-profit co-op and the for-profit co-op. In a non-profit co-op members own shares in the community and have the right to live in a unit but cannot sell their shares. In for-profit co-ops members own shares in the community and can sell them to others. Note however that the member owns the share in the community, not the particular unit they live in. So although they can sell the right to live in the co-op they cannot guarantee the use of any particular unit.

Management

The big difference between co-ops and other housing models is how it is run. Co-ops do not have a third-party management community in charge of management. The members choose a board of directors who govern the co-ops affairs. However, the co-op members still must vote for important matters such as the approval of the co-ops budget and to make changes in the community’s policies.

Benefits

The main benefits of co-ops is their affordability, democratic governance model, security of tenure and sense of community. They are affordable because once you own a share in the co-op you only need to pay for monthly housing charges which are set by the co-ops board. The community is governed directly by its members which improves its efficiency and the accountability of the board of directors. It is secure because you can’t get thrown out as long as you follow the community’s by-laws and pay your housing charges.

As of July 2011 the Canada and Ontario governments have assigned $301 million each, which brings the total funds committed to the program after adding other funding sources to $734 million. The program is designed to provide assistance to approximately 20,000 households in Ontario alone. This assistance has been made available to all regions, although it does focus on households with a moderate- to low-income who are currently renting. The purpose of the program is to assist households who are currently renting and have the income to afford a mortgage, but cannot buy a new home because they lack the savings to afford a down payment.

How much you need for a down payment when applying for a mortgage will depend on the price of the property, the type of loan you are eligible for and your income. Most lenders offer two main types of mortgage, 80 percent mortgages and 75 percent mortgage. If your household has an income of $60,000 and you can pay a 10 percent down payment, you can afford a home of up to $166,900, based on general lending requirements. However, if you can afford a 25 percent down payment you can afford up to $205,300. This can mean the difference between been able to buy a home in your neighborhood and having to move to another area to qualify for a mortgage.

Maximum House Price

The maximum house price for eligible down payment loans in the Affordable Housing Program ranges from $408,403 in the Regional Municipality of York, $384,422 in the City of Toronto, to $106,158 in Timiskaming. If your house is more expensive than your region’s maximum price, you will not be eligible. Click here for more information on the maximum prices for each Ontario region.

Maximum Income

The maximum income for the Affordable Housing Program is set at the 60^th percentile of your region. This means that at least 60 percent of households must have an income higher than yours. This means incomes vary widely from one region to another. For instance, in the Greater Toronto Area the maximum income is $77,900, while in the Regional Municipality of Niagara it is $70,100.

The biggest obstacle to households looking to buy a home is more often than not the down payment. As long as you have an average credit score and a regular income, you will probably find a bank willing to cover 75 percent of your new home’s price tag. The problems start when you need to find the extra 25 percent for the down payment (20 percent), the deposit (usually 5 percent) and the closing costs, which vary by lender.

If you live in Ontario and are also struggling to pay for down payments costs on your new home, congratulations, the Ontario Ministry of Municipal Affairs and Housing is offering Ontario homebuyers assistance through the Canada-Ontario Affordable Housing Program Homeownership Component. This article will provide you with the benefits this program offers and the requirements you must meet to qualify.

First the good news, as of 2011 the Canada Ontario Affordable Housing Program Homeownership Component offers a maximum of $75,800 down payment loans instead of the previous maximum of $62,600. However, your maximum loan may vary depending on where you live, more on that later.

What the Program Offers:

The Affordable Housing Program provides eligible participants with an interest-free, 20-year loan. As long as you live in the house during the 20-year period, do not lease the home or resell it, you will not have to pay interest on the loan. It doesn’t matter what size or type of home you buy as long as it falls within the selling price range set by the Affordable Housing Program for your region. Another important factor is your current income. If your income is above the program’s maximum, you will not qualify for an interest-free down payment loan.

Interest payments often represent a huge percentage of the total payments you make to your lender, especially on a 20-year old mortgage. For example, if you qualify for a $40,000 20-year loan at 6 percent you will pay by the end of the loan $28,777.38 in interest alone on top of the $40,000 you borrowed. This means that if you qualify for an Affordable Housing Program for the same loan amount, you would save $28,777.38, which you could either use to buy a better home, invest in home improvements or simply reduce the principal on your mortgage.

However, what must you do to meet the requirements of this program? What funds have been made for this program by the state and federal governments? What maximum income must a household have to qualify and what is the maximum price of a home for it to qualify in this program? We will answer these and other questions in the second article of this series on the down payment Ontario loan program.

The conservative banking regulations in Canada cause lenders to offer mortgage types which vary from the mortgage types offered in other Western countries. This article looks at five of the most popular mortgage types used in Canada and provides a brief review on the strengths and weaknesses of each type.

CMHC 5 Percent Down Payment

Originally this mortgage type was only available to first-time buyers and was created as a way of stimulating the purchasing of homes among sectors of the population that could not afford the high down payments required by most lenders. Now anybody can request a CMHC 5 Percent Mortgage. This mortgage type is useful for buyers who are just entering the property market or for those who don’t have sufficient savings for a large down payment. However, these mortgages are highly regulated and have minimum and maximum loan amounts which vary depending on where you live. Expensive areas like Toronto and Vancouver accept CMHC 5 percent mortgages of up to $250,000, while in other provinces the maximums range between $125,000 and $175,000.

ARM or Adjusted Rate Mortgages

These mortgages are a hybrid between fixed and variable rates. For a fixed period of time, anything between 3 months and 5 years, the rate is set at a fixed rate. Once the starting, also known as teaser, period has ended  the rate will adjust to whatever is the going rate is. This type of mortgage is a double-edged sword, because if the interest rates drop, you will end up paying less interest; but if the prices rise, well, it is going to hurt.

Fixed Rate Mortgages

Fixed-rate mortgages provide buyers with the certainty of knowing how much they will pay each month for their mortgage until the end of its term. This is helpful if you have a fixed income and need a to budget accurately what your fixed expenses will be. 

Variable Mortgages

Variable mortgages start off as fixed mortgages and then turn back to the going rate in the area. They are a good option for buyers who plan to sell their properties within a short period of time.

Closed and Open Mortgages

Closed mortgages are mortgages you cannot pay off early. You must follow the payment schedule set up at closing until the end of its term. These mortgages are designed so lenders can maximize the interest they reap from a loan. It is a good idea to confirm your mortgage is not closed before your purchase it, so you can pay it off early if your financial situation improves. Open mortgages are divided between mortgages you can pay off early if you are willing to accept a pre-payment penalty and those who are completely open and do not require penalty fees for early payments.

The Canadian banking system is quite different from the banking industries in the United Kingdom and the United States. The more stringent Canadian government regulations, as well as the business practices of Canadian bankers have been suggested as reasons why Canada was not hit by the real estate collapse of 2008 as badly as countries such as Spain, UK, United States and Japan with laxer banking regulations. The differences with Canadian banks is not only on the regulation level. There are also differences in the type of mortgages offered to customers. This client will describe two of the most popular mortgage types in Canada: high-ratio mortgage and conventional mortgages.

Conventional Mortgage

Conventional mortgages in Canada refer to mortgages where the buyer has at least 25 percent of the appraised value of the property to put down as a down payment. Therefore these mortgages cover only 75 percent of the purchase price. This makes them a much safer bet for lenders than higher-risk mortgages which require a smaller down payment. Some Canadian lenders take this conservative view of lending even further by requiring mortgage insurance from Canada’s Mortgage and Housing Corporation (CMHC) even on mortgages with a 25 percent (or higher) down payment.

Mortgage Insurance is a special type of insurance that covers lenders from the financial loss caused when a borrower fails to pay their mortgage. In Canada lenders usually require a mortgage insurance either from CMHC or GE capital for mortgages with a down payment below 25 percent. In the United States a similar guideline applies to mortgages with a down payment below 20 percent. The mortgage insurance is usually paid as a single fee once the lender supplies the funds. The mortgage insurance fee depends on the size of the mortgage and its debt to down payment ratio. The lower the down payment the higher the fee. For instance, a typical CMHC mortgage insurance for a mortgage with 25 to 35 percent down payment is 0.50 percent of the purchase value. However, a mortgage where the down payment is only 10 to 5 percent of the purchase value can cost around 3.75 percent.

High-Ratio Mortgages

Mortgages with down payments between 5 and 25 percent of the purchase value of the property are called high-ratio mortgages and are considered as higher-risk mortgages than conventional mortgages. This inherent higher risk causes lenders to charge higher interest rates and demand the payment of mortgage insurance fees.

So, the unthinkable has happened. Your apparently stable financial situation has crumbled beneath your feet and you are struggling to pay your mortgage. Unfortunately, you are not alone. If you live in Canada you are part of a growing community of homeowners who are facing the possibility of losing their home to their lenders. The good news is there are steps you can take to protect your home or at the very least control the damages of losing your home by choosing alternatives to foreclosure.

Your first step, whether you are at risk of losing your home or not, is to understand how the foreclosure process works.

Canadian Foreclosure Process

In Canada lenders who wish to recover the security on their loan (i.e. your home) must file a legal petition to the Supreme Court Registry where your mortgage is registered. If the lender is successful, you will receive a notice telling you the lenders are trying to get help from the court to recover their investment.

It is important to notice you should never have to lose your home for a temporary lay-off or financial difficulties. Lenders dislike foreclosures nearly as much as borrowers because they are expensive and rarely allow the lender to recover all their investment. If you believe your situation is temporary or can be solved by reducing your mortgage payments, you should be able to come to an agreement with your bank. What options are open to you?

Foreclosure Options in Canada

You should contact your lender as soon as possible and explain your situation. Ask for help and make it clear you want to repay the mortgage but have fallen in temporary financial difficulties and require assistance to restructure your mortgage payments. These are some of the solutions you and your lender can agree to:

Loan modification. This option restructures the payments of a borrower so the monthly cost of the mortgage is reduced, by either increasing the term of the loan, reducing the balance or dropping the interest rate or any combination of the above.

Mortgage Refinance. This is similar to a loan modification but involves paying off the current mortgage with the funds provided by a new mortgage. A refinance is viewed by lenders as a completely new mortgage and therefore generally costs more and borrowers must meet more stringent requirements than a loan modification. However, if you have a good credit history you could use a mortgage refinance to negotiate better terms for your mortgage and save money in the long run.

Temporary Waiver

Your lender may agree to grant you a temporary waiver during which you do not have to pay your mortgage. Typically this waivers do not last more than 6 months and are only a possibility if the bank or lender can be convinced your financial situation is very likely to improve in the near future. For instance, if you are a highly qualified professional in a high-demand industry who has been laid off, you will probably be able to convince your lender to give you a three- to six-month waiver to give you time to find work. However, this agreement does come at a price. The interest of those months and additional fees will probably be added to the balance of your mortgage, which will incur further interest costs for the duration of your mortgage.

Finding sound advice in periods of financial instability is not easy. If you are facing a foreclosure on your home and you are not familiar with Canadian law on real estate and loans, you probably have many questions on your mind. Foreclosure is a specially scary process because you are well aware of the possibility of losing your home to the bank or some other lender. However, understanding the basics of foreclosure law is not only for those who are currently struggling to pay the monthly bills. Any one of us can lose our jobs or source of income and it is vital we know our options if we were ever to face foreclosure.

First Things First, What is a Foreclosure?

According to Canadian law, foreclosure is a legal action lenders choose to take if a borrower stops making payments on his or her mortgage. If the foreclosure process is completed, the property is sold and the proceedings used to repay the debt. If the balance of the sale of the property does not cover the cost of the mortgage or other liens on the property, the borrower may have to pay the difference.

What is a mortgage?

A mortgage is a special purpose loan used to purchase properties. It is an agreement between the buyer and a lender to repay the loan within a certain period of time at an agreed rate of interest. That is pretty straightforward, but what happens if you miss a mortgage payment or are a little late in making a payment? You do not have to worry about dealing with foreclosure for missing a single payment or being a little late on your mortgage payments, although it will affect your credit rating and could affect your eligibility for future loans.

What many borrowers do not understand is that banks very rarely “want” to start foreclosure proceedings against a homeowner. Foreclosures are expensive procedures and lenders rarely recover all their investment when they file for foreclosure. Foreclosures in Canada are a last resort, used only when the lender believes you really cannot afford the mortgage and will not be able to afford it for the foreseeable future. 

So, if lenders are so ware of foreclosures, why are there so many of them? You may ask. Unfortunately, in many cases of foreclosure homeowners spent on their homes more than they could afford or did not understand what steps they could take to save their homes. Although, in some circumstances losing your home is unavoidable, often there is much borrowers can do to protect their investment. Even if your mortgage is beyond saving, there are more graceful ways to get out of a mortgage than foreclosure. Our next article will discuss further the process of foreclosure in Canada and what options you have to save your home or choose an alternative to foreclosure.

Every year Canada welcomes 240,000 to 265,000 permanent residents into its borders. Are you one of Canada’s new residents? Moving to Canada is a dream come true for many, but when this dream comes true new dreams take its place. Buying your own home maybe the next goal on your to-do-list. However, buying a new home is not easy, especially if you do not have an extensive credit history in Canada. The Canada Mortgage and Housing Corporation provides mortgage insurance to newly arrived Canadian who would otherwise not qualify for competitive mortgages.

This program is called the New to Canada Mortgage Insurance program. Are you interested in buying a home for you and your loved ones but don’t have the credit score or downpayment mortgage providers require? The New to Canada Mortgage Insurance program may help.

This program allows newly immigrated Canadians to buy a home with as little as 5 percent downpayment. There is no minimum period of residency to apply and no varying fees based on residency status. If you have a limited Canadian credit history the CMHC will consider foreign credit bureaus or alternative sources of payment history.

To qualify you will need a work visa, a filed application for landed immigrant status and three months of full-time employment. Although the minimum employment requirement can be waived if you are part of a corporate relocation program. You will also need some type of credit history, such as proof of regular payments towards your rent or room and board. You must also provide evidence of on-time payments for your utilities in the last 12 months.

The documentation and downpayment requirements for your mortgage will depend on the loan to value ratio of the home you choose to buy. The loan to value ratio determines what percentage of the purchase value of the house is funded with your own resources. For instance, if your house is worth $100,000 and you apply for a mortgage of $95,000, your loan to value ratio will be 95 percent.

Mortgages with a loan to value ratio of 90 to 95 percent will require a work visa, verification of landed immigrant status and a positive credit history from an International credit bureau.

However, if your mortgage has a loan to value ratio of 85 to 90 percent, you will not need a report from an international credit bureau but will need a letter of reference from a recognized institution or a minimum of 6 months of bank statements from a primary account. In this case, you can pay up to 5 percent of the house’s value with a corporate relocation subsidy.

The Prince Edward Island Native Council founded the non-profit Nanegkam Housing Corporation in 1947. Since then the Nanegkam Housing Corporation has provided reserve aboriginal residents access to suitable housing outside of the reserve. The organization is managed by local people of the Prince Edward Island community who are in charge of creating and enforcing the housing corporation’s policies. The organization works closely with the Canada Mortgage Housing Corporation, which provides much of the funding and resources required to manage the program.

Current Housing Opportunities

The PEI Housing Corporation provides several rental and mortgage assistance to eligible individuals. This article provides a description of the main programs offered or managed by the PEI Housing Corporation.

The homes available under these programs range from apartments, townhouses, single and family houses as well as locally funded units in Summerside and Charlottetown.

Rural Native Housing Program

The Rural Native Housing Program provides aboriginal households access to homes owned by the Canada Mortgage and Housing Corporation. The monthly payments of these homes are set at 25 percent of the monthly income of each household. Contact information for the managers of this program is printed below.

Nanegkam Housing Board of Directors                                                  Canada Mortgage and Housing Corp
Contact: Jayne Tremere                                                                              Contact: Marilyn Sellar
6 F.J. McAulay Court                                                                                     Suite 300, 3rd Floor
Charlottetown, PE C1A 9M7                                                                        119 Kent Street
Tel: (902) 892-5314 ext:221                                                                        Charlottetown, PEI C1A 1N3
Fax: (902) 368-7464                                                                                     Tel: (902) 566-7337
                                                                                                                          Fax: (902) 566-7350

Homeowner Residential Rehabilitation Program or RRAP.

This program allows low-income families on PEI who live in unsuitable housing conditions to perform emergency repairs on their homes to ensure their homes are not a hazard and provide a healthy and safe environment. If you are interested in this program you can contact Janet Wilson from Canada Mortgage and Housing Corporation at 902.566.7336.

Emergency Repaid Program or ERP

The Emergency Repaid Program is a grant offered to low-income homeowners in isolated areas who need to fix their homes for them to be safe. Most of this grant is allotted to local aboriginal families. The maximum grant available on Prince Edward Island is $4,635. You can find out more information calling Janet Wilson at 902.566.7336.

Eligibility to all these programs is dependent on your income, region and housing situation. Proof of income will be requested from all applicants, as payments to the program are dependent on your monthly income. For instance, an aboriginal family with an income of $1,000 that benefits from housing with the Nanegkam Housing Corporation, will not be asked to pay anything more than $250 toward housing expenses.