In 2016, 57 percent of first-time home buyers in Canada got their mortgages from a broker.

The staggering figure, which was published in a recent survey by the Canada Mortgage and Housing Corporation, is indicative of a broader trend: more and more Canadians are choosing brokers over banks when it comes to purchasing or refinancing their mortgages.

People are choosing brokers over banks because brokers often can give personalized advice on a mortgage and shop around between lenders to find better deals.

This flexibility can really make life easier and help cut costs, but here’s the catch about brokers: it’s tough to find the right person for the job.

The quality of your broker will help make sure funds are ready when the deal needs to complete and determine your financial situation for the next few years, so if you’re looking to buy a new home it’s important that you find a broker who’s both qualified and trustworthy.

What Does a Good Mortgage Broker Do?

A good broker will help you figure out how much you can truly afford, determine what the best mortgage product is for you, and shop around for options that help you save money.

But their job doesn’t end there.

Your broker should also help you after review your mortgage a few times a year to see how you can pay it off faster, whether it’s still the right product for you, and if it’s still competitive.

Here are a few characteristics of good mortgage brokers:

• They’re always one step ahead of you
• They make your interests theirs
• They have good communication skills
• They deliver on their promises
• They have a positive attitude
• They listen to you and can give good advice based on your desires
• They stay in touch with you after you sign a contract

How to Pick the Right Mortage Broker

Choosing the right mortgage broker is easier using these steps:

Phase 1: Make a  List

Write a list with the names of brokers you may know, you find and are referred to you.  If you have co-workers or friends who have bought a home recently; or renewed their mortgage; ask how they liked working with their broker and who they were.  

Ask your BC Notary, lawyer or Realtor for a referral for people they have worked with and they should be able to tell you fairly quickly who they know, like and trust.  

You can also search online to find mortgage brokers in your area.  We know a number of brokers and would be happy to provide some names of competent professionals to help you find the right fit.

Phase 2: Research

Before you even start talking to potential mortgage brokers, it’s important that you do some preliminary research.  

Search online. A quick Google search will give you the names of mortgage brokers that operate in your area. 

Many of these brokers will have websites and online profiles. High profile ones may even have peer-reviews posted websites like Yelp.

Visit their websites, check them out on LinkedIn, and read reviews. Doing this will give you insight into the the broker’s past work and reputation. 

While you’re at it, do a quick search on the Canadian Association of Accredited Mortgage Professionals’ website. The organization also has an online directory that can help you make sure that the broker is accredited.

Ask around. Once you’ve created a shortlist of potential mortgage brokers based on your research, start asking around for reviews and recommendations.

Talk to friends, colleagues and neighbours, and see if they have worked with anyone on your list, or if they have anyone else to recommend. If someone has had anything less than a good experience with an broker, immediately cross them off the list.

Reach out. Once you have a list of potential mortgage brokers, it’s time to contact them. See what kind of vibe you get and ask if they have references from previous clients. If you get a good vibe, keep them on the list, and coordinate a time to meet them. If you don’t get a good vibe, cross them off immediately.

Phase 3: Interview, Interview, Interview

By the end of the research phase, your list of potential mortgage brokers should have at least three strong candidates. The next step is to meet up with them.

These interviews may seem intimidating at first, but remember: You’re in control. They have to impress you, not the other way around. 

These interviews are important to figure out if the broker has the perfect balance between credentials and chemistry.

During each interview, make sure you ask yourself if this is a person you like and trust–and don’t forget to ask them the following four questions…

Four Key Questions to Ask a Potential Mortgage Broker

1. How long have you been in business?

While experience may not necessarily equate good service, it is important to know how long a mortgage broker has been in business. 

Mortgage brokers with experience will generally have cultivated relationships with more lenders. This means that they will be able to shop around for deals from a wider pool of lenders.

2. How many lenders do you deal with?

Regardless of experience, good brokers deal with many lenders.

High-volume brokers can negotiate better deals, helping you find something that best suits your needs. Low-volume brokers may have less options.

3. What’s the application process like?

Many brokers offer online platforms that help you compare costs and easily apply for loans.

Be sure to ask about average closing times, specific requirements (credit score, down payment, debt-to-income ratio, etc.), and all documents you will need throughout the entire process.  

4. What will my mortgage look like?

Not all mortgages are the same so find the one that works for you.  Make sure to consider things like prepayment privileges, porting, and assuming mortgages as well as whether to go with fixed or variable rates.  Is CMHC Insurance a consideration or can I have my property taxes collected with my mortgage payment?  

Discussing these topics and asking broker’s opinion will help you get to know then; educate you and also show them you know what type of questions to ask regarding your mortgage.

What now?

Now that you know how to choose a mortgage broker, it’s time to go out there and start your search. 

Good luck and have fun!  Let me know if you have any questions or would like a referral.

If you are buying a house the Vancouver’s Empty Home Tax may unexpectedly apply to you.

Last year after the Vancouver City Council passed the controversial Empty Home Tax By-Law, dozens of homeowners and buyers have come to my office asking about the whether it applied to them.

And the answer is not always clear, which can be particularly unsettling at the time of a real estate transfer. The new home buyer may be unknowingly responsible for paying a $10,000+ tax up to 2 years into the future. Ouch!

In this guide, we explain the Empty Home Tax in simple English, so that all homeowners and buyers understand what it is and whether it applies to them.

We also outline a solution that ensures no home buyer is caught with an unexpected tax up to 2 years after they purchased a house.

What is the Empty Home Tax?

The Empty Home Tax (sometimes known as the Vacancy Tax) applies to residential properties within the City of Vancouver that:

• Have been vacant for six or more months during a calendar year, or;
• Has not been rented out for 30 or more consecutive days).

The tax was set up for two reasons:

1. To make empty or under-utilized properties available for long-term rental, and
2. To help relieve pressure on Vancouver’s rental housing market, given low rental vacancy rates and high rental costs. 

The bylaw was passed tax in December of 2016, in a context in which rental prices were soaring, and more than 25,000 properties within the city remained empty or under-occupied. 

The tax looks to incentivize rentals, and the net revenues from the Empty Homes Tax will be reinvested into affordable housing initiatives in order to continue providing solutions to Vancouver’s housing affordability crisis.

The rate of the Empty Home Tax is 1% of a property’s assessed taxable value. This means that for every $1 million dollars of value, the tax will be $10,000.

The Empty Home Tax will be applied annually, with the first tax year beginning on January 1, 2017. It will be calculated each year based on the property’s assessed taxable value in the previous tax year.

Who Does The Empty Homes Tax Apply To?

Any non-principal residences within the City of Vancouver that is left empty for six months of the year or longer will have to pay the Empty Homes Tax.

If your property is located in a municipality that does not fall within the city, such as the University Endowment Lands, Burnaby or Surrey, the tax will not apply to you.

According to the City of Vancouver, this will only apply to a category of homes known as Class 1 Residential, which includes “single-family residences, multi-family residences, duplexes, apartments, condominiums, nursing homes, seasonal dwellings, manufactured homes, some vacant land, farm buildings and daycare facilities.”

If your property is within the boundaries of the city of Vancouver but is not solely classed as a Class 1 Residential property, the Empty Homes Tax will not apply and you are not required to make an annual property status declaration.

Some exceptions to the tax exist. They include but are not limited to properties that:

• Were not principal residences, but were occupied for at least 180 days of the year because you worked in the city of Vancouver.
• The owner or the tenant was receiving long-term, inpatient, medical, or supportive care.
• The registered owner was deceased and a grant of probate or administration of the estate was pending.
• The title was transferred during the year
• Were undergoing redevelopment or major renovations where permits:
  had been issued and were being carried out diligently and without delay, or
  were under review for redevelopment of vacant land or the conservation of heritage property 
• Are under a court order, court proceedings, or an order of a governmental authority prohibiting occupancy.

How Will The Tax Be Implemented?

Every year homeowners in the City of Vancouver will need to make an annual property status declaration. This will include the valuation of the property and will state whether or not the property was vacant for six months or more during the previous fiscal year.

The declaration will then be used to determine whether or not the property will be taxed.

All declarations for the 2017 fiscal year must be made between December 1, 2017, and February 2, 2018. Failure to do so will lead to the imposition of the tax, as well as a fine that may reach up to $10,000 per day of non-compliance. 

False reports can also lead to a $10,000 fine for homeowners.

According to a report published by Global News earlier this year, a City of Vancouver spokesperson said that “property status declarations will be subject to a rigorous audit process, in line with best practices for provincial and federal tax programs.”

This means that homeowners should definitely comply with the law, and be truthful in their declarations.

Will Unpaid Taxes Be Transferred to a New Buyer? 

Buyers may have to pay taxes owed on a property after they purchase it.

According to the bylaw, if you purchase or inherit a property that has unpaid Empty Homes Tax, you will not have to pay the one percent tax for that fiscal year.  

If it is found that it should have applied to previous years; that tax will be added to the property tax account associated with that property and “run with the land”. 

However, you’ll still have to present an annual property status declaration.

The Solution We’ve Found To The Potential Tax Problem

An Audit for the previous year could take place 1-2 years after your home purchase completes.  

Even if you know that the Seller lived there, it may be impossible to find them to sign an affidavit and provide the evidence required. This could be problematic.

We have seen several times were relations between buyer and seller are strained during the property transaction and negotiations.  How do you know they will cooperate with an audit?

As BC Notaries we are asked to provide our final report that the buyer owns the property free and clear of previous incumbents.  This is a new challenge in how we can now do that under the cloud of empty homes tax as the audit time is in the future and the tax liability stays with the homeowner.

 The penalty goes with to the individual (previous owner) but the tax if unpaid goes with the land.

Neither the City of Vancouver nor the real estate (salesperson and legal) community has done a great job at finding a convention on how we can deal with this. With every real estate transaction, there is potential that people are arguing about the Empty Homes Tax.  

This is an evolving area without a set generally accepted legal industry practice.  To protect buyer’s, we have a few new steps for City of Vancouver Purchasers.

1. Confirm Tax Status

Ensure that declarations are made and tax paid or held back until declaration made.

2. Protect The Buyer and Lender From A Future Tax

Where the contract is silent on who is going to deal with the issue about Empty Homes Tax, we need to find something that has certainty.

We have worked with the title insurance companies to confirm protection and most title insurance policies will protect buyers and lenders from the result of an unfavourable audit for previous year’s declarations.

The cost of title insurance depends on the price of the property. Here is a Policy Calculator for Stewart Title. Cost and coverage between title insurance companies are about the same.  

While title insurance is an increased cost, we can find something that delivers certainty as well as providing protection on several other areas as well.  We urge all buyers to now purchase “owner policy” title insurance.

Many Lenders already insist on getting title insurance to cover the mortgage.

The Empty Homes Tax isn’t mentioned in the contracts of purchase and we receive.  We can’t have variables.  We urge our purchaser’s to follow our advice and purchase owner’s policy title insurance.

Purchasers do have a choice and our clients can refuse to buy title insurance. In such cases, we will provide a Waiver if to confirm the risk lies solely with the purchaser. They agree we accept no liability around unpaid taxes or risks that would have been covered by title insurance.

Have any questions?

If you still have questions regarding the Empty Home Tax and for more information about buying real estate in the City of Vancouver, please call or email us.  We are happy to assist you directly or to provide a referral to a notary or lawyer in your area.

David Watts, BC Notary
Clinton Lee, BC Notary
David Watts Notary Corporation
Phone: 604 685 7786

After the Vancouver City Council passed the controversial Empty Home Tax By-Law, dozens of homeowners and buyers have come to my office asking about the whether it applied to them.

We’ve created this handy infographic that will help explain the Empty Home Tax.

It also details how to overcome the biggest risk to home buyers – getting hit with a $10,000+ tax from before they owned the property.

For a more detailed explanation of the Empty Home Tax, see this post.

If you find this infographic helpful, you can use it on your site. See below for full permission details.