Month: August 2014

29 Aug

Loyalty doesn’t pay when it comes to mortgage renewals


Posted by: Deborah Fehr

Loyalty doesn’t pay when it comes to mortgage renewals

A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.

A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.


A Bank of Canada study found that loyal bank customers don’t get best deal when they renew mortgage. People who switch and first-time buyers do.


Everyone you deal with would like you to believe there are rewards for your loyalty.

They may offer a better price, a bundling discount, or less tangible things like superior customer service. Sometimes your loyalty is rewarded and sometimes it isn’t.

The best way to figure out which is which is to become better informed about your choices. Compare prices and features, read the fine print on contracts and keep an eye on developments in the news. In this respect, the Internet has been a great leveler. The products are all on display in the online shop window. You can poke around, ask questions, figure out where you want to spend your money and negotiate a price.

The biggest investment most of us make is in a home. So if you can shave just a little off the cost of a mortgage, you can save thousands in interest payments.

Here, you’d think that loyalty would work in your favour — the more services you have with a bank, the better the deal. But, that’s not true according to evidence in a Bank of Canada paper called Discounting in Mortgage Markets. The 2011 study by three economists looked at a sample of Canadian insured mortgages between 1999 and 2004 to figure out who got the best rates.

The economists found that people who switch banks get a better deal than existing customers, because new customers offer the banks an opportunity to sell more products. Existing customers assume they will automatically get a better deal because they’re loyal, but don’t. They don’t bother to shop around because they assume they’ll get the best rate so, lacking ammunition, the discount may not be much. Those least likely to shop around are affluent, possibly because they’re happy with the full service they get from a bank and are willing to accept higher rates in exchange.

The study also found that mortgage brokers find the best rates . Mortgage brokers are paid by the lender, not the customer, but aren’t confined to one lender’s products. Their business is very competitive, so the pressure to find the very best rates is high. The study noted that brokers “are a significant factor driving discounts,” reducing the cost of a mortgage on average by 17.5 basis points.

As a group, first-time buyers do well because they are more likely to have shopped around, have tight budgets and so fight for every basis point. They’re a higher risk group for a bank because they have so much debt, but over time the bank can sell them more services. So they get good deals.

“Lenders are more willing to offer discounts to younger borrowers in return for future expected profits,” the study says.

Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, an industry group, isn’t surprised by the finding.

About a quarter of Canadian mortgages are done through a mortgage broker, but the portion of new buyers who use brokers is a much higher 40 per cent, he says. First-time buyers tend to be younger, more comfortable using the Internet and social media for research, and like shopping around, he says. They are also less loyal and happy to try new things — like a mortgage broker — if it gets them what they want.

“We don’t do as well with renewals,” Murphy says. “Your lender sends you something in the mail, you’ve paid off some principal, the new rate looks pretty good, so you say OK.

“But you should shop around. Just because a bank offers you a rate doesn’t mean it’s the best one.”

You remember when your mother said you should do your homework? She was right.

15 Aug

3 Myths about Home Staging


Posted by: Deborah Fehr

3 Myths About Home Staging 

By Audra Slinkey, Home Staging Resource

There’s been a lot of talk about staging a home to sell these days because for the first time in a long time, sellers are getting above asking price offers! Making the most money on the sale of the house is the name of the game, and the agents who can do that for a neighbor/friend becomes the agent of choice.

Unfortunately, there are quite a few myths about home staging that need to be corrected…

Myth #1 – Staging is mostly “decluttering.”

FALSE! Staging is about “styling for the photo shoot.”

While removing the extraneous in a home in order to give the seller a view of the architectural details is a part of staging, completely clearing off the kitchen counters, dining tables, and coffee tables is most definitely NOT what a good home stager recommends.

kitchen_blankslateListing photos online often show kitchens, for example, with completely cleared countertops and that are overall lifeless.

But an expert home stager works with the home’s integrity to capitalize and merchandise the space into something that will resonate with the buyer online first — so they’ll then want to see the home in-person.


Photo credit: Karen Scovie of Staging Consultants, staging


Myth #2 – Staging is mostly for vacant homes.

FALSE! Staging is more critical in occupied homes because it costs a lot less and has a huge impact.

Consider this photo online originally for this room (another overly “decluttered space”).

june carter before living

Once June Carter of stages the space using updated accessories the photo and room is transformed!

june carter cafter living

Myth #3 – Staging is about neutralizing and painting all the walls beige.

FALSE! Staging is about working with what the seller has, so that the more expensive cosmetic changes don’t need to done.

For example, look at this dark bedroom. It likely would benefit best from paint.


Debra Ostrus of Spaces Streamlined works first with the owner’s furnishings to inexpensively rearrange and photograph the space using the color scheme provided.


The challenge for most real estate agents is finding the kind of home stager who understands that staging is an art form in merchandising. We are creating a space the buyer will fall in love with. When we do this, the demand for the product goes up and thus the price too.

12 Aug

New homes made affordable – thanks to Mom & Dad


Posted by: Deborah Fehr

New homes made affordable – thanks to mom and dad

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Those who are hoping to get their first step on the property ladder may have a family discussion about how their parents may be able to help.

One option that could be considered is mom and dad selling their house to the adult child, but at a below market price but does this make good financial sense? Accountant Graham Williams says no.

As selling a principle residence is tax free, he says parents would be wasting an opportunity to maximise that benefit and suggests an alternative. Parents sell the house on the open market, downsize and use the left over cash to help the kids out. The gift would be tax free or the down-payment could be marked as a mortgage free loan to be repaid on the sale of the house; this loan would not have to be repaid in practice.

Williams suggests consulting with an accountant or lawyer to get advice on individual circumstances.