Insurance Products When You Own a Home

Michael Hallett • Apr 04, 2019
When it comes to your home, big or small, be prepared to be bombarded by a number of insurance products to keep you protected. While it can seem overwhelming, it’s a good idea to get familiar with the basics of some of the insurance you will either need to have, or choose as an optional.

Title Insurance: Title insurance is an insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership. It is not a requirement in many parts of Canada, but don’t dismiss it outright.

Title Insurance can protect you from existing liens on the property’s title, but it’s most common use is protection against title fraud. Title fraud typically involves someone using stolen personal information, or forged documents to transfer your home’s title to him/herself, without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money. Title Insurance is a one-time fee or premium with the cost based on the value of your property. You can purchase title insurance through your lawyer or title insurance company like First Canadian Title Company.

Mortgage Protection Insurance: Just before you sign off on your mortgage, your broker is required to tell you about mortgage protection insurance. While this insurance is also optional, don’t dismiss it outright. Almost every broker has a story of someone who passed on the extra coverage and tragedy hit. The majority of people skip over getting mortgage insurance for two reasons: they don’t want to spend the money, or they already have some type of life insurance policy through work.

But if you have spouse and kids, you need to think about whether they can carry on with the mortgage payment. If they can’t they’ll be forced to sell. For a few dollars a month extra, it may not be a bad idea.

There are also a number of different policies that could work for your budget. Manulife’s Mortgage Protection Plan offers you immediate insurance and can be canceled at any given time.

While you think you may be covered through your work, you need to take a closer look at the policy.

Mortgage insurance is a debt replacement while life insurance is an income replacement. You need to understand the difference. You also need to see just how much you’re going to get through your life insurance policy. Unless you’re a police office or firefighter, you may end up being surprised just how little you end up with at the end of the day.

Property/fire insurance: Before you close on your home, your lender is going to require you have home insurance. While there are different types of coverage, home insurance generally covers you from damage to the home that is accidental or unexpected like a fire. It can also cover the contents of the home depending on your insurance package. If you’re buying a condo or a strata, you’re also going to need similar condo insurance that covers you for your unit.

Consider this: Just because you have home insurance doesn’t mean you’re covered in the event of a flood or earthquake. Depending on where you live, you may need to purchase additional coverage to be protected from a natural disaster. It’s best to talk to your insurance provider to make sure you’ve got the coverage you need. Don't know anyone? Contact me anytime, I would love to point you in the right direction.

This article was included in the DLC monthly newsletter for March 2019. 

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MICHAEL HALLETT
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Understanding the Recent Housing Affordability Measures in Canada

By Michael Hallett • 18 Apr, 2024
In recent years, housing affordability has become a significant concern for many Canadians, particularly for first-time homebuyers facing soaring prices and strict mortgage qualification criteria. To address these challenges, the Canadian government has introduced several housing affordability measures. In this blog post, we'll examine these measures and their potential implications for homebuyers. Increased Home Buyer's Plan (HBP) Withdrawal Limit Effective April 16, the Home Buyer's Plan (HBP) withdrawal limit will be raised from $35,000 to $60,000. The HBP allows first-time homebuyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) to use towards a down payment on a home. By increasing the withdrawal limit, the government aims to provide young Canadians with more flexibility in saving for their down payments, recognizing the growing challenges of entering the housing market. Extended Repayment Period for HBP Withdrawals In addition to increasing the withdrawal limit, the government has extended the repayment period for HBP withdrawals. Individuals who made withdrawals between January 1, 2022, and December 31, 2025, will now have five years instead of two to begin repayment. This extension provides borrowers with more time to manage their finances and repay the withdrawn amounts, alleviating some of the immediate financial pressures associated with using RRSP funds for a down payment. 30-Year Mortgage Amortizations for Newly Built Homes Starting August 1, 2024, first-time homebuyers purchasing newly built homes will be eligible for 30-year mortgage amortizations. This change extends the maximum mortgage repayment period from 25 years to 30 years, resulting in lower monthly mortgage payments. By offering longer amortization periods, the government aims to increase affordability and assist homebuyers in managing their housing expenses more effectively. Changes to the Canadian Mortgage Charter The government has also introduced changes to the Canadian Mortgage Charter to provide relief to homeowners facing financial challenges. These changes include early mortgage renewal notifications and permanent amortization relief for eligible homeowners. By implementing these measures, the government seeks to support homeowners in maintaining affordable mortgage payments and mitigating the risk of default during times of financial hardship. The recent housing affordability measures announced by the Canadian government are aimed at addressing the challenges faced by homebuyers in today's market. These measures include increasing withdrawal limits, extending repayment periods, and offering longer mortgage amortizations. The goal is to make homeownership more accessible and affordable for Canadians across the country. As these measures come into effect, it's crucial for homebuyers to stay informed about the changes and their implications. Consulting with a mortgage professional can help individuals explore their options and make informed decisions about their housing finances. If you're interested in learning more about these changes and how they may affect you, please don't hesitate to connect with us. We're here to walk you through the process and help you consider all your options and find the one that makes the most sense for you.

A First Home Savings Account (FHSA)

By Michael Hallett • 18 Apr, 2024
Dreaming of owning your first home? A First Home Savings Account (FHSA) could be your key to turning that dream into a reality. Let's dive into what an FHSA is, how it works, and why it's a smart investment for first-time homebuyers. What is an FHSA? An FHSA is a registered plan designed to help you save for your first home taxfree. If you're at least 18 years old, have a Social Insurance Number (SIN), and have not owned a home where you lived for the past four calendar years, you may be eligible to open an FHSA. Reasons to Invest in an FHSA: Save up to $40,000 for your first home. Contribute tax-free for up to 15 years. Carry over unused contribution room to the next year, up to a maximum of $8,000. Potentially reduce your tax bill and carry forward undeducted contributions indefinitely. Pay no taxes on investment earnings. Complements the Home Buyers’ Plan (HBP). How Does an FHSA Work? Open Your FHSA: Start investing tax-free by opening your FHSA. Contribute Often: Make tax-deductible contributions of up to $8,000 annually to help your money grow faster. Withdraw for Your Home: Make a tax-free withdrawal at any time to purchase your first home. Benefits of an FHSA: Tax-Deductible Contributions: Contribute up to $8,000 annually, reducing your taxable income. Tax-Free Earnings: Enjoy tax-free growth on your investments within the FHSA. No Taxes on Withdrawals: Pay $0 in taxes on withdrawals used to buy a qualifying home. Numbers to Know: $8,000: Annual tax-deductible FHSA contribution limit. $40,000: Lifetime FHSA contribution limit. $0: Taxes on FHSA earnings when used for a qualifying home purchase. In Conclusion A First Home Savings Account (FHSA) is a powerful tool for first-time homebuyers, offering tax benefits and a structured approach to saving for homeownership. By taking advantage of an FHSA, you can accelerate your journey towards owning your first home and make your dream a reality sooner than you think.
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