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moneysense.ca, 19/04/07
This and That
- Jonathan Chevreau asks if the acquisition of Algoma Steel by an Indian company means that Canadians should get a little more exposure to the Indian market.
- Larry MacDonald points out that as the GST rebate for purchasing a brand new house is not indexed for inflation, fewer and fewer houses now qualify for the full rebate.
- Rob Carrick writes in The Globe and Mail that it is not worth switching your mortgage lender unless the rate offered is more than 15 basis points cheaper.
- You wouldn’t expect this from a stock analyst, but here are ten ways to improve your level of happiness.
- Crunch Money pans a new guaranteed investment product.
- A CIBC report forecasts that Canadian house prices can be expected to double (in real terms) over the next 20 years, which works out to an annual rate of 3.5%.
moneysense.ca, 19/04/07
Another aspect of the gst rebate for new houses is the gst rebate for substantial renovations which is what my wife & I did to our house. Basically the rebate works the same for either case but the problem with the reno rebate is that you have to fill in a lengthy form indicating costs accrued during the reno. Not a big deal (took me 6 hours) but I put our rebate forms in last October – finally got a response in March, five months later indicating we needed to submit some receipts (we got audited I guess). We did that and now a month later we wait for some news on the decision. The reality is that if they know anything about house prices in downtown Toronto they will see through the “comparable” house prices we gave them and will disqualify our rebate because the house price is too high.
What am I complaining about here? Why do we hav e a tax-payer funded department to look after gst rebates for new houses/big renos when 90% of the country has house prices that put the owners over the threshold for receiving a rebate?
And why do they take so damn long to process the claim???
FYI – the rebate is 100% for houses that have a market value of $350k or less. And zero for a house that is over $450k. Anywhere in between is pro-rated, ie a $400K house will get 50% of the rebate.
FYI2 – the rebate calc is 36% of the gst you spent on the house or reno up to a certain amount which I can’t remember, but it’s pretty big.
I like Rob Carrick’s article on Mortgage Lender switching. The banks love to play the mortgage game and simply try to quickly lock up their existing clients rather than give them any competitive rate. It amazed me when I went back to my bank recently to renew my mortgage. After announcing they would want to treat me as a loyal long time repeating customer with a superior discount, the bank offered me less of a discount than what I had received on my first mortgage and higher than other rates out there. Do they not check their own records first? To me its all sales lingo and empty promises. You always need to push them for more. However, its good to know that even though you might get a lower rate you always need to watch the transfer fees. The fees that these companies try to give you in transition are most always waivable. I cannot tell you how many times ive asked to have unwarrented fees waived. Alot of them are simply IMHO a money grab. Hence speak up against it. “Cuz the squeaky wheel gets the oil”.
The banks are stupid sometimes – I’m mortgage shopping right now – I told my mortgage person at TD that I was going to be shopping around ie give me your best rate, and the quoted rate was 15 bps over ING. Through a mortgage broker so far I have 30 bps less than TD.
Ethan: The banks play this game because it works for them. Rob Carrick mentioned in his book that 30% (I think) of mortgage renewal offers are just signed and returned. Many people just don’t bother to shop around and negotiate with their bank. But at least, as Rob says in the article, people are wising up to these tricks.
And for those that aren’t wising up, the profit is going to those of us that own bank shares in one form or another
Is anyone familiar with Coast Capital? They’re a BC credit union, and they claim that their posted mortgage rate is their best rate, with no haggling. I’m just wondering whether that’s true or if it’s empty marketing. A lot of times their supposed “best rate” is 10 bps or more higher than ING.
Aleks, I just saw the TV ad for Coast Capital, advertising their no-haggle rates. I’m curious on what those rates actually are as well.
Ethan, I too have experienced exactly what you have. A week ago I went into by bank (Scotia) to meet RE: renewing and her “offer” was 25bps off prime! Fortunately, I had a hardcopy of a webpage of a local mortgage broker with his “today’s best rate” table. She was *then* willing to come down to within 5bps of his rate which was a further 60bps lower than the original “offer.”
Going to the bank should not have the same feeling as dealing with a slimy used car salesman.
One approach a lot of our clients take is to negotiate the best deal with their bank, and then come to us so we can beat it. Happens all the time, and the client typically gets even better terms and privileges to boot. A reputable mortgage broker (do your homework to find one!) will almost always save you money.