TDSS - What First Time Home Buyers Should Know

ROB CARRICK

The Globe and Mail

The TDSS ratio is a guide to balancing debts, saving for things like retirement and spending on essentials and luxuries. If you can keep your TDSS in the right zone, you can do it all.

Think of the TDSS as a riff on the Total Debt Service Ratio, which all lenders use to qualify mortgage customers.

The Total Debt Service Ratio is a comparison of your monthly mortgage, property tax and heating costs plus other debt payments against your monthly gross household income.

There is but one purpose to this ratio: Determining whether you will be able to repay what you borrow.

In no way does it indicate whether you’ll be able to balance debt repayment, saving through registered retirement savings plans or tax-free savings accounts, and spending on non-essentials.

The TDSS does exactly that by adding the cost of saving to the analysis of what’s affordable. Now, you’re measuring all your housing and debt costs plus a monthly savings commitment of 10 per cent of your paycheque. If you can keep your TDSS in line, you’re good to spend what’s left.

Here’s why lenders don’t automatically do this kind of number crunching: Mortgage lending is an important generator of revenues and they won’t do anything to prejudice a deal.

Tell a young couple they can’t afford a home and still manage a 10-per-cent savings plan? Won’t happen.

Banks could actually benefit by using the TDSS to sell their investing products, however.

The conversation might go something along the lines of, “Here’s how much of a mortgage you can afford and still contribute 10 per cent of your pay to an RRSP or TFSA. And, by the way, here are the investment options we offer.”

But banks evolve the way the Toronto Maple Leafs improve – so slowly that you doubt it’s even happening.

It’s up to you, then, to see whether you’ll be able to save and carry a mortgage.

To get you started, we’ve created an online TDSS spreadsheet. Just plug in your numbers and let the spreadsheet calculate your TDSS. (Click here to download it.)

What you need to get started:

• Gross monthly household income: Simply divide the combined annual pre-tax salaries for you and your partner, if applicable, by 12.
• Your projected monthly mortgage payment: If you plan to pay biweekly, multiply your estimated payments by 26 and divide by 12 to get a monthly amount.
• Monthly property tax cost: Get the most recent annual property tax bill for the home you’re considering, increase it by the inflation rate and then divide by 12.
• Heating: Find out what the monthly heating bill is for the home you’re looking at, or ask your real estate agent what a typical cost is.
• Other monthly debt payments: Add your car loan or lease payment and whatever else is applicable.
• Savings: Block out an amount equal to 10 per cent of your monthly take-home pay for contributions to RRSPs, TFSAs or emergency fund savings accounts.

Some background for interpreting your numbers: Lenders may let a client’s Total Debt Service Ratio go as high as 44 per cent, but 40 per cent is a common ceiling.

If you can keep your TDSS ratio in that same zone or lower, you’re doing well. Because you’ve left room for savings as well as repayment of your mortgage and other debts, there’s room in your finances for extras like lattes, and also for extra savings.

If your TDSS is in the 40- to 50-per-cent range, affording the home you’re looking at will be tougher.

You can do it, but your ability to spend on luxuries without incurring more debt will be at least somewhat compromised.

TDSS scores that are even higher suggest you need to keep building your down payment before buying a house.

One last thing: It’s a good idea to lock in your 10-per-cent savings commitment by arranging automatic electronic transfers to a savings or investment account every time you get paid.

Lenders ensure they get paid by deducting money directly from your account. Give your savings the same courtesy.

www.teambluesky.ca

5 things to consider before renovating

Lauren La Rose

BATHTUB

Jill Greaves DesignOne stand-out item, such as a bathtub, can be come the focal point of a room.

1 of 2

TORONTO Whether you’re about to tackle a do-it-yourself project or enlisting the support of professionals to carry out the job, there’s a lot to consider before embarking on a home renovation.

“It is a fairly complex process and (with) lots of decisions to be made as the homeowner,” says Jill Greaves, who has specialized in interior designfor about 15 years. At the recent Interior Design Show in Toronto, she led a seminar on ways to draw maximum benefit from home renovation projects.

She has five things she wants you to think about before breaking out the tools — or cracking open your wallet.

1. Determine goals and inspirations. “If you want a new bedroom for a new baby or if you want your house to be more Zen, that should guide you through the process.”

2. Space planning. Whether it’s a new build or a fixer-upper, Greaves says it’s important to take note of the prominent features that distinguish your property.

“If you’re looking at redoing your living room, do you have beautiful light that comes in? Do you have a nice view of your back yard? Is the house already in a good location? Or are you trying to maximize the potential of the house?

“Looking at your assets and determining how you can best use those (are) part of the space-planning process.”

3. Budgeting. While determining how to divvy up funds is typically top of mind when it comes to renovations, allocating how to devote your time is just as integral to the process.

“If you have a certain budget in mind for your home and time, you need to communicate that to people you’re working with.”

For those who enlist a consultant, Greaves says clients should clearly communicate that the task needs to be completed within the timelines and budget agreed upon and that there’s no stretching beyond the margins.

If homeowners want an alteration midway through, they should be prepared to see potential changes in the completion date — and the final price tag.

“That rolls everything back a few steps, and it will cost you more to make decisions twice.”

Greaves says having a wants vs. needs conversation early on can determine which items on the project list are realistic and which fall outside of the realm of possibility.

4. Finishes. Now comes the fun part — choosing the flourishes that will form the result.

Individuals ready to rip out their carpet or revamp their flooring have several options and wood flooring may be among them.

An unfinished wood floor that’s finished on-site will take several days for the finish to harden enough to walk on — and is still a bit fragile for a week, she notes.

“If you have a crew waiting to do other work for one week or you have other accommodations, that’s a week worth of cost.

“If it’s prefinished in the factory, install it and walk on it right away.”

For tiles and hard finishes, Greaves says porcelains are less expensive than natural stones.

“You’ll get a different look. It can be very stylish and very contemporary or timeless as well; but you’ll pay less and it will be less maintenance.”

5. Furniture. Costs can quickly mount if you replace your loveseat, armchair and sofa all in one go.

When opting to invest in the largest pieces for your space, Greaves says it’s best to select classic shapes and styles that have more longevity.

“Accessories are where you can go trendy with colours (and) patterns.

“Keep the larger pieces, the more expensive upholstered pieces or some of your cabinetry a bit more classic unless you have the budget to change those big things all the time to keep on the trends.”

Fresh linens, toss cushions, European shams and a throw over the end of the bed will instantly alter the appearance of the bedroom less expensively than a full room overhaul, she notes.

If you are splurging or investing in a big-ticket item, consider selecting something that will be the centrepiece of your space.

“Nobody sees the chairs when you’re sitting down for dinner but everybody sees the chandelier. It’s a great place to have an accent piece.”

The Canadian Press

www.teambluesky.ca

Burlington Home Sales, Listings & Average Price

SALES, LISTINGS & AVERAGE PRICE 2003-2012





RAHB's media release


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How to Work with a House Painter

by: Lisa Frederick

Although painting is one of the most DIY-friendly jobs, there are times when you'll want or need to hire a pro. Here's how you can ensure a tip-top experience.

What a house painter does: In addition to painting surfaces of all kinds, painters prep those same surfaces (stripping wallpaper, sanding wood etc.), source and purchase materials, provide input about colors and finishes and, in many cases, supervise crews. Some handle specialty finishes such as a Venetian plaster or rag-rolled effect.

When to hire one: Hire a painter for interior and exterior painting jobs you don't want to handle or that are too tricky for an amateur to tackle.

What it will cost: Rather than an hourly fee, most painters charge according to surface area and the level of skill and work involved. Prices vary widely, but in general, labor will cost between $2 and $4 per square foot for a basic paint job. Paint itself costs $15 and up per gallon, depending on the brand and finish, and other supplies such as tape and rollers add to the bottom line too.

Ready to start? Keep the following suggestions in mind.

by Webber + Studio, Architects

by Webber + Studio, Architects

Make preliminary decisions up front. The process will go more smoothly if you go into it with ideas about your preferred colors and finishes and know exactly which surfaces you want painted. Be aware that paint colors almost always look slightly different in print or on a computer screen, so use these only as guides.

Paint chips, while not 100 percent true to life, provide a closer approximation, but the only reliable method of choosing colors is to test them on the walls (more on that in a minute). The painter you eventually hire should be able to offer advice on how lighting and other concerns will affect the hues you're considering.

Take care of necessary repairs. Do you have cracked moldings, dented drywall or other structural dings that need to be fixed? Make plans to repair them before the painter begins work. A flawed surface can ruin even a perfect paint job.

by Carla Aston | Interior Designer

by Carla Aston | Interior Designer

Gather and contact potential pros. Painters are among the most common professionals that homeowners use, so simply asking friends and neighbors for recommendations should start you off with a good list of names. You can also check with your local homebuilders' association or talk to architects andinterior designers to see whom they like to work with.

Generally, a prospective pro will pay a site visit in order to learn more about your needs and work up an estimate. You want to find a painter who falls in step with your budget, suits your style and has experience with the types of surfaces you need painted, especially if you're considering special finishes. Once you've narrowed down your list to a few likely candidates, ask for references and check them.

by LASC Studio

by LASC Studio

Request samples. Once you've settled on a painter, it's time to pin down the paint. Again, the only way you'll know if you really like a given color is to try it out in your target space. Ask the pro to provide sample boards or small pots of paint that you can dab onto the walls.

Be specific about brands. If you want a certain brand of paint used, be sure the painter is aware (ideally, you'd put it in writing). Otherwise, he or she might take the liberty of choosing a different variety to stay within budget or compensate for your choice's lack of availability.

Clear out the room before painting begins.If an item can be moved, move it — this will make the painter's job easier and ensure that paint doesn't get dripped on your prized porcelain lamps. Large or fixed objects, such as chandeliers or sofas, can be covered with drop cloths or plastic sheeting. Don't use bedsheets; paint will soak right through them.

Be sure that the painting crew cleans up thoroughly. At the end of the job, keep an eye out for drips and spills, debris or other things that may need to be remedied.

Agree on follow-up maintenance. Most painters will fix chips, flakes, blisters and other flaws that appear within a specified time period after the painting is done. The paint you choose might come with a warranty as well, but remember that it won't cover the cost of labor. 

www.teambluesky.ca

What's "Leftover Wine?"

by epicurious

When it’s time to turn that opened bottle of wine into a sauce

You’ve heard the joke. Question: “How long does leftover wine last?” Answer: “What’s leftover wine?” In the interest of promoting moderation and less wine waste, let’s tackle this issue. You’re probably staring at a bottle on your counter right now, wondering, “Can I still drink this?” Part of the problem is having the wine on your counter. Store leftover wine, even reds, in the fridge. The cold environment slows down the oxidation process. When it comes to preserving freshness and flavor in your wine, oxygen is the enemy. While preparing dinner (or waiting for that pizza to be delivered), don’t forget to pull that bottle of red out of the fridge. By the time you dig into your dish (or slice), the wine will have shed its chill. So you’d like an absolute number when it comes to how long an open bottle of wine lasts? Not a wide range, nor vague answer, but something concrete? Since the vast majority of wine produced today is meant to be opened and consumed immediately, time is definitely not on your side. At Bottlenotes, we generally keep dry white wines for two days; red wines for three. Of course there are exceptions to every rule, so let us know your thoughts. It comes down to whether avoiding waste becomes more important than taste. Luckily, with wine, as Christy Frank, owner of Frankly Wines in New York City, explains, “It's not going to go bad in the way that milk does, so it won't make you sick. Just keep trying it until you feel it's not worth drinking.” www.teambluesky.ca

Buying a Home for the First-Time, consider RRSP's

The Hamilton Spectator, January 29, 2013

Julie Shea

Is it me, or are RRSPs becoming passé?

Every RRSP season there is that inevitable question: “Should I invest in RRSPs or TFSA’s?”  While the answer depends entirely upon the individual’s personal tax situation, if you are a first-time home buyer with goals to purchase a home, RRSP’s are definitely “IN”.

Thanks to the Home Buyers Plan, contributions you make today will not only provide you with a nice tax refund, but that money can be taken out tax free to use towards a down payment on your first home.

Each qualified first-time home buyer is allowed to take up to $25,000 from their RRSP- tax free! A first-time home buyer is someone who has not owned a home in the past four years. So even if you may have owned a home in the past, if four years have passed, you can utilize this program. While you can use the program more than once, you have to make sure the balance has been paid off from the first time. If you qualify, both you and your partner can take up to $25,000 from your RRSP. Then, after a two-year grace period, you will have 15 years to replace it into your RRSP in equal instalments. Your RRSP is an excellent place to save for a down payment because you will be placing it a plan that is difficult to withdraw from. Don’t have the money to contribute right now? Consider an RRSP loan. These are a little easier to qualify for than traditional loans and you pay a large portion back using your RRSP tax refund. RRSP loans are particularly good for people who need to beef up or repair their credit by adding another trade line to their credit history. There are some caveats to making that “soon-to-be-home-buyer” RRSP contribution. If you are planning on purchasing in the next three months be careful using this strategy because money in an RRSP can only be withdrawn tax free if it has been in the RRSP for at least 90 days.

Also, when you make your RRSP contribution with the intention of taking it out for a home, it is best to keep the investments within the RRSP in cash so that it won’t be locked in when you need it.

Traditional GICs have strict maturity dates and you basically have to die to get the money before it matures. Also, don’t place the money in any investments that might have fees for withdrawal.

When you are speaking to your financial adviser make sure to let them know that this money is intended to be used for a down payment on your home. All monies intended for your down payment should be in safe, liquid, no-fee investments.

www.teambluesky.ca