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Changes to Mortgage Lending Guidelines May be on the Horizon

Changes to Mortgage Lending Guidelines May be on the Horizon

Are you thinking of buying a home soon? The federal government has proposed changes to mortgage lending guidelines that may affect you. The changes are aimed at reducing the financial risks associated with Canada's heated housing markets.

Currently, there is a 'stress test' applied to insured mortgages. That rule requires homebuyers with less than a 20% deposit to qualify at the Bank of Canada's posted rate (typically higher than offered rates). The proposed guidelines may also include a similar test for uninsured mortgages, which are loans secured with a deposit of at least 20% on the value of the home. This change could mean that homebuyers will have to show they can afford a 2% increase on the interest rate for which they are approved. According to an example from cbc.ca, a buyer looking to secure a mortgage with 20% down on a $1M home at 3% interest rate would have to prove they could pay up to $4,652 per month instead of the $3,786 on their contract — a difference of $866 per month. This would apply to both variable and fixed-rate mortgages, regardless of term.

These proposed guideline changes were drafted this past July by the Office of the Superintendent of Financial Institutions (OSFI). The public was invited to give feedback on the proposed changed up until August 17. Once OSFI has reviewed the feedback, they will finalize the guidelines and set an effective date for later in 2017. Federally regulated financial institutions would be expected to follow these guidelines once implemented. Though nothing has been announced yet, it might be a good idea to prepare as these changes could make it more difficult to secure a mortgage.

We'll keep an eye on the possible changes. For now, you can get more information from OSFI (link to http://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/B20_dft_nr.aspx)

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Your New Home Warranty Coverage 

Your New Home Warranty Coverage

We understand that buying a home is an important decision for you and your family. It’s a huge investment and you want to make sure it’s protected. That’s why every home that Kirkland Homes builds carries a comprehensive warranty through the Alberta New Home Warranty Program (ANHWP).

 
Since Kirkland’s inception in 2009, we’ve been a proud member of the ANHWP. They are Alberta’s largest home warranty provider and have stringent standards for builder membership. ANHWP also works towards improving homebuilder performance, professionalism, responsibility and accountability – the cornerstones of every successful relationship between homebuilders and their customers. 


While Kirkland Homes’ customers have always had ANHWP coverage, it wasn’t until February 2014 – when the Alberta government enacted The New Home Buyer Protection Act – that all new homebuyers were required to receive warranty protection from their homebuilder. According to this legislation:

 

  • Every homebuilder must provide proof of warranty coverage to obtain Alberta building permits.
  • A government-managed registry will provide public access to key dates and specific information about new home warranties.
  • At a minimum, the warranty on each new home whose building permit application was submitted after February 1, 2014, will provide “1-2-5-10” coverage.

This means that any home you purchase from Kirkland Homes includes mandatory warranty coverage of one year for labour and materials, two years for delivery and distribution systems, five years for building envelope protection and 10 years for major structural components (“1-2-5-10” coverage). 


Take a look at this video, which shows the new home warranty coverage you will have over the coming years of home ownership.  

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Checking Your Sump Pump

This is just a friendly reminder from the Kirkland Homes team to check your sump pump!

Edmonton (and area) has experienced a rainy and snow-filled spring. All of this water in the ground means that there's likely to be significant levels of saturation in the soil around your home. Please take a moment to examine your sump pump to ensure it is plugged in and working properly. If it's not functioning, there is the potential for a basement flood.  

Take a look at our short video to see how to inspect your sump pump. If you're not comfortable with performing this task, or if your sump pump requires maintenance, we suggest calling an expert. As homeowners are responsible for the care and upkeep of the home's sump pump, you can use the plumber of your choice. If you need the name of a plumber, Kirkland Homes uses Access Plumbing for sump pump inspections; the cost associated with this service is $117.

 

 

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Pre-Sale vs. Spec Homes

Pre-Sale vs. Spec Homes

The Kirkland Homes Advantage:  Pre-Sale versus Spec Homes

 

The Kirkland Homes Advantage

Kirkland Homes offers both pre-sale and spec homes. But what’s the difference between the two options, and which option would work best for you and your family?

Spec Homes

Builders speculate (hence the term “spec homes”) on houses that will be popular in the coming months and build with the knowledge that the home will eventually sell. Also known as “quick possessions”, these homes are either at or near completion. The lot, model, colours and finishes have already been chosen by the builder.

This option is generally for buyers who value time more than customization. Since the home is already under construction (or is already completed), you have the ability to own the home right away. The trade-off is that you likely won’t be able to customize the home (depending on the stage of construction) since all of the big decisions have already been made. 

Pre-Sale Homes

These homes are built for a specific customer. The customer chooses the lot, model, exterior options and interior colours and finishes before construction begins.

This option is generally for buyers who value customization more than time. With a pre-sale, you’re involved in your home’s construction from the beginning and are an integral part of its evolution. You have the ability to modify a floorplan to suit your preferences, and make sure the elements of the home are perfect for you and your family. The trade-off is that it takes more time to build a home than it would to buy a spec home. 
It all comes down to what you value most – time or personalization.

Consider what both options would mean for you and your family before you decide on a spec home or pre-sale home. Either way, Kirkland Homes will work closely with you to make sure you get a home that will work for you and your family. And whatever home you choose, it will be protected for years to come since we’re a proud member of the Alberta New Home Warranty Program.

If you’d like to find out more about our Quick Possession homes, click here. If you’d like to find out more about building a home in Stewart Greens or Hawks Ridge, contact Lauren at 780-490-8006. For homes in Creekwood, contact Ann at 780-916-0829. For homes in The Brickyard (Stony Plain) contact Heather at 780-919-6619.