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Recently, the U.S. imposed tariffs on metals like steel and aluminum, suffering severe backlash from other nations, many of which are allies. This has caused a ripple effect that has undermined the stock market and could jeopardize the international trading system.

Canada, the largest supplier of steel and aluminum to the U.S., is one of the countries that must grapple with the actions and decisions of its most important trading partner. The fallout could be immense with the housing market and homebuyers feeling the repercussions and mounting some form of retaliation.

The New Tariffs 

The Trump administration has only released small details about the new tariffs but it’s believed that the U.S. will impose a 25% tariff on steel and a 10% tariff on aluminum. This news caused the Canadian dollar to plunge and the stock market to dip.

The U.S. enacted new tariffs under a stipulation that allows the president to revise tariffs if it is in the name of national security. For some reason, this little-known trade law was put into practice. These tariffs were controversial to U.S. trade partners but also had its detractors in the GOP and on Capitol Hill. 

The Construction Industry and the Housing market

The supply chain and cost of materials will be impacted by these tariffs, which will make construction projects prohibitively more expensive. Any price increase or inflated cost will most likely trickle down to homebuyers. This can raise housing prices which could price some prospective buyers out of the market. It could be profitable for sellers, heat the rental market or it could lower supply for a period. Only time will tell and it is also dependent on what counter-measures Canada plans to put into place.

With the right plan in place, Canada could strengthen other trade relations or have the U.S. reconsider, erasing any negative impact on the housing market or the construction industry.

Canada and the U.S. have an integrated economy so not only does this have the potential to hurt both countries economically, it can strain the diplomatic relationships in ways beyond trade.

Are you thinking about selling your house? If so, you are probably hearing advice telling you to wait until the spring or until the market turns around or to beware of new Government policies which will make it harder. Deciding to sell is a big decision and there are a lot of factors to weigh.

What market factors should sellers review for before listing?

Don’t Rule out the Winter

Yes, the GTA real estate market does heat up in the spring but there is much more inventory. This spring and summer market is more competitive and you might even find that many of your neighbours also waited until the snow melted to list their home.

The winter will give you a smaller pool of buyers but those buyers will have fewer options. Be sure to invest the time or money to shovel your driveway and to winterproof your windows, if listing during the colder months.

The Current Market

The best indicator as to whether you should sell or not is the market. The issue is that the market is open to interpretation and can be difficult to forecast. Sellers need to look at the market locally and review recent sales of similar properties to determine if the circumstances lend themselves to a larger pool of buyers and a potential bidding war.

The best strategy is to speak with an agent who has sold multiple homes in your area within the last 12 months. They will have the best insight as to whether you should list or wait.

Policies and Interest Rates 

How the Federal, Provincial and Municipal Governments in addition to The Bank of Canada intervene in the housing market can have an enormous impact on the sale of your home. Whether it’s the affordable housing act or an interest rate increase or a stress test, measures are often put in place to cool or warm a market.

You need to be aware of the overall state of the market to make an informed choice about if the time is right to sell your house.

If you’re considering going to school or need an influx of cash to pay for your child’s educational expenses, you’re probably already well-aware how much it costs to go to college or university.

In Canada, tuition for an undergraduate program for full-time students is, on average, $6,571. The average cost for a graduate program is $6,907. Toss in residence and food, etc., and a four year-university degree can cost as much as $60,000.1 For a child born today, it could cost as much as $140,000 to put them through college or university.2

It’s not just a post-secondary education that is costly. If you’re thinking of sending your kids to a private school, it can cost even more. A lot of private schools have tuition starting at under $4,000 per year for elementary years. Tuition for going to a private high school, generally range from $6,000 to $12,000 per year. If you want your kids to attend Ridley College or Upper Canada College, you’ll need to come up with around $35,000 a year.

Options for Financing an Education. Whether it's through a Registered Education Savings Plan (RESP) or a Tax-Free Savings Account (TFSA), some people find it easy to set aside that kind of money for a post-secondary education in Toronto.

But not everyone.

A study conducted by the Bank of Montreal found that 45% of parents with kids under the age of 18 expect to foot anywhere from 50% to 100% of their child’s post-secondary education. But not even that will cover all the expenses. To cross the finish line, student loans and scholarships will be needed to make up the difference.3

If you’re a homeowner, you have a secret weapon that can help pay for college tuition. It’s the equity in your home. Not only can a home equity loan give you the flexibility you need to help pay for a post-secondary education in Ontario, it also provides the peace of mind you need to focus on studying.

What Is Home Equity?

Every time you make a mortgage payment, or the value of your property increases, you build up equity in your home. The longer you own your home and pay your mortgage, the higher the equity in your home is.

For example, if you purchased a home for $400,000 and it has been appraised at $500,000 and you still owe $150,000 on the mortgage, you have built up $350,000 in home equity.

If you need to come up with money for tuition costs and you have built up more than 20% equity in your property, a home equity loan may be the best route to take. Not only is the Toronto housing market solid, interest rates remain low, and Ontario’s economy is strong.

Borrowing with a Home Equity Loan

Home equity loans are secured against your property. But banks will not let you borrow against all the equity you’ve built up. The maximum you can borrow with a home equity loan in Toronto is 80% of the appraised value (minus the unpaid balance of the existing mortgage).4

Once approved for a home equity loan, the lender will give you a one-time lump sum payment that gets paid off over a predetermined period, just like your mortgage does.

Just like your mortgage, you get charged on interest on the total amount of the home equity loan as soon as the lender gives it to you. And, just like your first mortgage, with a home equity loan, you are now responsible for two monthly mortgage payments.

Does Everyone with a Home Qualify for a Home Equity Loan?

No. Just because you have a home does not mean you automatically qualify for a home equity loan. Even if you’ve built up considerable equity in your property, Canada’s big banks might think there’s a good chance you’ll default on a home equity loan.

Why would big financial institutions do that? Maybe things have changed since you qualified for your first mortgage. If you’re now self-employed and cannot verify your income, it will be difficult to get a home equity loan.

If your credit has taken a hit or taken on too much additional debt, major lenders might turn down your request for a home equity loan. On top of that, Canada’s new stricter lending rules have made it much more difficult for the average home owner to secure a home equity loan.

If, for some reason, the value of your property has dropped, the equity you’ve built up in your home will have shrunk, further diminishing the chances of getting a home equity loan.

Canadalend.com, Helping Ontarians Access Their Home Equity

Unfortunately, the cost of living and unexpected expenses mean most Canadians have not saved up enough money to pay for a post-secondary education; whether it’s for their kids, grandkids, or themselves. If you’re a property owner, Canadalend.com can help you get a home equity loan with the best terms and conditions.

How can Canadalend.com provide better service and options that Canada’s big banks? Big banks will only try and get you to buy one of their financial products, whether it’s in your best interest or not.

Because the licensed mortgage professionals at Canadalend.com are independent, we have access to literally hundreds of different lenders. Many are non-traditional lenders that are not regulated by federal or provincial regulations.

If you’re a home owner and are looking to take out a home equity loan to help pay for tuition, or any other reason, contact Canadalend.com today. We’ll evaluate your current financial situation and help you find a lender that can provide you with a financial product that suits your needs. Or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

In October 2017, the Federal Government announced that a mortgage stress test would be applied to all mortgage applications in Canada. This news caused a firestorm of opinion and questions as many believed that it would block tens of thousands from homeownership.

What do current and future homebuyers need to know about the stress test, and what positives can be drawn from this Government intervention?

The Basics

Under this test, homebuyers must prove that they can afford a mortgage at either a five-year rate close to 5% or two percent higher than their current rate, depending on which is higher. The idea is to prove that a household will survive in the event of an interest rate hike.

The stress test is now embedded into the pre-approval process and is unavoidable for the most part. Homebuyers must evaluate their ability to pass the test or speak to a mortgage expert.

Insured and Uninsured First-time Homebuyers

An uninsured borrower is one who puts a minimum of 20% towards the purchase price as part of the sale. For borrowers who have a down payment below 20%, they must pay additionally for mortgage insurance.

Many uninsured borrowers assume that their down payment would exempt them from the stress test. Being able to pay a larger lump sum upfront doesn’t tell the lender that an applicant can carry the cost of a home monthly. Both insured and uninsured borrowers will be subjected to the stress test.

Mortgage Renewals

The stress test is not retroactive, meaning if your mortgage was approved prior to October 2017, then there will be no impact on your situation. In addition, if you renew with your existing lender, then you are exempt from the stress test. With respect to renewals, if you switch lenders then you will be subjected to the stress test during the process. Be sure to speak with your broker to confirm as this can vary from lender to lender.

The best advice is to not get too stressed about this situation. This new rule is designed to protect borrowers and lenders in the long-term against any market volatility.

There is a lot of information to sort through so speak with a mortgage specialist to review your situation and start the pre-approval process.