What is HELOC in Canada?

Owning a home is a dream for many Canadians because it provides a feeling of stability and security that is hard to find in the rental market. However, that dream is difficult to turn into a reality because owning a home entails a slew of financial obligations, including managing home equity. That's where a HELOC comes in. A HELOC, or Home Equity Line of Credit, is a tool that many Canadians use to leverage their home equity. In fact, according to a new report, more than 30 percent of Canadian homeowners have a HELOC. Now you might be wondering what exactly is a HELOC and how can it be used to benefit homeowners? So, let's understand!

What is a HELOC in Canada?

A Home Equity Line of Credit, also known as a HELOC, is a sort of attached revolving line of credit that allows homeowners to borrow against their home equity. If you are familiar with the term equity, then it is the difference between the value of the home and the mortgage. And that equity fills in the property as the homeowner pays off their mortgage.

A HELOC allows homeowners to use a portion of their home equity as a line of credit. The amount of available credit is determined by the creditworthiness and obligation of the borrower, as well as the equity of the home. The borrower can borrow as much as required and pay interest only on the amount used.

How does a HELOC work?

A HELOC is similar to a credit card in that it is a revolving line of credit. On the off chance that it is necessary, the borrower can get a loan up to the predetermined credit limit. The borrower pays interest only on the used credit amount.

Suppose a homeowner has a HELOC with a credit limit of $50,000. In the event that they use $10,000 of the loan to finance a home renovation, he will be charged interest on the $10,000 until it is repaid. If necessary, the borrower can get the remaining $40,000 in credit. It typically have variable interest rates, and that means they can change based on market conditions. But, there are some lenders that offer fixed-rate HELOCs, which can stabilize a borrower's monthly payment.

What can a HELOC be used for?

HELOC can be used for many purposes. Many homeowners use it to finance home renovation projects because HELOC often have lower interest rates than other, more unstable loans. This can also be used to consolidate high-interest debt, such as credit card debt or personal loans. A few homeowners also use HELOC to finance education costs, pay for weddings or other large occasions, or cover surprising expenses.

However, it's important to note that using a HELOC to finance non-essential expenses can be risky, as it can increase the borrower's overall debt load and potentially put their home at risk if they are unable to repay the debt.

Last Updated:

2023-04-12

Real Estate Canada

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What are disadvantages of Home Equity Line of Credit or HELOC in Canada?

Are you a Canadian homeowner and thinking to use Home Equity Line of Credit (HELOC) to finance the home renovations or other expenses? Yes, a HELOC can be a valuable tool for accessing the equity in your home, but, have you really considered the potential drawbacks before making this decision? Do you really know that HELOC comes with the risk of overborrowing to the possibility of losing your home? If yes and you understood properly the you go for it, if not the nothing to fear about. Because today, we'll explore the most significant drawbacks of HELOCs in Canada and what you can do to mitigate them. ## What are disadvantages of Home Equity Line of Credit or HELOC in Canada? **1. Variable Interest Rates** One of the biggest disadvantages of a HELOC is the variable interest rate that often accompanies it. While the interest rate on a HELOC can be lower than other types of loans or credit, it can also fluctuate based on the Bank of Canada's prime lending rate. This means that your monthly payments can vary and become unpredictable, making it difficult to budget and plan for future expenses. **2. High Costs** HELOC often come with high upfront fees, including appraisal, legal, and processing fees. Homeowners also need to pay for ongoing maintenance costs such as property insurance, property taxes, and any necessary repairs. Additionally, if you decide to pay off your HELOC early, there may be prepayment penalties that can add to the overall cost. **3. Risk of Losing Your Home** Risk of losing your home means that when you take out a HELOC, your home is used as security for the loan. This means that if you don't make your monthly payments or default on the loan, your lender can take ownership of your home. Although the chances of this is not very high but, it's still important to think about the potential risks before getting a HELOC. You need to be aware that if you're unable to pay back the loan, you could end up losing your home also. **4. Temptation to Overspend** HELOC is a flexible way to borrow money for different expenses, like home renovations or vacations. But you know, this flexibility can also be a great problem because it can be tempting to spend more than you can afford and can push you in debt. I So, it's very important to remember that a HELOC is not free money, and you should only use it for things you really need and once you have money then pay off the balance as soon as possible so you don't accumulate too much debt. **5. Fluctuating Housing Market** The housing market in Canada is unpredictable, and fluctuating home prices can impact the value of your home equity. And this is directly proportionate to your chances of borrowing, i.e., if the value of your home decreases, then your available credit will also decrease, and this will affect your borrowing options. **6. Limited Availability** You should remember that not all Canadians are eligible for HELOC. This is because lenders require you to have at least 20% equity in your home. This means that you have to own a significant portion of your home before you can borrow against it. And also, if you have a low credit score or a high amount of debt compared to your income, then again you may suffer in the eligibility criteria. ## Home Equity Line of Credit or HELOC in Canada If you understand the risks and use the credit responsibly, a HELOC can be a flexible and valuable tool for accessing your home equity. Just remember that it's not free money, and you should only borrow what you need and pay back the balance as soon as possible.

How do Reverse Mortgages work in Canada?

A reverse mortgage is a financial product that is mainly to assist Canadian homebuyers with gaining equity in their homes. This type of mortgage is specially for Canadians aged 55 and over and offers them a single amount payment, regularly scheduled payments or a line of credit. Let's look more about the reverser mortgage and find out how actually it works in Canada. ## Eligibility conditions: To qualify for a reverse mortgage in Canada, a homeowner must meet the following criteria: - Must be 55 or more - Must have a home in Canada. - Must have a minimum amount of equity in their home. ## How do reverse mortgages work in Canada? A reverse mortgage works by allowing the homeowner to get a portion of the equity in the home without having to sell their home or make regularly scheduled payments. The lender offers the homeowner a one-time payment, a regularly scheduled payment, or a line of credit in exchange for a portion of the home equity. The lender takes a mortgage on the home, and when the homeowner dies, sells the home, or moves out, the loan must be repaid, along with any interest and fees that have accumulated. ## Advantages of a reverse mortgage A reverse mortgage offers several benefits to Canadian seniors, including: - **Access to Cash**: Homeowners can access their home equity without having to sell their home or make regularly scheduled payments. - **No Regularly scheduled Payments**: Homeowners don't have to pay regularly scheduled payments while living in the home. - **Flexibility**: In the event that you wish, the homeowner can get the cash as a single amount, regularly scheduled payment or credit limit. - **Doesn't affect government benefits**: Reverse mortgage reserves don't affect government benefits such as Old Age Security or Guaranteed Income Supplement. ## Disadvantages of a reverse mortgage While reverse mortgages have many advantages, they also have a few disadvantages, such as: - **Reduced inheritance**: The loan and accrued interest and expenses must be repaid when the homeowner kicks the bucket, sells the home or moves, hence reducing the legacy that can be passed on to the homeowner's beneficiaries. - **Interest **: Loan interest accumulates over time, which can increase the obligation when the loan is repaid. - **Fees**: Reverse mortgages have several expenses, including appraisal charges, legal expenses and mortgage insurance. ## Reverse Mortgages in Canada A reverse mortgage can be a valuable financial tool for Canadian seniors who want to develop equity in their homes. It offers an adaptable way to access cash without paying month to month charges, yet it also has a few disadvantages, such as decreased inheritance and interest accrual. So, with these disadvantages this becomes equally important to think before considering a reverse mortgage, it is also important to consider your financial situation, tentative arrangements and ability to repay the loan when it comes due. If you find it for you the definitely go for it else try other options.

What to look for when buying land in Ontario, Canada?

Purchasing property anywhere is a challenging agreement, and Ontario is no exception. It's very easy to make a commitment you later regret if you don't recognize the specifics of buying a piece of land. ## Features of Buying Land in Ontario _**Let us list out the most important features to consider while purchasing the land in Ontario**_ ### 1. Area The first and most important evaluation when purchasing land is the location. Conduct research on potential locations based on your requirements. Do your own research on the basis of safety, transit options, and anything else that may influence your decision. When you've decided, try and contact local developers or search the web for high priority land exchanges and transactions. If you have any questions about ownership in Ontario, you can contact one of the many land registry offices. ### 2. Type of Land The type of land or plot you buy is determined according to what you intend to build. You should also consider whether it is suitable for construction. Some plots may be categorized for specific purposes only, while others may be flood plains. Make sure you buy the land knowing you can construct the structure you want without regard for development control or committee rules. ### 3. Location The location of your home is significantly vital. You should consider living conditions such as transportation, convenience, schools, parks, and anything else you may require. ### 4. Access Building a private road extension or driveway to access your property on raw land or land that does not have existing road access may necessitate going through the property of another privately-owned and you could also think about paving an existing gravel road. Having gas, phone, and power lines run to your house can be expensive. ### 5. Taxes A land transfer tax has to be paid when purchasing land or property in Ontario. The price of your property will influence the value. The percentages range from 0.5% to 2.5%. The taxes can be compensated in 2, 6, or 11 installments throughout the year. If you buy vacant land for residential purposes, you do not have to pay Harmonized Sales Tax (HST). If you intend to develop commercial properties, you must pay HST ## How to Finance the Purchase of Land in Ontario ? _These are the following points to consider while doing financing for the Purchase of Land _ ### 1. Financing from the Seller Seller financing, also known as owner financing, occurs when the land's seller acts as a lender. You will purchase the land from them with a down payment and then make loan payments to the seller in the same way that you would make loan repayments to a bank. ### 2. Loans for Land In Ontario, you can obtain private financing to purchase land. Vacant and raw land is risky for a lender because you are not directly attached to the land, unlike a residential mortgage, where you may lose your home if you fail to make your mortgage payments. Depending on the type of land, a down payment of at least 30% to 50% is required. You may also discover [Best Land Loan Options in Canada](https://getnewhouse.ca/blog/land-loan-options-in-canada-best) ### 3. Personal Loans and HELOCs Depending on the size of the transaction, you may choose to pay for the land with cash, a personal loan, a HELOC, or a combination of these methods. If you already own a home, you can borrow money to buy the land using a home equity line of credit. ## Buying Land in Ontario, Canada If you have a down payment, buying land in Ontario is not complicated. The value will vary, so make sure you're investing in land that will give you a return on your investments. You must take into account all of the factors listed above. It's also important to remember that the cost to you will include not only the land, but also property taxes, utilities, and other expenses.

Can New Immigrants Buy a House in Canada?

Are you a newcomer wondering, **Can a new immigrant buy a house in Canada?** We have the answers to your query. Moving to Canada with your family is a big step, and buying a new home there can be challenging. That is why many banks and lenders offer mortgage options for **new immigrants** to help them get settled. According to reports, the rate of immigrant homeowners has surpassed Canadian-born counterparts. Therefore, buying your own home as an immigrant in Canada is achievable. Nothing beats the feeling of getting the keys to your first home in Canada as a new immigrant. But empowering yourself to make the best decision about your new home is very important. What is an Immigrant Mortgage? ------------------------------ An immigrant mortgage is a special [newcomer mortgage program](https://fintrakk.com/mortgage-new-immigrants-canada-newcomer-programs/) offered by banks for new immigrants in Canada. These programs help them get a mortgage even when they do not meet the requirements for a regular mortgage. New immigrants in Canada are allowed to buy a home, even if they have just immigrated to the country. They also qualify for a mortgage as long as they meet the standard financial requirements. As a new immigrant, navigating the rules and regulations can get overwhelming. So, we have put together a detailed guide to everything you need to know about buying a house in Canada. Why it's difficult for New Immigrants to get Mortgage approved? --------------------------------------------------------------- Things are not that easy as they seem to be! As a [**new immigrant to Canada**](https://getnewhouse.ca/blog/why-is-immigration-good-for-canada/), it's difficult to get your mortgage approved. Let's see why so. ### 1\. Lack of Canadian Employment History One of the requirements for eligibility for a regular mortgage in Canada is Canadian employment history. Many banks want to ensure you’ve been working in the country for at least two years. These show that you have a stable level of income. ### 2\. Canadian Credit History An established credit history shows how consistent and responsible you are with your finances. Banks need a credit report to see how you handle your debt. They want to know if you have missed any payments or made late payments. So, new immigrants with no credit history can face challenges. Eligibility for a Mortgage as a New Immigrant in Canada ------------------------------------------------------- Let's see how new immigrants are eligible to get mortgage approval. ### 1\. Migrated to Canada within the last 5 years You must have immigrated to Canada within five years to be considered a new immigrant. Have you been staying in Canada for more than five years? If yes, you are no longer considered a new immigrant. ### 2\. Established Legal Status in Canada New immigrants with a temporary or permanent residence are eligible. Those with a non-permanent resident with a work permit are also eligible. ### 3\. Working full time for 3 months New immigrants do not need to have two years of employment history to get a mortgage. However, they must have at least three-month full-time employment history. You will need at least three months of full-time employment history. These laws exclude those that are relocated to Canada by their current employer. ### 4\. Have a 5% Down Payment A 5% down payment is mandatory for a new immigrant to get a house in Canada. These down payments also vary from one agent to another. For example, some lenders may require a higher down payment if the house price is over $500,000. ### 5\. Meet Qualification Ratios Your debt service ratio shows the percentage of your income that pays your debt. The higher this ratio, the more difficult it is to get a mortgage. This is because you are spending more of your income on service debt. How to Buy Your First House in Canada? -------------------------------------- Are you wishing to buy your first house in Canada? Here are few things to guide you. ### 1\. Have a Budget According to reports, the average house prices have sky-rocketed in Canada in the past few years. This price is due to the astronomical cost of houses in places like Vancouver and Toronto. However, the price of houses are cooling down a bit due to [**high benchmark interest rates**](https://getnewhouse.ca/blog/what-are-best-fun-activities-in-toronto-in-ontario-in-canada-for-adults) and other regulations. Keeping this in mind, new immigrants must have a budget when opting to get a house mortgage. They should know the down payment and monthly housing payment they can afford. Therefore, having a solid budget helps you understand how much house you can afford. ### 2\. Mortgage Approval Process Mortgage approval helps estimate your potential mortgage payments. The process of getting a mortgage approval varies from state to state. It also depends on your eligibility. Most banks and mortgage lenders approve the maximum loan you can qualify for. So it is important to understand the requirements at your stage. New immigrants must provide their income, assets, debts, and current employment information to get approval. After submitting this information, the bank or lender will evaluate the application. The application will be approved if they are qualified and rejected if they are not. ### 3\. Search for a Perfect House It is time to search for your dream home. Your mortgage approval often determines the kind of house you will search for. As a newcomer, it is advisable to partner with an experienced real estate agent. Ask your neighbours and friends if they know any trustworthy realtor that can help you through the home buying process. ### 4\. Get Home Inspection Done Home inspections help protect the buyer from any potentially serious and dangerous problems in the building. Therefore, it is paramount. But you will need to pay a fee to inspect the house. Your realtors or mortgage lenders can help you find a qualified home inspector if you don't have any. And yes, home inspection is very crucial part of the buying process. So, don't think of missing it out to save some money! ### 5\. Make an Offer After inspecting the house, it is time to make an offer on the property. Making an offer in Canada requires putting down a deposit. However, this deposit is different from your down payment. The deposit shows the seller you are serious about buying the property. Your deposit will be added to your down payment when you close on the house. But it is non-refundable if you walk away. ### 6\. Sign the Papers Buying and finalizing your house mortgage requires a lot of paperwork. You must first finalize your financing options and get your mortgage formally approved. These can be completed within a few weeks. Ask your realtor for help when navigating through the paperwork to ensure transparency. And here you are ready for getting the possession of your dream house on closing day! Buying Home as a Newcomer to Canada ----------------------------------- Canadian banks keep on updating their eligibility requirements with the newcomer mortgage program. So, you must be aware of the latest changes applicable. But, you will need to meet the basic criteria of [**home buying in Canada**](https://getnewhouse.ca/blog/renting-vs-buying-home-canada-better/) before fulfilling your housing dream.

Can a non-resident get a mortgage to purchase a house in Canada?

The Canadian real estate market is open to both residents of Canada and non-citizens who reside abroad. There are no restrictions on the kind or quantity of real estate that may be bought in Canada. As a result, a lot of people are interested in buying real estate in Canada but are unable to do so due to a lack of available funds because buying a home or piece of property can be very expensive. Therefore, the majority of people require bank financing or a mortgage in order to buy a piece of land or a house. So, today will determine whether a non-resident can get a mortgage to buy a home in Canada or not. ## Can a non-resident get a mortgage to buy a house in Canada? Yes, non-residents who want to purchase a home in Canada can apply for a mortgage there. Although the interest rates are very similar, Canadian banks frequently demand a larger down payment from non-residents than they do from residents. A **minimum of 35% of the home's value is typically required as a down payment** but these requirements may differ from bank to bank, with some being stricter than others. However, in addition to the down payment, non-residents will often have to show the following as well: - Employment verification letter (including income verification) - Bank statements as proof of deposit(at least three months) - Six months of financial statements or an international credit bureau report - A Canadian bank account from which mortgage payments can be made. There are several other lenders that offer mortgages. These lenders can offer a mortgage of up to 65% of the property’s value. You will also need a reference letter from your bank, bank statements for the previous three months, credit information, and tax returns to prove your ability to pay the mortgage. Additionally, these different lenders may offer comparable products with different interest rates and terms. To make sure you're getting the best mortgage product for your needs, speak with several lenders. Canada has substantial expat communities as well as many foreigners that visit for vacations, employment, or study for a short time. Anyone can purchase real estate in Canada, whether they are a citizen, a resident, or a non-resident. This means that you will be able to purchase land in Canada even if you are a non-resident who resides permanently in another nation. But a frequent query that many individuals have is whether they must travel to Canada in order to purchase real estate while they are non-residents. So today we'll find out if you have to be physically present in Canada to purchase a property or not. ## Being a Non-resident, do I need to come to Canada to buy a property? There are no restrictions on non-resident investors buying real estate or businesses in Canada. You are thus free to buy houses, businesses, commercial properties, or agricultural land. There is no requirement for residency or even physical presence in Canada. You can, in fact, look for properties online from anywhere in the world, work with an agent to do so, and even make a purchase. However, you will need to travel to Canada at least twice if you want to buy a property there. The first time is to open a Canadian bank account so you can get Canadian financing. The second time is to sign all of the necessary paperwork. Foreign homebuyers are not permitted to grant powers of attorney for the purpose of remotely signing real estate documents. **Important:** Until recently, anyone could purchase real estate in Canada. But, after the introduction of Foreign Home Buyer Ban effective from January 2023 any non-permanent residents and non-citizens won't be allowed to purchase residential property for a period of 2 years. ## Do you need to come to Canada to buy a property? You can virtually anywhere in the world see a property online or by working with an agent to do so, and even make a purchase. However, there are specific phases of this process where you'll need to visit Canada, such as when you have to open a bank account, which, as we previously stated, is required for the purchase of real estate. ## Non-resident can get a mortgage to purchase a house in Canada Yes, non-residents can get a mortgage in Canada to finance the purchase of a home in Canada. And as far as mortgage interest rates go, both Canadians and non-residents are subject to the same rates as long as they meet the requirements for mortgage eligibility.

What are the new Canadian HELOC rules?

For many Canadians, owning a home is the best investment because it offers an array of benefits. Although there are many advantages to homeownership, one of the most significant is the ability to borrow against home equity. I know many of you are aware of this or may have already taken advantage of it, but due to new regulations drafted by banking regulators, this benefit is changing. Homeowners will have less access to their equity, and the underwriting requirements will be tightened. Here's everything you need to know about the new Canadian HELOC rules. ## New HELOC Rules: What You Need to Know The new regulations that will be enforced late 2023 will limit the amount that property owners can tap into their home equity, primarily targeting combined loans. **Homeowners can currently borrow up to 80% of the loan's value, but the new regulations lower it by 15%, making them repay some of the principal after exceeding the new threshold of 65%**. ## New Bank Requirements: How They Will Affect Borrowers Banks are also changing their rules, now taking an individual's credit limit into consideration regardless of how much they have borrowed. These additional financial factors mean that some borrowers may no longer qualify for a HELOC. ## Why Are These Changes Being Implemented? The new rules are being put in place to protect the housing market during a vulnerable time and ensure federally regulated financial systems are prepared for economic risk or shocks. Don't think these changes have come out of nowhere, as OSFI has been reviewing HELOCs for a time because of their potential risks. One of the major implications is that borrowers who are struggling to pay off their debts could utilize these loans, which could create a "**robbing Peter pays Paul**" scenario, in which the HELOC becomes the primary source of financing. Additionally, HELOCs typically have interest-only payments, which can create a risk that the principal won't be repaid over time. To eliminate these risks, **the new guidelines require an equity of at least 35% in mortgage revaluations, up from the current 20% requirement**. This means that now borrowers must have more equity in their homes to qualify for these kinds of loans. While this change may assist with reducing the risks associated with HELOCs, a few specialists say the risks are not as significant as certain regulators believe. ## Canada's new HELOC rules The change in mortgage lending rules requires lenders and borrowers to meet their loan obligations; it simply means that now it has become more difficult to get qualified for a HELOC. Borrowers may never again utilize HELOCs, regardless of whether they were valid before. Consolidated credit can assist homeowners who want to take advantage of a HELOC before it's too late. So, it is important to be aware of the changes and conditions of the new Canadian HELOC rules and then take the proper decision

20 Real Estate Terms in Canada - List for Canadian Home Buyers, Sellers & Agents

Are you ready to conquer the Canadian real estate market, but feeling a bit daunted by the abundance of jargon and complexities? Don't worry, you're not alone! The real estate industry can be a minefield to navigate, but with the right knowledge, you'll be able to understand the ins and outs of the market and make informed decisions. So, whether you're a first-time home buyer, a seasoned seller, or a budding real estate agent don't let the jargon hold you back- let's unlock the secrets of the Canadian real estate market with the ultimate 20 real estate terms that you need to navigate the minefield of the Canadian real estate market and come out victorious. ## 20 Real Estate Terms in Canada - A Comprehensive List Knowing real estate terms is key to being a pro in the Canadian market. It's not just for first-time buyers or sellers; it's also for sellers and real estate agents who work here but are unaware of these terms. Because understanding the lingo is what sets you up for success here. For this reason, we have words ranging in complexity from simple words to complex terms. ## **20 Basic Real Estate Terms & Concepts to Know** So buckle up and let's dive in deep into the real estate world. ### **1. Amortization**: The length of time it will take to pay off a mortgage, calculated by dividing the total mortgage amount by the annual mortgage payments. It is the period over which the loan is planned to be paid off, usually in a range of 15-30 years. ### **2. Appraisal**: An evaluation of a property's value by a professional appraiser. Appraisals help to determine the fair market value of a property, which is used to help set a fair price for the property. ### **3. Closing Costs**: The expenses associated with purchasing a property, such as legal fees, land transfer taxes, and home inspection fees. These costs can add up to thousands of dollars and are typically paid at the time of closing. ### **4. Conditional Offer**: An offer to purchase a property that is contingent upon certain conditions being met, such as the successful completion of a home inspection. It means that the offer is made on the condition that certain things happen, such as financing or home inspection. ### **5. Equity**: The difference between the market value of a property and the outstanding balance on the mortgage. It is the portion of the property that the owner fully owns, and it increases over time as the mortgage is paid down and the property increases in value. ### **6. Fixed-Rate Mortgage**: A mortgage with an [interest rate](https://getnewhouse.ca/blog/what-does-higher-interest-mean-for-housing-market-in-canada) that stays the same for the entire term of the loan. It means that the interest rate will not change for the duration of the loan, providing predictability and stability for the borrower. ### **7. Home Inspection**: A comprehensive examination of a property's condition by a professional home inspector. Home inspection is an important step in the home buying process, as it can help identify any potential issues or defects with the property. ### **8. Interest Rate**: The percentage at which the lender charges interest on a mortgage. It is the cost of borrowing money, and it can have a significant impact on the overall cost of the mortgage. ### **9. Land Transfer Tax**: A tax paid by the purchaser when a property is transferred from one owner to another. It is a government tax that is paid on the transfer of property ownership and varies by province. ### **10. Listing Agreement**: A contract between a property owner and a real estate agent that outlines the terms of the agency relationship. It outlines the services that the agent will provide, the length of the agreement, and the commission that will be paid to the agent. Also, know the truth behind a [home listed for 1$ in the [Canadian Housing Market](https://getnewhouse.ca/blog/what-it-means-when-home-listed-for-one-dollar-in-canada). ### **11. Mortgage Broker**: A professional who acts as an intermediary between borrowers and lenders to help them find the best mortgage product. They can help borrowers find the best mortgage rate and product that suits their needs. ### **12. Mortgage Pre-Approval**: A conditional commitment from a lender to provide a mortgage for a certain amount, subject to the buyer meeting certain conditions. It is a letter from a lender that states that you are pre-approved for a mortgage up to a certain amount, subject to certain conditions. ### **13. Multiple Listing Service (MLS)**: [MLS or Multiple Listing Service](https://getnewhouse.ca/article/what-is-mls-in-real-estate-canada) is a database of properties for sale by real estate agents. It is a system used by real estate agents to list properties for sale, and it is a valuable resource for buyers and sellers. ### **14. Power of Sale**: A legal process that allows a lender to sell a property in order to recover unpaid mortgage debt if the borrower defaults on the mortgage. It is a provision in the mortgage agreement that gives the lender the right to sell the property in case of default. ### **15. Property Condition Disclosure Statement**: A document that outlines any known issues or defects with a property. It is a statement provided by the seller that discloses any known issues or defects with the property. ### **16. Real Property Report (RPR)**: A legal document that shows the boundaries, dimensions, and location of a property, as well as any improvements or structures on the property. It is a detailed survey that shows the property's boundaries and any structures or improvements on the property. ### **17. Title Insurance**: Insurance that protects the buyer and the lender against any issues with the property's title or ownership. It protects against any hidden issues with the property's title, such as outstanding liens or encumbrances. ### **18. Underwriting**: The process of evaluating a mortgage application to determine whether to approve the loan and what terms to offer. It is the process used by lenders to evaluate a borrower's creditworthiness and ability to repay the loan. ### **19. Zoning**: Set of regulations established by local governments that determine how land can be used in a particular area, by dividing the municipality into different zones and regulating the development, density and allowed uses of the land. ### **20. Lease**: A lease is a legal agreement between a landlord and tenant outlining the terms and conditions of renting a property, including the rental amount, length of the lease and responsibilities of both parties. ## **20 Advanced Real Estate Terms & Concepts to Know** Now, let's get an idea on some of the advance terms used in the real estate industry. ## **1. ‘As Is’ clause** Let's learn about this real estate concept from both a seller's and a buyer's point of view. #### **For sellers** "As-Is" clause means property is sold in current condition, with no promises or guarantees from the seller. - It can be a quick and cost-effective option for sellers. - But, it also means that the buyer will have to take on any necessary repairs or renovations. - Legally required to disclose all issues with the property, including providing a detailed statement of condition, prepared by a professional, and based on an inspection. #### **For buyers** "As-Is" properties may come at a lower price, but they can also end up costing more if extensive repairs are needed. - It's crucial to do a thorough inspection of the property to reveal any potential issues. - Consider including a "subject to inspection" clause in the contract, which allows the buyer to back out if the inspection reveals more problems than initially disclosed by the seller. - Important to proceed with caution and have a solid team of professionals, including a real estate agent, home inspector, and attorney, to minimize the risk. For more details, refer [What does As-is clause mean in real estate?](https://getnewhouse.ca/article/what-does-as-is-where-clause-mean-real-estate-canada) ### **2. POA (Power of Attorney)** POA is a legal document that allows you to give authority to another trustworthy person(s) to manage your property or money on your behalf. - The person you appoint is called your attorney, and they do not have to be a lawyer. - It is required that a person be ‘mentally capable’ at the time of signing a POA for it to be valid. - Laws, requirements, and definitions of POA vary across provinces and territories in Canada. - Real Estate and POA In real estate, your attorney can manage buying or selling of real estate in your name, pay bills on your behalf, and even collect money owed to you, unless restricted to do so. Your attorney does not become the owner of your property, they can only manage it on your behalf. ### Types of POA - **General Power of attorney**: Allows your attorney to manage all or part of your finances and property only while you are mentally capable of managing your own affairs. Becomes invalid if you become mentally incapable. Can be limited to a particular task or time period. - **Continuing power of attorney**: Allows your attorney to continue managing your finances and property even if you become mentally incapable to do so. Can start immediately or come into effect when you become mentally incapable. ### **3. MLS (Multiple Listing Service)** MLS (Multiple Listing Service) is a database of properties for sale or rent, maintained by real estate agents and brokers. - It allows agents to share information about properties with other agents in their area, increasing the chances of a sale or lease. - MLS data is only available to real estate agents and brokers who are members of the service. - It includes detailed information about properties, including photographs, prices, and descriptions. - MLS can be a powerful tool for buyers, sellers, and real estate professionals to find and market properties. ### **4. CCIM (Certified commercial investment member)** CCIM (Certified Commercial Investment Member) is a professional designation for commercial real estate professionals. - It is awarded by the CCIM Institute after completing education and demonstrating experience. - Recognized as mark of expertise in commercial and investment real estate. - Only held by a select group of professionals. - CCIMs are trained to analyze investment opportunities. ### **5. CPM (Certified Property Manager)** CPM (Certified Property Manager) is a professional designation for property management professionals. - It is awarded by the Institute of Real Estate Management (IREM) after individuals complete a rigorous education curriculum and demonstrate their experience in property management. - The CPM designation is recognized as a mark of expertise in the property management industry. - Only held by a select group of professionals. - CPMs are trained to manage and maintain properties effectively and efficiently. ### **6. CMA (Comparative Market Analysis)** CMA (Comparative Market Analysis) is a report that compares a property to similar properties in the same area. - It is used to determine a property's estimated value, and to help with pricing decisions when buying or selling a property. - A CMA includes information about recent sales and current listings of similar properties. - It also includes information about market trends, such as average days on market and sale-to-list price ratios. - CMA is a helpful tool for both sellers and buyers to have a better understanding of the market and make informed decisions. ### **7. CRE (Commercial Real Estate)** CRE (Commercial Real Estate) refers to properties used for business or investment purposes. - It includes properties such as office buildings, retail centers, industrial warehouses, and multifamily apartments. - CRE transactions are generally more complex and involve more money compared to residential real estate transactions. - CRE professionals such as brokers, investors, and property managers have specialized knowledge and skills to navigate the market. - CRE can also include special purpose properties such as hotels, hospitals, and self-storage facilities. ### **8. CAC (Central Air-Conditioning)** CAC (Central Air-Conditioning) is a type of air conditioning system that cools a building or home by circulating chilled air through ductwork. - It typically uses a central unit, such as a furnace, to cool the air and distribute it throughout the building. - CAC systems are often more efficient and can cool larger areas compared to individual room air conditioners. - It can also improve air quality by filtering and circulating air throughout the building. - CAC systems require regular maintenance to ensure they are functioning properly and efficiently. ### **9. COI (Certificate of Insurance)** A Certificate of Insurance (COI) is a document that verifies that a specific insurance policy is in effect and provides details on the coverage provided. - COIs are typically issued by insurance companies or their agents and are used to provide proof of insurance to third parties, such as lenders or landlords. - COI includes: insured name, policy number, coverage type/limits, and insurance company/agent contact information. - Some COIs may also include additional information, such as endorsements or exclusions to the policy. - COIs are not the same as the insurance policy itself and do not provide all of the terms, conditions, and exclusions of the policy. ### **10. CMHC (Canada Mortgage and Housing Corporation)** Canada Mortgage and Housing Corporation (CMHC) is a Crown corporation of the Government of Canada. - Its primary function is to provide mortgage loan insurance to Canadian banks and other lending institutions. - This insurance helps protect lenders against losses if a borrower defaults on a mortgage loan. - CMHC also conducts research and provides information on housing markets and trends, as well as housing-related programs and services. - CMHC is funded by premiums paid by borrowers who take out mortgage loans that are insured by the corporation. ### **11. CMA (Comparative Market Analysis)** A [Comparative Market Analysis (CMA)](https://getnewhouse.ca/article/what-is-cma-in-real-estate-canada) is a report that compares a property to similar properties that have recently sold or are currently on the market. - It is used by real estate agents, appraisers, and homeowners to estimate the fair market value of a property. - A CMA typically includes information such as the property's location, size, condition, and features as well as information on comparable properties, including their sale prices and other relevant details. - It is based on recent sales data, it helps in determining the current market value of a property - It is used to set the price for a property that is for sale or to be appraised. - A CMA can also be used to evaluate the potential return on investment for a rental property or a fix and flip investment. ### **12. ARV (After Repair Value)** After Repair Value (ARV) is a term used in real estate investing to refer to the estimated market value of a property after any necessary repairs or renovations have been completed - It is used to determine the potential profitability of a fix-and-flip investment or the maximum purchase price for a property being considered for a rental or rehab project. - ARV is calculated by taking the estimated market value of a property in its current condition, subtracting the cost of repairs and renovations, and then adding any potential value-adds such as an addition or a finished basement. - It is an estimate of the potential of the property in the future after the repairs are done - It helps in determining the maximum amount to be spent on the renovation and property purchase, so it doesn't exceed the potential value of the property after renovation. ### **13. LTV (Loan to Value)** Loan-to-value (LTV) is a ratio used in the mortgage industry to indicate the size of a loan compared to the value of the property being used as collateral. - It is calculated by dividing the loan amount by the value of the property. - It is used by lenders to determine the risk of a loan and the creditworthiness of a borrower. - A higher LTV ratio indicates a higher risk to the lender, as the borrower has less equity in the property. - LTV is used to determine the minimum down payment, interest rate, and maximum loan amount - Lenders usually have different LTV ratios for different types of properties and loans. - A high LTV ratio may require a higher interest rate or mortgage insurance. ### **14. Cap Rate** The Capitalization Rate, or Cap Rate, is a measure used in real estate investing to indicate the rate of return on a property based on its income and purchase price. - It is calculated by dividing the property's net operating income by its current market value or purchase price. - Cap Rate is a metric used to compare the potential returns of different properties. - A higher cap rate indicates a higher return on investment, and a lower cap rate indicates a lower return. - Cap rate is used to evaluate the performance of a property and its potential as an investment. - Cap rate can be used to compare the yields of different properties and areas, even though it is a ratio, it does not take into account the cost of debt. ### **15. GDS (Gross Debt Service)** Gross Debt Service (GDS) ratio is a measure used by mortgage lenders to determine a borrower's ability to afford the mortgage payments on a property. - It is calculated by dividing the total mortgage payments, including principal, interest, property taxes, and heating costs, by the borrower's gross income. - GDS is one of the two ratios used to qualify borrowers, the other being TDS (Total Debt Service). - It is used to evaluate the borrower's ability to meet the housing cost, it is usually expressed as a percentage. - Lenders usually have a maximum GDS ratio, typically between 31% and 39% - A high GDS ratio may indicate that a borrower is over-extended and may have difficulty making mortgage payments. - A low GDS ratio may indicate that a borrower has a lower risk of defaulting on the loan. ### **16. TDS (Total Debt Service)** Total Debt Service (TDS) ratio is a measure used by mortgage lenders to determine a borrower's overall ability to afford the mortgage payments on a property, as well as their other debts and expenses. - It is calculated by dividing the total monthly debt payments, including mortgage payments, credit card payments, car loans, and any other debts, by the borrower's gross income. - TDS is one of the two ratios used to qualify borrowers, the other being GDS (Gross Debt Service). - Lenders usually have a maximum TDS ratio, typically between 42% and 44% - A high TDS ratio may indicate that a borrower is over-extended and may have difficulty making mortgage payments and other debts. - A low TDS ratio may indicate that a borrower has a lower risk of defaulting on the loan and other debts. ### **17. JT (Joint Tenancy)** Joint Tenancy is a type of co-ownership of property where two or more individuals own the property together. - Each owner holds an equal and undivided interest in the property. - Joint tenants have the right of survivorship, meaning that if one of the owners passes away, their interest in the property passes automatically to the remaining owners. - In a joint tenancy, all parties have equal rights and responsibilities on the property - Each joint tenant has the right to use the entire property. - All the parties need to agree to sell the property or make any changes to it. - In case of death, the share of the deceased tenant automatically goes to the surviving tenant/s. ### **18. TIC (Tenancy in Common)** Tenancy in Common (TIC) is a type of co-ownership of property where two or more individuals own the property together, but each has a distinct and separate share of the property. - No right of survivorship, meaning if one owner dies, their share does not automatically pass to the remaining owners. - Allows multiple parties to invest in real estate together or pass assets onto beneficiaries. - Each tenant owns a specific percentage of the property and can sell or dispose of their share. - Tenants have right to use entire property, but cannot sell or make changes without agreement of other tenants. - In case of death, share is passed on according to will or testamentary disposition, not automatically to surviving tenants. - Different from Joint Tenancy which has equal shares and right of survivorship. ### **19. Lien** - A lien is a legal claim on a property that gives a lender or other creditor the right to seize the property if the borrower or property owner fails to fulfill their obligation. - Liens can be placed on property for unpaid debts, taxes, or other financial obligations. - Liens can be either voluntary, such as a mortgage, or involuntary, such as a judgment lien. - Liens are recorded in the public records, this means that they are visible to anyone who searches. the records. - When the property is sold, the lien must be paid off before the sale can be completed. - If the lien is not paid off the property may be foreclosed or seized by the creditor. ### **20. Ontario Agreement of Purchase and Sale** The Agreement of Purchase and Sale (APS) is a legally binding contract between a buyer and a seller for the purchase of a property in the province of Ontario, Canada. - Outlines terms and conditions including purchase price, closing date, and contingencies. - Prepared by a real estate agent or lawyer, reviewed and signed by both parties, and a copy provided to each. - Includes schedule of chattels and fixtures, closing date, and contingencies, if any. - Legally binding contract, both parties have legal obligations and rights related to the sale. - Buyer typically pays deposit held in trust until closing. - Starting point for completion of sale transaction and ownership transfer. ## Knowing the Canadian Real Estate Concepts The understanding of the real estate terms specific to Canada is essential for home buyers, sellers and agents in order to navigate the market and make informed decisions. Being familiar with terms such as CMHC, ARV, LTV, Cap Rate, GDS, TDS, JT, TIC, CMA, APS, and others, can help you understand the mortgage process, evaluate properties, and negotiate the terms of a sale. Whether you're a [first-time home buyer](https://getnewhouse.ca/blog/renting-vs-buying-home-canada-better), an experienced investor, or a real estate agent, having a solid understanding of these terms will help you make the most of the Canadian real estate market. Did we miss any important term here? Do you wish to include any other interesting concept on real estate in Canada, do comment and share your views.

How to buy vacant land with no money down in Canada?

Many people harbor the fantasy of becoming homeowners. True home ownership involves starting from scratch, not just buying an existing house and making modifications over time. So, if you are living in Canada and want to build your dream home, the first step in building a home or any other kind of structure in Canada is to purchase land. The best option is to purchase vacant land because it is typically less expensive than properties with buildings already in place, though this can still be quite expensive. However, the high down payment of between 35% and 50% required for vacant land necessitates significant savings. So today we will see how to buy vacant land with no money down in Canada. ## How to buy vacant land with no money down in Canada? Vacant land typically requires a significant down payment of 30% to 50%. This is due to the fact that lending money on vacant land is riskier than lending money on a house, where you could lose your home if you default on your mortgage payments. ## Buying A Vacant Land with No Down Payment in Reserve But here are the ways by which you can buy vacant land with no or a little money down in Canada- **1. Home equity loan** A home equity loan is a loan that you can get using the equity in a house as collateral. Home equity loans are a type of consumer debt that are also referred to as equity loans and second mortgages. It is available against both residential and non-residential property and can be used for any purpose. Therefore, you can borrow a loan amount equal to the current market value of your home and use that amount to purchase vacant land through fixed rate loans or Home Equity Lines of Credit (HELOC). **2. Personal loans** In case the price of the vacant land you are buying is lower or if you simply need a little extra money on top of your savings to complete the purchase, you can also take out a personal loan and use it to buy your land without having to put down a sizable down payment. **3. Seller financing** Seller financing, also known as owner financing, is when the seller of the land also acts as a lender. Since the terms of seller financing are flexible, you can haggle with the seller to lower your money down for buying vacant land. **4. Private lenders** You can also get a loan from a private lender since they don't ask for a down payment, but these loans are typically for a shorter time and may have high interest rates. ## Buy vacant land with no money down in Canada A sizeable down payment of between 35% and 50% will be required if you want to obtain financing for vacant land. However, there are various [land loan options](https://getnewhouse.ca/blog/land-loan-options-in-canada-best), including personal loans and home equity loans, that can be used in Canada to purchase vacant land with no or little down payment.

What is the advantage in buying New construction homes?

If you're in the market for a new home, you may be considering whether to buy a new construction home or a pre-owned one. While both options have their advantages, there are several benefits to buying a new construction home in Canada. Today, we'll explore some of the top reasons why buying a new construction home can be a wise investment for Canadian homebuyers. ## What is the advantage in buying New construction homes? Here are a few benefits in buying new construction homes- ## 1. Customization Choices One of the biggest advantages of buying a new construction home is the ability to customize it to your preferences. While buying a pre-owned home, you could need to burn through a large chunk of change on redesigns or pick a format that doesn't exactly suit your preferences. In any case, with a new construction home, you can work with the developer to choose completions, installations, and other plan components that line up with your own preferences and necessities. ## 2. Energy Proficiency New construction homes in Canada are every now and again developed utilizing the latest energy-efficient materials and innovation, which can bring about huge service bill reserve funds. These homes are intended to keep out drafts, give better protection, and use energy-efficient machines, bringing about lower energy costs and a decreased natural effect. ## 3. Lower Maintenance Costs New construction homes require less upkeep than pre-owned homes since everything is shiny new and under guarantee. With a pre-owned home, you might need to manage exorbitant fixes and redesigns that can add up rapidly. A new construction home, then again, will probably have less support issues and will be covered by a guarantee, giving you genuine serenity and setting aside you cash over the long haul. ## 4. Modern Amenities New construction homes frequently come outfitted with present day conveniences that more established homes need. For instance, many new homes in Canada incorporate shrewd home innovation, like programmable indoor regulators, security frameworks, and energy-efficient lighting. Furthermore, new construction homes might include open floor plans, bigger wardrobes, and higher roofs, making a more agreeable and roomy residing climate. ## 5. Better Resale Value Buying a new construction home in Canada can be a shrewd speculation on the grounds that these homes will generally hold their worth better than pre-owned homes. Since they're shiny new and worked with the most recent materials and innovation, they're more averse to require expensive updates and fixes soon. This can be a significant benefit when it comes time to sell your home, as it will probably be more appealing to purchasers and order a greater cost. ## Advantage in buying New construction homes Buying a new construction home in Canada offers various advantages, including customization choices, energy productivity, lower support costs, current conveniences, and better resale esteem. While the upfront cost may be higher than a pre-owned home, the long-term savings and quality of life improvements make it a wise investment for many homebuyers.

5 Best Handyman Services Apps in Canada 2023

Are you tired of dealing with the stress and frustration of finding reliable handyman services for your home repairs? Look no further! The top 5 best handyman services apps in Canada are here to revolutionize your approach to home repairs and renovations. With just a tap, professional and efficient handymen are readily available to tackle any task, making home repairs a seamless reality. It's time to upgrade your home repair game and basket in the glory of a job well done, every time. Say farewell to frustration and hello to a new era of convenience. So, don't wait any longer, explore the top 5 best handyman services apps in Canada here! ## How do on-demand Handyman Apps work? On-demand handyman apps work by connecting customers with local, qualified handymen for home repair and improvement services. Customers can use the app to browse a list of services offered, choose the desired service, select a date and time for the appointment, and pay for the service directly through the app. Handymen use the app to receive job requests and communicate with customers. The app typically verifies the handyman's qualifications, insurance, and background information to ensure a safe and high-quality service experience. With the convenience of on-demand apps, customers can easily find and book reliable handymen for their home repair needs. ## 5 Best Handyman Services Apps in Canada In Canada, there are a number of handyman services apps available, offering a convenient and efficient way to connect with skilled tradespeople in your area. Here are five of the best handyman services apps in Canada: ## 1. TaskRabbit TaskRabbit is a platform that connects you with local tradespeople for various home services, including handyman services. The app makes it easy to find and book a handyman for your home repairs and maintenance needs. Here are some key features of TaskRabbit: **Wide range of home repair and maintenance services**: TaskRabbit offers a wide range of home services, including handyman services, furniture assembly, cleaning, and more. **Online payment system:** TaskRabbit has an online payment system that allows you to pay for the services you receive through the app, making the process convenient and secure. **Customer reviews and ratings:** TaskRabbit allows customers to leave reviews and ratings for the tradespeople they hire, giving you a better idea of the quality of work you can expect. **In-app messaging:** You can communicate with the handyman directly through the app, making it easy to ask questions and get the information you need. **Guaranteed work quality:** TaskRabbit offers a guarantee on the quality of work provided by its tradespeople, giving you peace of mind when booking a handyman through the app. **Easy booking process:** TaskRabbit makes it easy to book a handyman, with just a few taps on the app. ## 2. [Urban Tasker](https://urbantasker.com/) Urban Tasker is a fast-growing and emerging home services platform that allows you to find local and trusted help for your day to day tasks and home projects. With Urban Tasker, you can book services for tasks such as assembling furniture, electrical fittings, plumbing, cleaning, lawn care, moving, other handyman services, and much more. Here are some of the key features and benefits of using : **Local and trusted help:** Urban Tasker only works with local and trusted professionals, so you can feel confident that you're getting the best quality of service. **Quality assurance:** This online platform is dedicated to ensuring that you're completely satisfied with your service. They offer a quality assurance guarantee to give you peace of mind. **Get An Instant Quote Estimation:** With the price estimation tool, you can get an instant quote for the task you need done, making it easy to budget and plan for the services you need. Moreover, you can compare different quotes and select the best one that fits in your budget. ## 3. Handy Handy is a home services platform that connects customers with skilled and vetted tradespeople for various home services, including handyman services. With Handy, you can book a handyman with just a few taps on the app, making it easy to get your home repairs and maintenance tasks done quickly and efficiently. Here are some of the key features offered by Handy: **Top-rated professionals:** Handy professionals are experienced, friendly, background-checked, and insured. You can be confident that you are hiring a skilled and trustworthy tradesperson for your home services. **Next-day availability:** Appointments are available 7 days a week, making it easy to book a handyman when you need one. **Handy Happiness Guarantee:** Handy is dedicated to customer satisfaction, and if you're not happy with the services you receive, the company will work to make it right. **24/7 customer service:** Handy offers 24/7 customer service, so you can get help and support whenever you need it. **Wide range of services:** Handy professionals provide a variety of home services, including home cleaning, office cleaning, handyman services, plumbing services, and electrical services. **Easy booking and payment process:** You can book a handyman through the app and pay for the services you receive securely and conveniently. **In-app messaging and booking management:** You can communicate with the handyman directly through the app and manage your bookings on the go. ## 4. Jiffy Jiffy is also a home services platform that provides a convenient way to book quick and small jobs around the house. With Jiffy, you can get access to vetted and insured professionals for various home services, including handyman services, cleaning, and home renovations. Jiffy is currently available in Toronto, Ottawa making it easy to find the help you need no matter where you are. Here are some of the key features and benefits of using Jiffy On Demand: **Reliable professionals:** Jiffy only works with experienced, insured, and reliable professionals to ensure the best quality of service. **Wide range of services:** Jiffy offers a variety of services, including handyman services, cleaning, home renovations, and more. You can easily find the right professional for your project. **Affordable pricing:** Jiffy also offers competitive pricing on all of its services, so you can get the help you need without overspending. **Easy booking process:** You can book services through the Jiffy On Demand app or website, making it quick and convenient to get the help you need. **Instant quotes:** Get instant quotes on all services, so you can compare prices and make an informed decision. ## 5. Mr. Handyman Mr. Handyman is a well-known handyman service in Canada that offers a wide range of home repair and maintenance services. The Mr. Handyman app makes it easy to book a handyman for your home repairs, and the company's reputation for quality and reliability makes it a popular option for those in need of a handyman. Mr Handyman is part of the Neighborly family of home services companies. In addition to painting, they offer a range of home maintenance and repair solutions. You can easily access their services through their website or by downloading the Neighborly - Local Home Repair app, available on both Google Play Store and the App Store. The app has received high ratings, with an average of 4.1 stars on the Play Store and 4.9 stars on the App Store. Some of the benefits of using Mr. Handyman services include: **Experienced professionals**: Mr. Handyman's technicians are experienced, skilled, and knowledgeable in all aspects of home repair and improvement. **Wide range of services:** Mr. Handyman offers a comprehensive range of services, including home repairs, renovations, and installations. **Quality workmanship:** Mr. Handyman guarantees quality workmanship and a commitment to customer satisfaction. **Convenient scheduling:** Mr. Handyman offers flexible scheduling to meet the needs of their customers. **Customer-focused service:** Mr. Handyman is dedicated to providing excellent customer service and ensuring customer satisfaction. You may also like to explore [Best Cities to Live in Ontario, Canada](https://getnewhouse.ca/blog/top-10-best-cities-to-live-in-ontario-canada) ## Handyman Services Apps Canada On demand handyman apps provide a convenient and efficient solution for Canadians looking to tackle home maintenance and repair tasks. From basic home cleaning to more complex projects, these apps connect customers with fully vetted and insured pros in just a few taps. Additionally, customers can also avail these services through the websites of these companies, offering a comprehensive solution for all home maintenance needs.