Tag Archives: New Rules

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The View From Inside: It’s Time To Buy Your New Home

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The View From Inside: It’s Time To Buy Your New Home

Don’t let current chatter about mortgage rules and rates keep you from purchasing your dream home

By Stephanie Lane, Geranium

In a cyclical economic sector such as real estate, it is important to gauge your personal homebuying decisions with relativity and realism in mind. Whatever qualifies as your dream home, be it a modest condo, a five-bedroom mansion or something in between, avoid allowing the current chatter about mortgage rules and rates to keep you from realizing that dream.

Remember that the new rules on obtaining mortgages will affect each homebuyer differently. In addition, depending upon which institution you approach for financing, there may be a variety of outcomes. My advice is to visit a few lending institutions prior to making your purchase decision – or before you start shopping, ideally – so you know what you can afford. Should you not qualify for the amount you were hoping for, at a minimum, you might have to expand your geographic search to more affordable areas, consider an alternate home style, or save more toward a down payment.

Keep in mind, too, that in real estate, everything is relative. Looking at Canadian mortgage rates over the past four decades, our rates have remained amazingly low in comparison. Posted five-year mortgage rates peaked to double digits in the 1980s (when they reached over 20 per cent at one point) and the early 1990s. At that time, economic experts believed that we would never experience single-digit rates again.

Looking at the past few years, things have remained relatively stable since 2010, with bank rates fluctuating between 0.75 per cent and 1.25 per cent from then to early 2018, and prime rates from 2.25 to 3.45 per cent during that time period. The bank rate right now is 1.5 per cent, bringing a relatively small increment of the most recent five-year posted fixed mortgage rates from 4.99 to 5.14 per cent. Even with this moderate rate rise and potential increases in the near future, we are still hovering at the low end of historic rates compared to those of the 1970s through the early 2000s.

Yes, there are more stringent rules now to qualify for a mortgage, but keep in mind that Canada’s conservative financial practices kept us from reaching the devastating economic real estate lows the U.S. experienced years ago. These tightened rules are designed to ensure that buyers are, in fact, equipped to handle mortgage payments over time rather than getting in over their heads.

Rates and rules may change, but one thing that remains the same over the decades is that a well-researched homebuying decision is far more likely to result in happy homeowners than a rushed process. Be sure to consider all of the parameters and contemplate your options thoroughly. You owe it to yourself to make the very best decision possible.

During the past few decades, real estate has proven to be a worthwhile decision for those who ride out the highs and lows of the market. Now remains an excellent time to buy new homes in Ontario.

Stephanie Lane is sales and marketing manager for Geranium. Celebrating 40 years in business, Geranium has created master-planned communities including more than 8,000 homes in Ontario. Geranium.com

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Report: New Mortgage Rules Keeping You From The Home of Your Dreams?

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Report: New Mortgage Rules Keeping You From The Home of Your Dreams?

Not at Meridian!

The mortgage market has absorbed a significant amount of change over the past several years with the most recent update being introduced in January 2018. Among these changes is the requirement for federally regulated financial institutions to introduce a qualifying rate for applicants that can be 2 per cent higher than the rate being offered. As you can imagine, this makes qualifying for your dream home much more difficult.

Meridian, a provincially regulated institution, is not effected by these recent changes. It continues to see strong momentum within the mortgage market and its approach has not changed. Meridian always includes a member-focused attitude that embraces proactive financial advice with engaging dialogue that places financial well-being and, by extension, well-being in general at the forefront. This remains at the heart of what Meridian does.

Therein lies the Meridian difference, not only for its existing members, but for all residents of Ontario. Members can continue to look at moving into the home of their dreams and feel secure that the Meridian collaborative and practical approach will balance what they desire with what they can afford.

Here are some tips and advice that will help you become a successful homeowner.

Save for a down payment: Saving up a significant down payment is extremely important, as it will help to cut down mortgage payments going forward. You should save up at least 5 per cent of the price of the home for a down payment. Saving 20 per cent or more will help you to avoid mortgage insurance or having to be approved at the prescribed Bank of Canada rate.

Calculate your initial costs: Aside from your down payment, you have to factor in closing costs, moving costs, lawyer fees and taxes. So you aren’t surprised later, the general rule of thumb is to add 1.5 to 2 per cent of the total purchase price to cover closing costs.

Get pre-approved: Work with a trusted mortgage specialist to make your first home buying experience easy and well planned. When getting pre-approved, make sure that you are accounting for all your monthly expenses, such as contributing to a savings account. Life has a way of changing at just the wrong time so it is good to have some financial wiggle room for unexpected events.

Know your options: It’s important to know that a first-time homebuyer includes anyone who has not owned a home in the past seven years. The Canadian government is currently offering a First-Time Home Buyer Tax Credit, up to $750, which you can later put towards a mortgage payment. It allows first-time homebuyers to borrow up to $25,000 from their Registered Retirement Savings Plans tax-free to fund their purchase.

MERIDIAN For further information and to find out more about home mortgages and all your other financial needs, visit the website.

MeridianCU.ca

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