The age-old question of renting vs. buying a home is one that many Canadians grapple with on a daily basis. The decision is not only about having a place to call your own but also involves significant financial considerations. In this blog, we’ll explore the key factors that can help you decide whether renting or buying is the right choice for you. Additionally, we’ll discuss why GLM Mortgage Group is the best mortgage group to work with when you’re ready to make that decision.

The Financial Implications of Renting

Renting a home offers several advantages, particularly for those who are not yet ready to commit to a long-term investment. Here are some financial benefits of renting:

1. Lower Upfront Costs: Renting typically requires a security deposit and the first month’s rent, which is significantly lower than the down payment required for purchasing a home.
2. Flexibility: Renting offers greater mobility. If your job requires frequent relocation or if you are unsure about settling in a particular area, renting allows you to move with relative ease.
3. Maintenance and Repairs: When you rent, the responsibility for maintenance and repairs generally falls on the landlord, saving you both time and money.
4. No Property Taxes: Renters are not responsible for property taxes, which can be a significant annual expense for homeowners.

However, renting also has its drawbacks. Monthly rent payments can be seen as “money down the drain” since they do not contribute to building equity. Additionally, renters are subject to rent increases and may face the uncertainty of lease renewals.

The Financial Implications of Buying

Buying a home is often viewed as a long-term investment with the potential for significant financial benefits. Here are some reasons why buying might be the right choice:

1. Building Equity: Every mortgage payment contributes to building equity in your home, which can be a valuable asset over time.
2. Appreciation: Real estate generally appreciates in value over the long term, providing homeowners with the potential for capital gains.
3. Stability: Owning a home offers stability and the freedom to make modifications or renovations as you see fit, without needing a landlord’s approval.
4. Tax Benefits: Homeowners may be eligible for various tax deductions, such as mortgage interest and property taxes, which can lower their overall tax burden.

Despite these advantages, buying a home also involves higher upfront costs, including a down payment, closing costs, and ongoing expenses such as property taxes, maintenance, and repairs.

Renting vs. Buying: Key Considerations

When deciding between renting and buying, it’s essential to consider your financial situation, lifestyle, and long-term goals. Here are some key questions to ask yourself:

1. How Long Do You Plan to Stay? If you plan to stay in one place for a long time, buying may be more cost-effective. However, if you anticipate moving within a few years, renting might be the better option.
2. What Is Your Financial Situation? Consider your savings, income stability, and credit score. These factors will influence your ability to secure a mortgage and afford the associated costs of homeownership.
3. Are You Ready for the Responsibility? Owning a home requires a significant commitment of time and money for maintenance and repairs. Make sure you’re prepared for these responsibilities.
4. Market Conditions: The real estate market varies by region. In some areas, it may be more advantageous to buy, while in others, renting may be more financially prudent.

Why GLM Mortgage Group is the Right Choice

When you’ve made the decision to buy a home, choosing the right mortgage group is crucial. GLM Mortgage Group stands out as the best option for several reasons:

1. Expertise and Experience: GLM Mortgage Group has a team of experienced professionals who understand the intricacies of the mortgage market. They can provide personalized advice tailored to your unique financial situation.
2. Wide Range of Products: GLM Mortgage Group offers a variety of mortgage products to suit different needs and preferences. Whether you’re a first-time homebuyer or looking to refinance, they have options that can meet your requirements.
3. Customer-Centric Approach: At GLM Mortgage Group, customer satisfaction is a top priority. They work diligently to ensure that you receive the best possible mortgage terms and conditions.
4. Local Knowledge: With deep roots in British Columbia, GLM Mortgage Group has extensive knowledge of the local real estate market. This insight allows them to offer valuable guidance and support throughout the home-buying process.
5. Competitive Rates: GLM Mortgage Group is committed to helping you secure the most competitive mortgage rates, ensuring that you can afford your dream home without stretching your budget.

Conclusion

Deciding between renting vs. buying a home is a significant financial decision that requires careful consideration of your personal circumstances and long-term goals. Both options have their pros and cons, and what works for one person may not be suitable for another.

When you’re ready to take the plunge into homeownership, working with a reputable and knowledgeable mortgage group like GLM Mortgage Group can make all the difference. Their expertise, customer-centric approach, and competitive rates ensure that you get the best possible deal, making your dream of owning a home a reality.

By weighing the financial considerations and partnering with the right professionals, you can make an informed decision that aligns with your financial goals and lifestyle.

The post Renting vs. Buying: Financial Considerations for Canadians appeared first on GLM Mortgage Group.

Discover the roadmap to homeownership in British Columbia with a comprehensive guide highlighting key government assistance programs, including the B.C. First-Time Home Buyers’ Program and federal initiatives such as the Home Buyers’ Plan. Learn how to navigate the process and maximize savings with expert insights and strategic approaches. Call GLM Mortgage Group today for personalized assistance!

Introduction

Embarking on the journey to homeownership in British Columbia can be both exhilarating and daunting for first-time buyers. While financial assistance from relatives can be a boon, many prospective homeowners rely on a blend of savvy tactics, personal sacrifice, and professional guidance to navigate the complexities of the real estate market. However, with a plethora of government assistance programs at their disposal, aspiring homeowners can pave a smoother path towards realizing their dreams. In this comprehensive guide, we delve into the essential strategies and programs tailored to empower first-time buyers in British Columbia, offering insights and expert advice to navigate the process with confidence. If you need personalized assistance, call GLM Mortgage Group today!

B.C. First-Time Home Buyers’ Program: Your Gateway to Savings

• The B.C. First-Time Home Buyers’ Program stands as a beacon of hope for those seeking to alleviate the financial burdens associated with homeownership. Beyond merely reducing closing costs, this program serves as a gateway to substantial savings, particularly through its impact on the land transfer tax, also known as the property transfer tax.
• As of April 1, 2024, the program has undergone significant enhancements, offering an exemption from the tax on homes valued up to $835,000. This translates to substantial savings, with buyers paying no transfer tax on the first $500,000 of the home’s value, potentially saving up to $8,000. Even for homes valued up to $860,000, a partial exemption is still available, offering relief to a broader spectrum of buyers.
• However, the benefits extend beyond monetary savings. To qualify for a full exemption, applicants must meet stringent criteria, including being a permanent resident of Canada or a Canadian citizen, demonstrating residency or tax filing history in B.C., and never having previously owned a property considered their principal residence anywhere in the world. Moreover, even if one co-buyer is ineligible, the program allows for partial exemptions, ensuring that households can still benefit from its provisions.
• These enhancements mark a significant stride in making homeownership more accessible and affordable for first-time buyers in British Columbia. By leveraging the B.C. First-Time Home Buyers’ Program, aspiring homeowners can not only realize their dreams of homeownership but also secure their financial future with confidence and peace of mind

B.C. Home Owner Grant: A Lifeline for Property Tax Relief

• For homeowners grappling with property tax burdens, the B.C. Home Owner Grant offers a lifeline of support. Regardless of whether you’re a first-time buyer or a seasoned homeowner, this program provides annual reductions in property taxes, ensuring long-term affordability and financial stability. By meeting residency and property usage requirements, eligible homeowners can harness substantial tax savings, freeing up resources for other essential expenses.

To learn more about this grant, check out this webpage from the BC Government.

Newly Built Homes Exemption: Seize Opportunities in the New Construction Market

• Prospective buyers eyeing newly constructed homes can capitalize on the Newly Built Homes Exemption to mitigate property transfer taxes. With expanded thresholds and enhanced incentives, including exemptions on properties valued up to $1.1 million, this program opens doors to affordability and accessibility in the burgeoning new construction market. By leveraging this opportunity, first-time buyers can navigate the competitive landscape with confidence and secure their dream homes with ease.

Federal Programs for B.C. First-Time Home Buyers: Harnessing National Support

• In addition to provincial initiatives, federal programs offer a wealth of opportunities for first-time buyers in British Columbia. The Home Buyers’ Plan empowers eligible buyers to tap into their registered retirement savings plans (RRSPs) for down payment assistance, providing a tax-efficient strategy for homeownership. Similarly, the First-Time Home Buyers’ Tax Credit and GST/HST New Housing rebate deliver tangible tax benefits and financial relief, easing the financial burdens associated with purchasing a home.

You can use up to $35,000 of your RRSP towards your down payment, or $70,000 if you are a couple. This amount can then be used towards a tax deduction, but the amount has to be repaid to your RRSP within 15 years.

First Home Savings Account: Building a Strong Foundation for Homeownership

• The First Home Savings Account (FHSA) serves as a cornerstone for prospective buyers looking to bolster their down payment savings. By allowing contributions of up to $8,000 annually, coupled with tax-deductible benefits and potential investment growth, the FHSA accelerates the journey to homeownership while fostering financial discipline and resilience. With strategic planning and prudent investment strategies, aspiring homeowners can lay a solid foundation for their future endeavors in the real estate market.

Conclusion

Embarking on the path to homeownership as a first-time buyer in British Columbia necessitates a strategic approach and a comprehensive understanding of available resources. From provincial programs like the B.C. First-Time Home Buyers’ Program to federal initiatives such as the Home Buyers’ Plan and First-Time Home Buyers’ Tax Credit, aspiring homeowners have access to a diverse array of tools and assistance. By harnessing these programs effectively and seeking professional guidance where needed, prospective buyers can overcome financial barriers and embark on the rewarding journey of owning their first home in the picturesque landscapes of British Columbia. 

For personalized assistance tailored to your unique needs, call GLM Mortgage Group today!

The post Unlocking the Door to Homeownership: Essential Strategies and Programs for First-Time Buyers in British Columbia appeared first on GLM Mortgage Group.

Navigating the labyrinth of Canada’s housing market can feel like an insurmountable task for many prospective homebuyers. With prices soaring to astronomical heights, the dream of homeownership often seems like a distant mirage. However, amidst the chaos, there shines a glimmer of hope in the form of a revolutionary financial instrument – the First Home Savings Account (FHSA). In this blog, we delve into the intricacies of this game-changing tool, designed to ease the burden of accumulating the elusive down payment.

The FHSA: A Financial Lifeline

According to Pat Giles, Vice-President of Saving and Investing at TD Bank, the FHSA is nothing short of a financial lifeline for aspiring homeowners. With its array of tax benefits, Giles advocates for its adoption as an indispensable asset in the arsenal of any first-time buyer. “It’s really a no-brainer for any first-time homebuyer. That first home savings account is something you just have to get,” he asserts.

Understanding How it Works

How does this magical account work? Essentially, the FHSA enables individuals to stash away up to $8,000 annually, with a cumulative limit of $40,000 over five years. What’s more, these contributions enjoy a tax-free passage both upon deposit and withdrawal, akin to the mechanics of a Registered Retirement Savings Plan (RRSP) on the inbound journey and a Tax-Free Savings Account (TFSA) on the outbound. Giles aptly dubs it “the best of both worlds.”

Navigating Risks and Rewards

Yet, like any investment venture, the FHSA isn’t devoid of risks. Prospective buyers must tread cautiously, bearing in mind the possibility of unforeseen circumstances derailing their homeownership plans. Shannon Terrell, Lead Writer and Spokesperson for NerdWallet Canada, advises prudence in utilizing the FHSA, even for those unsure of their long-term housing aspirations. “We see so many tax benefits from this account that even if 15 years pass, the money is still yours. The investment gains are still yours,” she reassures.

Inclusivity and Eligibility

Contrary to popular belief, the FHSA isn’t exclusively reserved for first-time buyers. Canadian residents aged 18 to 71, devoid of homeownership in the preceding five years, are deemed eligible. This inclusivity extends to individuals previously owning property but now renting it out, thereby broadening the demographic scope of FHSA beneficiaries.

Maximizing Savings Potential

In a bid to maximize savings potential, individuals can open multiple FHSAs across various financial institutions, albeit within prescribed contribution thresholds. This multi-account strategy paves the way for augmented down payment capabilities, a boon in the face of exorbitant housing prices plaguing metropolitan hubs like Toronto and Vancouver.

Tax Implications and Financial Preparedness

Come tax season, FHSA holders are tasked with navigating the realm of tax implications. From T4FHSA slips to Schedule 15 filings, the process demands meticulous attention to detail to make sure you maximize all your saving potential. Contributions are tax-deductible, furnishing individuals with a pathway to potential refunds. Moreover, unclaimed deductions can be carried forward, offering a safety net for future tax obligations.

Conclusion: A Beacon of Hope

In essence, the FHSA emerges as a beacon of hope amidst the tumult of Canada’s housing market. With its blend of tax incentives and investment flexibility, it stands poised to empower a new generation of homeowners. However, prudence and foresight remain indispensable companions on this journey towards realizing the dream of homeownership. As prospective buyers navigate the treacherous waters of real estate, the FHSA stands as a testament to the power of financial innovation in reshaping the trajectory of one’s aspirations.

Remember, we are always free to chat and look forward to having a conversation with you about your real estate journey. Feel free to give us a call today!

The post Unlocking the Door to Homeownership: The First Home Savings Account (FHSA) appeared first on GLM Mortgage Group.

Unlocking Tax Savings for First-Time Home Buyers: What You Need to Know for This Year’s Tax Season

To Note Before Reading: As Canada’s First-Time Home Buyer Incentive undergoes significant changes, it’s crucial to stay informed. No new applications will be accepted after March 21, 2024, with all submissions required by midnight on March 21. The shared-equity program offers home buyers 5% or 10% of a home’s price toward a down payment, with borrowers repaying the original amount plus 5% or 10% of any gain in the home’s value, capped at 8% per year. Since September 2019, the program has assisted 23,000 home buyers with approximately $285 million until September 2023, falling short of its $1.25 billion goal for 100,000 people. 

Unlocking Tax Savings: The First-Time Home Buyers’ Tax Credit

As the calendar flips to another tax season, Canadian first-time home buyers have a unique opportunity to leverage tax incentives tailored to their journey. Chief among these is the First-Time Home Buyers’ Tax Credit (HBTC), recently bolstered by legislative changes.

Understanding the HBTC: A Path to Savings

The enhanced HBTC now offers first-time home buyers a non-refundable income tax credit of $10,000—twice its previous amount. This upgrade translates to potential tax savings of up to $1,500, providing a significant financial boon.

Claiming the HBTC: Simplified Process for Maximum Benefits

Accessing the HBTC is refreshingly straightforward. When filing taxes for the year of home purchase, simply input the Home Buyer’s Amount of $10,000 on Line 31270 of your income tax return. This credit, calculated at the lowest personal tax rate, can be shared with a spouse or common-law partner, but the combined total claims must not exceed $10,000.

Navigating Eligibility: Key Criteria for HBTC Claimants

To qualify for the HBTC, purchasers (or their spouses or common-law partners) must buy a qualifying home registered in their name. The property can encompass various types, including single-family houses, townhomes, condos, and more. Importantly, applicants must be first-time home owners, defined as individuals who haven’t owned property in the preceding four years.

Additional Assistance: Exploring Home Buyer Programs

Beyond the HBTC, the federal government offers a range of programs to support first-time home buyers. From the Home Buyers’ Plan, enabling tax-free withdrawals from RRSPs, to the shared equity First-Time Home Buyer Incentive and the First Time Home Buyers Savings Account , opportunities abound to ease the financial burden of home ownership. We will write a blog next week to touch on more of these subjects.

Provincial Offerings: Localized Support for Home Buyers

Provincial governments may also extend specific home buying programs, such as land transfer tax refunds, tailored to enhance affordability for first-time buyers. Exploring these localized incentives can further amplify savings during the tax season.

Conclusion: Seizing Opportunities in Tax Season

As Canadian first-time home buyers embark on their tax-filing journey this year, a myriad of opportunities await to unlock substantial savings. By capitalizing on the enhanced HBTC and exploring additional federal and provincial programs, individuals can navigate tax season with confidence and financial acumen, all while realizing their dream of homeownership.

Next week we will touch on other tax credits to watch out for and the FHSA (First Time Home Buyers Savings Account) to talk about how you can maximize your tax benefits before you even buy a home!

As always, we are happy to chat and get you on your way in the real estate world. Give us a call anytime!

The post Unlocking Tax Savings for First-Time Home Buyers: What You Need to Know for This Year’s Tax Season appeared first on GLM Mortgage Group.

Embarking on the adventure of purchasing your first home is an exciting milestone, filled with anticipation and dreams of a place to call your own. This is likely something you have been thinking about for years. While aligning yourself with a reputable mortgage service, such as GLM Mortgage Group, is a pivotal first step as discussed in a recent blog about first mortgages, it is equally important for first-time home buyers in Vancouver, BC, to be aware of potential pitfalls that can impact their financial well-being. Here, we delve deeper into key considerations to ensure a successful and stress-free home buying experience:

1. Cultivate Financial Flexibility

Determining the affordability of your dream home is a fundamental starting point that you must locate. However, it is crucial not to overextend your budget. Beyond considering the mortgage amount, factor in your future financial goals. Resist the allure of opting for a mortgage at the upper limit of your budget as it can leave you money strapped for emergencies down the road. By maintaining flexibility in your budget, you create a financial safety net that can help navigate unforeseen circumstances or changes in interest rates without undue strain.

2. Master Your Credit Health

Understanding your credit health is a cornerstone of the mortgage application process. Before delving into the intricacies of securing a mortgage, obtain your credit report from reliable sources such as Equifax months in advance. Scrutinize it for any surprises or discrepancies that you may witness. Familiarize yourself with your credit score and the factors influencing it. Armed with this knowledge, you can address any potential issues, optimize your creditworthiness, and position yourself for favorable mortgage terms by the time you are ready.

3. Comprehensive Cost Considerations

The financial commitment of homeownership extends beyond the down payment. Be prepared for additional costs that can accrue swiftly during the home buying process. Property taxes, interest adjustments, insurance fees, and moving costs are among the myriad expenses that should be factored into your budget. Closing costs are typically 1.5% of the purchase price with some exceptions, so it is good to be well-prepared for these ancillary expenses, contributing to a smooth and stress-free closing process. Having this cushion will also allow the experience to be less stressful and more enjoyable, as your first purchase deserves to be exciting. 

4. Harness the Expertise of a Mortgage Broker

Navigating the complexities of securing your first mortgage can be daunting, but not when you have a knowledgeable ally by your side. Mortgage brokers, such as GLM Mortgage Group, possess the expertise to guide you through the process. They assist in determining your affordability, identifying the best lenders for pre-approved mortgages in Vancouver, BC, and providing insights into the nuances of the mortgage landscape. Pre-approval not only streamlines your home search but also empowers you with the confidence of knowing the exact amount you qualify for and the obligations entailed by your mortgage.

5. Embrace Informed Decision-Making

As you embark on this significant investment, embrace a mindset of informed decision-making. Regularly engage with professionals, leverage their expertise, and stay attuned to market trends. This proactive approach equips you with the knowledge needed to make sound decisions at every stage of the home buying journey.

Conclusion

While the prospect of owning your first home is undoubtedly thrilling, a proactive and informed approach is key to a successful and enjoyable journey toward homeownership. By incorporating these considerations into your home buying strategy, you not only enhance your financial preparedness but also set the stage for creating lasting memories in your new abode. To embark on your mortgage process with confidence and expertise tailored to first-time home buyers, reach out to GLM Mortgage Group today for personalized guidance and support. Your dream home awaits, and a secure financial foundation will help you unlock its doors with confidence. You deserve to have a memorable experience.

The post Navigating the First-Time Home Buying Journey: Essential Insights for Success appeared first on GLM Mortgage Group.

Are you ready to embark on the exciting journey of purchasing your first home in beautiful Vancouver, British Columbia? As you step into the world of homeownership, one of the first crucial steps you need to take is to secure your first mortgage. Choosing the right mortgage services can make all the difference in the world, and that’s where GLM Mortgage Group comes into the picture.

Understanding Your First Mortgage

At GLM Mortgage Group, we understand the significance of your first mortgage, which is why you will notice this is not our first blog about it. It’s not just another financial transaction; it’s a milestone on your path to homeownership. Our experienced team knows the Vancouver, BC, market inside out, and we are here to help you navigate the intricate world of first mortgages.

When it comes to securing your first mortgage, it’s essential to understand that the process is much more than just borrowing a sum of money. It’s a commitment that involves several factors that will impact your financial future. From the mortgage term to interest rates and your ability to meet payments, all these elements come into play.

The Importance of Budgeting

Your first mortgage is not just about the amount you can borrow; it’s about making an informed decision that aligns with your financial goals. This is why budgeting is so crucial. It’s easy to get swept up in the excitement of purchasing your first home, but it’s important to remain realistic about what you can afford. As a first-time homebuyer, you don’t want to overstretch your budget, setting yourself up for potential financial strain down the road. GLM Mortgage Group can help you find a mortgage that aligns with your budget while considering future financial aspirations.

Create a Realistic Budget: One of the key steps in securing your first mortgage is to create a realistic budget. This budget should consider not only your current financial situation but also your future goals and expenses. A carefully crafted budget can ensure that your mortgage is a sustainable commitment rather than a financial burden.

Knowing Your Credit Health

Before you dive headfirst into the world of mortgages, it’s important to know the state of your credit health. Unexpected surprises on your credit report can disrupt your home-buying plans. Our advice: request your credit report from a reputable source like Equifax. It’s a valuable step in understanding your credit score and the factors that influence it. This knowledge is instrumental in the mortgage application process and ensures a smoother path to your first mortgage in Vancouver, BC.

Understanding Your Credit Score: Your credit score is a critical factor that lenders consider when evaluating your mortgage application. It’s essential to review your credit report and address any issues or discrepancies before applying for a mortgage. A higher credit score can help you secure better interest rates.

SEO Optimized Phrase: Understanding your credit score and addressing issues is essential to secure a favorable mortgage rate in Vancouver, BC.

Beyond the Down Payment

Securing your first mortgage is not just about the down payment, as it can seem. In addition to this initial expense, there are other costs that you need to factor into your budget. Property taxes, interest adjustments, insurance fees, and moving costs are some of the additional expenses that can catch you by surprise if not considered. GLM Mortgage Group recommends budgeting an extra $5,000 to $7,000 to cover these costs, ensuring a stress-free closing process that falls well within your financial comfort zone.

Additional Costs: Beyond the down payment, there are various additional costs associated with homeownership. These include property taxes, insurance, and the expenses of moving into your new home. Preparing for these costs in advance can make the transition to homeownership smoother.

The Mortgage Broker Advantage

A trusted mortgage broker can be your best friend in the journey of securing your first mortgage. At GLM Mortgage Group, we have the expertise and experience to guide you through the process. We will help you determine what you can afford, connect you with the best lenders for pre-approved mortgages in Vancouver, BC, and provide the confidence you need to make that first home purchase. With mortgage pre-approval, you’ll have a clear understanding of your mortgage eligibility, the amount you qualify for, and the responsibilities it entails.

Expert Guidance: The mortgage process can be complex, especially for first-time homebuyers. A qualified mortgage broker can provide expert guidance, helping you make informed decisions and secure the best possible mortgage for your needs.

In conclusion, your first mortgage in Vancouver, BC, is a significant step towards realizing your dream of homeownership. At GLM Mortgage Group, we are committed to making this journey as smooth and informed as possible. Don’t let the complexities of the mortgage process deter you from owning your dream home. Reach out to us today and take that crucial first step toward your future home. We are here to help you secure your first mortgage and start the exciting journey of homeownership in Vancouver, BC.

The post Securing Your First Mortgage in Vancouver, BC: The Path to Your Dream Home appeared first on GLM Mortgage Group.

As you have probably heard time and time again, things are expensive. One group that is especially vulnerable to the rise in prices are young adults who are just starting to get a career going and now must decide between high rent prices or saving a lot of money for a downpayment with high interest rates.

In a recent survey, young Canadians showed increasing pessimism about the current economy. The survey, which was conducted between September 27th and October 11th, found that 74% of Generation Z and millennial Canadians do not believe the country’s economic situation will improve in the following year (compared to 66% last year). That is a frighteningly high number and is one of the reasons why 23% of participants disagreed with feeling generally happy, and 26% said they have experienced significant depression.

All signs point to a tough time for the younger population, and adult who are just starting to move out not only have rent, car, food and other normal costs, but they are also trying to pay off student debts.

For this reason, it makes more and more sense why we are seeing young adults feel like they could miss out on their life goal to own a home, at least for the foreseeable future.

Not all is lost, there is some relief in a strata building amendment coming next year which we have talked about in a recent blog, but there is also one incentive that we have not discussed yet that is relatively unknown to many first time home buyers; the First-Time Home Buyer Incentive.

First Time Home Buyer Incentive

The First Time Home Buyer Incentive was proposed to help qualified home buyers ease the load of their monthly mortgage payments. It is a shared-equity mortgage loan with the Government of Canada. Yes, you co-own the home with the government.

The percentage of support changes depending on the type of home you are buying:

• 5% or 10% for a newly constructed home
• 5% for a resale home
• 5% for a new or resale mobile or manufactured home

The incentive is a loan based on the property’s fair market value. The loan is interest-free, and there is not a set way in which you must pay it back without incurring penalties (monthly, yearly, etc.), but there is a few conditions that you will want to be aware of:

1. The loan, in its entirety, must be repaid within 25 years of the date borrowed or when you sell the home, whichever comes first.
2. While the loan is interest-free, it is a “shared equity mortgage,” which means the government shares in any gains or losses on the property value up to a maximum profit or loss per year of 8% (not compounded)

Example

To help you better understand how this incentive works, we have included an example:

Let’s say that you qualified for a mortgage of $400,000 on a resale home and already have $20,000 saved. Since it is a resale property, The Government of Canada will pay 5% of the cost of the property, at $20,000, making your total down payment $40,000, which equals a 10% down payment.

To add on to this example, let’s say you are able to pay $60,000 of the down payment on a $400,000 resale house, and the Government of Canada pays 5% at $20,000. This would make your total down payment $80,000, which is a 20% downpayment, meaning that you may qualify to not have to pay mortgage insurance on your home.

Who qualifies for the First Time Home Buyer Incentive

There are some obligations to who can qualify:

• Must be a first-time home buyer
• Must have a household income of $120,000 or LESS
• The mortgage is capped at 4.0 times the maximum household income of $120,000 ($480,0000), which means the average price of a home would be $500,000 to $600,000, depending on the down payment.
• You must be a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
• You also must meet the minimum down payment requirements with traditional funds (which include savings, RRSP withdrawals) or a non-repayable financial gift from a relative or immediate family member.

*It is important to note that the Government of Canada has recently modified the eligible criteria for homebuyers in Toronto, Vancouver, and Victoria. In these areas, home buyers are now eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000, and an increased total borrowing amount of 4.5 instead of 4.0 times their qualifying income. This change would increase their buying power to roughly $722,000, up from $505,000.

What makes this First Time Home Buyer Incentive so valuable?

The First Time Home Buyer Incentive is so valuable because it is already so tough to get a downpayment for their future homes. Additionally, with interest rates currently at high levels, you can have a greater downpayment so that you are not paying as much interest over time and lowering your monthly costs. Since the incentive is interest free, you can have a worry free mind knowing that you only must pay back the amount borrowed instead of even more additional costs (as long as you follow the conditions).

Conclusion

We think that this incentive is an amazing addition for First Time Home Buyers, as it will make buying a home easier. We understand it is not perfect, and many homes still may be priced out of the range the government allows, but this should help a large number of First-Time Home Buyers be able to at least consider buying.

To some this may be a surprise that this incentive exists as it is not the most widely known incentive. This would explain why the number of people who have used the incentive is under 20,000, even though in 2019 the Liberal Government hoped at least 100,000 Canadians would take advantage.

We also want to point out that this is a Liberal Government incentive, meaning that it could go away at anypoint if there was to be an election and the Liberal Government did not win.

If you have any questions about how this incentive can help you, please give us a call or email.

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Choosing a Mortgage That is Right for You

When you buy a home, you may only be able to pay for part of the purchase price. The amount you pay is a down payment. To cover the remaining costs of the home purchase, you may need help from a lender. The loan you get from a lender to help pay for your home is a mortgage.

With a secured loan, the lender has a legal right to take your property. They can do so if you don’t respect the conditions of your mortgage. This includes paying on time and maintaining your home. Unlike other loans mortgages are/may/will:

• be secured by a property
• have a balance owing at the end of your contract
• normally need to renew multiple times until you finish paying the balance in full
• must meet qualification requirements including passing a stress test
• need a down payment
• need to break your contract and pay a penalty
• typically for an amount in the hundreds of thousands of dollars

What to Consider When Getting a Mortgage

When you’re shopping for a mortgage, your lender or mortgage broker will provide you with options. Make sure you understand the options and features. This will help you choose a mortgage that will best suit you and your benefits.

This includes your:

• mortgage principal amount
• amortization
• payment frequency

Your Term:

The mortgage term is the length of time your mortgage contract is in effect. This consists of everything your mortgage contract outlines, including the interest rate. Terms can range from just a few months to 5 years or longer.

At the end of each term, you must renew your mortgage if you can’t pay the remaining balance in full. You’ll most likely be required to many terms to be able to pay everything off.

The length of your mortgage term has an impact on:

• your interest rate and the type of interest you can get (fixed or variable)
• the penalties you must pay if you break your mortgage contract before the end of your term
• how soon you must renew your mortgage agreement

How Your Mortgage Choices Affect Your Future

Mortgage lenders charge a penalty fee when you break your contract. If you sell your home, you could owe the lender thousands of dollars in penalty fees.

Options related to mortgage flexibility include if your mortgage:

• is open or closed
• is there a penalty to break the term
• how is that penalty calculated if broken
• is portable
• allows you to borrow more money if the mortgage is ported to another property that is being purchased
• is assumable
• has a standard or collateral security registration

Opened Mortgages (aka Secured Lines of Credit):

The interest rate in most cases is usually higher than on a closed mortgage with a comparable term length. This allows more flexibility if you plan on putting extra money toward your mortgage.

An open mortgage may be a good choice for you if you:

• plan to pay off your mortgage soon
• plan to sell your home soon
• think you may have extra money to put toward your mortgage from time to time

Closed Mortgages (aka Fixed and/or Variable):

Closed term mortgages usually limit the amount of extra money you can put toward your mortgage each year. Your lender calls this a prepayment privilege, and it is included in your mortgage contract. Not all closed mortgages allow prepayment privileges. This can vary from lender to lender.

A closed mortgage may be a good choice for you if:

• you plan to keep your home for the rest of your loan’s term
• the prepayment privileges provide enough flexibility for the prepayments you expect to make

It is PARTICULARLY important to have a clear understanding of the implications when it comes to choosing the right mortgage that’s best for you. It makes a significant difference in future planning and can impact you in incredibly substantial ways.

At GLM Mortgage Group, we know what questions to ask. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you. We want you to make the best decision possible on the mortgage that you are committing to. Call us anytime for a FREE consultation on the mortgage products available to you.

The post Choosing a Mortgage That is Right for You appeared first on GLM Mortgage Group.

Value of Homes:

It has likely come to your attention that the Bank of Canada increased the Prime Rate 0.75% from 2.5% to 3.25% last week. Our most recent blog that we published on September 9th discussed the pros and cons of the prime rate increase as well as discussed what rate option is best for you. I recommend checking it out to have a better understanding of how this prime rate increase may affect you.

In this blog we are diving more into the topic of how this increase will affect the value of homes and the effect it will have if you were to sell and/or purchase a property in the near future.

Starting in April (2nd fiscal quarter), the value of properties started to decline. From April to June, the value of residential real estate held by households fell by $419 billion, while financial assets dropped by $531 billion according to Statistics Canada. This means that household net worth fell by 6.1%, which is the largest drop on record. 

This being said, households remain much better off than they did before the pandemic, with a net worth of $2.9 trillion higher than at the end of 2019. The value of residential real estate held by households is up $2.3 trillion over that time. 

What is offsetting the prices of homes? Companies did much better in the 2nd quarter, thanks to the rising prices for commodities that are offsetting the drop in household wealth. The net worth of the corporate sector jumped by $812 billion.

We want you to know that the drop in housing prices is likely to continue into 2023. In theory it is important to understand that just because the value of your home drops does not mean that you are losing money. It is all about the time of sale, and if you sell at the same time that you buy another home within the same market, then you are likely to average out the loss of your sale with the lower purchase of your new place.

It is all relative to the market you purchase in. If you are located in Langley, and you sell your current Langley property in favour of another property in Langley, then the discounted value that someone bought your place at will likely be the same discounted value for the new place that you purchase. If you live in Langley and move to Toronto, then the likely discounted price is not going to be the same, and that is why it is best to do research ahead of time.

We are anticipating more decreases in sale prices this year and into 2023, with the possibility of going into 2024 and beyond. Economists believe that the worldwide downswing in prices that we are seeing is only getting started and that a correction to closer to pre-pandemic levels is likely. When we say closer to, we do not mean back to where they were, we still anticipate home prices to stay at a decent percentage over 2019 levels (10-15%). For reference, home prices went up 35-45% in some regions from the beginning of 2020 to the beginning of 2022.

Moving to a new place can feel daunting, especially if you are moving geographic boundaries during a downtrend in the housing economy. If you have any questions about where the market is in a particular geographical area, please do not hesitate to reach out to us, we would be more than happy to help you and make sure that you understand the value addition or loss you could receive on your geographic move. 

The post Value of Homes Due To 0.75% Prime Rate Increase appeared first on GLM Mortgage Group.

Real Estate is always a great conversation starter.

Earlier this year we did a blog on the statistics of first time home buyers and the challenges that come with being a first time home buyer. Today we are going to discuss the reasons why getting into the market is still a great idea and although being a first time home buyer has never been harder, the path to buying real estate is still a rewarding journey. 

We understand that in today’s age, lots of young people are wondering if they will even have the opportunity to enter the real estate market. A lot of young people are also wondering if it is even worth entering the real estate market with the way the market has been the past few years. We are here to tell you that it is still a great idea and here is why. 

Carlos Miramontez, the Vice President of mortgage lending at Orange County; Credit Union in California recently said that “owning a home is how most Americans build wealth. A portion of every housing payment made by a homeowner is applied toward paying down the home loan balance (principal payment), which increases the equity in the home and helps to build a homeowner’s net worth.”

Canadian households have seen their net worth rise significantly due to the COVID-19 pandemic. If you are a homeowner then your net worth is likely rising 3X more then average just due to the surge in home prices, and 80% of net worth rises in millennial is due to the fact of the rise in the home(s) they own.

We understand that sometimes starting out in real estate is not something you can do right away, and that financial assistance from relatives is not something that everyone can afford. The truth is though, that a financial net worth of greater than enter counterparts is not just because of financial luck passed down from generations. Owners are more likely to be financially smart and focus on important budgeting and cost of living tools for all aspects of their life and not just their home. Even if you can not enter the market for years to come, just working your way towards that goal will lead to increased financial understanding, increased desire to save money for future goals, and an increased awareness of every financial decision made. 

As you prepare to start creating financial plans to save for your entrance into the real estate market, understand that it is important to create a goal before entering the market. This is important because you want to have enough money saved for emergencies as well as for some retirement savings and a low debt-to-income ratio on top of a dependable income first. You also will want to plan for the closing costs of buying a home which can range from 2-6% of the purchase price depending on the type of loan, the type of property, the location and other factors. 

We know that it is hard to enter the real estate market right now, and we understand it is not always easy to look at silver linings. Financially, saving towards the purchase of a home is a smart tactical decision. Do not feel you need to pressure yourself to this “ideal” of when a home should be purchased, just focus on what is best for your needs and how you can get there in the timeframe that makes sense to you. Understand that someone else’s ideal does not have to be your ideal, and it is best to go at your pace so that you do not fall down a hole because you kept yourself too tight on money for too long. 

The post Why Entering The Real Estate Market is Still A Great Idea appeared first on GLM Mortgage Group.