Effective December 15th, 2024, significant changes to Canadian mortgage rules will provide new opportunities for homebuyers. The maximum home purchase price eligible for default insurance has been raised from $1 million to $1.5 million. Additionally, select borrowers will now have access to default-insured mortgages with 30-year amortization periods. These changes aim to make homeownership more attainable for Canadians in a competitive housing market.

In this blog, we’ll explore what these updates mean for you and why GLM Mortgage Group is your go-to partner for navigating these opportunities.

What’s Changing in Default Insurance Eligibility?

Default insurance protects lenders when borrowers are unable to meet their mortgage payments. It also allows buyers to purchase homes with smaller down payments. Until now, only homes priced up to $1 million were eligible for default insurance. However, starting December 15th, the threshold will rise to $1.5 million, opening doors for buyers in higher-priced markets.

Down Payment Requirements

The down payment rules remain the same but now apply to homes priced between $1 million and $1.5 million. Here’s how they break down:

• 5% for the first $500,000
• 10% for the portion between $500,001 and $1.5 million

For example, to purchase a $1.5 million home:

• 5% of the first $500,000 = $25,000
• 10% of the remaining $1 million = $100,000

Total minimum down payment: $125,000

This means buyers can now purchase a $1.5 million home with a down payment as low as $125,000, a massive improvement in accessibility for those looking to enter or upgrade in today’s market.

Introduction of 30-Year Amortizations for Default-Insured Mortgages

Another major update allows some borrowers to access a 30-year amortization for default-insured mortgages. Previously, insured mortgages were limited to a maximum 25-year amortization.

Who Qualifies for a 30-Year Amortization?

Borrowers eligible for this extended amortization include:

1. First-Time Home Buyers: New buyers can now reduce their monthly payments by spreading their mortgage over 30 years, making it easier to afford their first home.
2. Purchases of New Builds: Those buying newly constructed homes can take advantage of this option, encouraging homeownership and supporting housing development.

This change helps reduce monthly mortgage payments, making homeownership more affordable, particularly in high-cost markets like Vancouver, Toronto, and other major Canadian cities.

Why These Changes Matter

1. Broader Market Access

Raising the price threshold for default insurance enables buyers to access homes in higher-priced markets without needing a 20% down payment. For example, instead of requiring $300,000 for a $1.5 million home, buyers can now qualify with as little as $125,000.

2. Lower Monthly Payments

The introduction of a 30-year amortization reduces monthly payments for eligible buyers, allowing them to manage their cash flow better while still entering the housing market.

3. Increased Affordability for New Builds

Encouraging purchases of new builds with 30-year amortization will support Canada’s housing supply, which is a critical step in addressing housing affordability challenges.

The GLM Mortgage Group Advantage

Navigating these rule changes can be overwhelming, but with GLM Mortgage Group, you’re never alone. Here’s how we can help you take full advantage of these updates:

1. Expert Advice on New Rules

We stay ahead of regulatory changes to help you understand how they impact your homeownership journey. Whether you’re upgrading to a higher-priced home or looking for a first-time buyer advantage, we’ll guide you every step of the way.

2. Tailored Mortgage Solutions

Every buyer’s situation is unique. We assess your financial goals, current circumstances, and eligibility to create a personalized mortgage plan that takes advantage of these new rules.

3. Access to a Wide Network of Lenders

GLM Mortgage Group partners with a variety of lenders, ensuring you get the best rates and terms. Whether you need default insurance for a high-value home or are looking for a 30-year amortization, we’ll connect you with the right options.

4. Support for First-Time Home Buyers

First-time home buyers face unique challenges. With the new 30-year amortization option and higher default insurance limits, our team will help you unlock the door to your dream home while keeping your finances on track.

5. Seamless Application Process

We make the process of applying for a mortgage stress-free. From pre-approval to finalizing the deal, we handle the details so you can focus on your future home.

What Should You Do Next?

If you’re considering purchasing a home or exploring your options under these new rules, here are the steps you can take:

1. Determine Your Budget
   Use a mortgage affordability calculator to see how much you can afford under the updated rules.
2. Consult with a Mortgage Expert
   Speak with a trusted mortgage professional at GLM Mortgage Group to discuss your unique situation.
3. Get Pre-Approved
   A pre-approval gives you a clear idea of what you can borrow and strengthens your position as a buyer.
4. Explore Your Housing Options
   With the higher price limit and 30-year amortization options, you may have access to homes that were previously out of reach.
5. Finalize Your Mortgage Plan
   Work with GLM Mortgage Group to secure the best rates and terms for your mortgage.

Why These Changes Are a Big Deal

With Canadian housing prices continuing to rise, these rule changes address some of the biggest barriers to homeownership. By raising the default insurance price threshold and introducing 30-year amortizations for select borrowers, the government is creating pathways for more Canadians to achieve their homeownership dreams.

Your Trusted Partner: GLM Mortgage Group

Understanding and leveraging these changes can make a significant difference in your home-buying journey. That’s why it’s crucial to work with a mortgage professional who understands the market and can tailor solutions to your needs.

At GLM Mortgage Group, we pride ourselves on our client-focused approach. We’re here to simplify the process, secure the best terms, and ensure you feel confident in every step of your mortgage journey.

Contact us today to learn more about how we can help you navigate these exciting changes and turn your homeownership dreams into reality.

This blog is designed to inform, engage, and highlight GLM Mortgage Group’s expertise in guiding clients through these new opportunities. Let me know if you’d like to refine it further!

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Introduction

In the ever-evolving Canadian real estate market, buying a home is a dream for many. Whether you’re stepping onto the property ladder for the first time or upgrading to a new space, this decision is one of the most significant financial commitments you’ll ever make. For potential homebuyers in British Columbia and beyond, understanding the full scope of affordability is crucial. This is where an affordability calculator becomes an indispensable tool, empowering individuals to make informed decisions about their financial future.

Why Affordability Matters

Affordability is at the heart of any home-buying decision. It’s not just about whether you can secure a mortgage but about ensuring that the mortgage you take on is one you can comfortably manage over the long term. The financial landscape for homebuyers in British Columbia can be particularly challenging, with high property prices and varying interest rates adding to the complexity. An affordability calculator offers a realistic assessment of what you can afford, helping you avoid the pitfalls of overextending yourself.

Realistic Financial Assessment

One of the primary benefits of using an affordability calculator is that it provides a clear and objective picture of your financial situation. By inputting accurate data such as income, existing debts, monthly expenses, and the amount of your down payment, you can gain insight into your financial capabilities. This step is essential to avoid making decisions based on emotions or aspirations rather than financial reality.

For instance, if you’re considering buying a home in Vancouver, where property prices are notoriously high, an affordability calculator can help you determine whether you can realistically afford to live in your desired neighborhood or if you need to explore other options. It allows you to see the full picture and make decisions based on facts, not just desires.

Preventing Over-Borrowing

Over-borrowing is a common risk for homebuyers, especially when they are seduced by the idea of owning their dream home. However, taking on more debt than you can handle can lead to severe financial strain, increased debt, and even the risk of default. An affordability calculator helps you set realistic expectations by calculating an affordable loan amount based on your financial situation.

Consider a scenario where a family is looking to buy a home in Kelowna. The affordability calculator will take into account their income, current debts, and other financial obligations to provide a maximum mortgage amount they should consider. This way, they can avoid the stress of monthly payments that are too high and ensure that they can maintain their lifestyle without sacrificing their financial well-being.

Planning and Budgeting for the Long Term

Mortgage payments are a long-term financial commitment, often lasting 25 years or more. Therefore, it’s crucial to incorporate these payments into your overall budget. An affordability calculator doesn’t just provide a maximum loan amount; it also helps you estimate your monthly mortgage payments based on various loan terms, interest rates, and down payment amounts.

This information is invaluable for planning your budget for a home. By knowing how much your mortgage will cost each month, you can plan for other expenses, such as utilities, property taxes, and maintenance. For example, if you’re buying a home in Victoria, where the cost of living is relatively high, knowing your monthly mortgage payments in advance will allow you to budget effectively and ensure you can meet all your financial obligations without stress.

Comparison Shopping in a Diverse Market

The mortgage market is diverse, with numerous lenders offering different loan products, interest rates, and terms. An affordability calculator enables you to compare the affordability of various mortgage options. By inputting different loan scenarios, you can see how each option affects your monthly payments and long-term financial goals.

For example, you might be choosing between a variable-rate mortgage and a fixed-rate mortgage. An affordability calculator can show you the potential fluctuations in your payments with a variable rate versus the stability of a fixed rate. This information empowers you to make an informed decision about which mortgage product best suits your needs and financial situation.

Connecting with Experts: The Role of GLM Mortgage Group

Navigating the complexities of the mortgage market can be challenging, even with the best tools at your disposal. That’s why working with a trusted mortgage broker like GLM Mortgage Group is invaluable. With their expertise, they can provide personalized advice tailored to your specific financial situation and home-buying goals.

For instance, if you’re a first-time homebuyer in British Columbia, GLM Mortgage Group can guide you through the various first-time homebuyer programs available, helping you maximize your savings and ensure you get the best mortgage deal possible. They understand the local market dynamics and can help you navigate the challenges of buying a home in cities like Vancouver, Victoria, or Kelowna.

Conclusion

The importance of an affordability calculator for mortgages cannot be overstated. It’s an essential tool for anyone looking to buy a home, whether you’re a first-time buyer or upgrading to a new property. By providing a realistic financial assessment, preventing over-borrowing, aiding in long-term planning and budgeting, and allowing for effective comparison shopping, an affordability calculator empowers you to make sound financial decisions.

But remember, while an affordability calculator is a powerful tool, it’s just one part of the equation. Working with experienced mortgage brokers, like those at GLM Mortgage Group, ensures you have the expert guidance you need to make the best decisions for your financial future.

Are you ready to take the next step to homeownership? Contact GLM Mortgage Group today to schedule a consultation. Their team of experts will assess your financial situation, provide you with a clear understanding of your affordability, and guide you through the mortgage application process. With GLM Mortgage Group by your side, you can embark on your home-buying journey with confidence, knowing you have a trusted partner to help you every step of the way.

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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.

Why This Blog is Important to You: The affordability calculator allows you to input your financial information and accurately estimate the maximum home price you can afford. This helps you gain a clear understanding of your financial capabilities and sets realistic expectations for your home-buying journey.

Introduction

Last week we talked about an affordability calculator and why it is important. Today, we are going to talk about how to use and read it. We are going to base it on the Canada Mortgage and Housing Corporations tool that they have as an Affordability Calculator.

Here is the first page you will find when you click into the site for the Affordability Calculator tool made by the Canada Mortgage and Housing Corporation.

As a mortgage group, we will be focusing on the section that looks at if you are wanting to buy.

How To Use an Affordability Calculator Part 1

When you enter the app you will want to click the Buy (I want to be a homeowner). Once you have done that you can click Next.

How To Use an Affordability Calculator Part 2

Next you will want to fill out this page pictured below. You will want to be as honest as you can based on the factors that are within your control.

How To Use an Affordability Calculator Part 3

As pictured below, we will be considering a household income of $150,000 (based on two $75,000 salaries). We will assume for the sake of this blog that the buyer wants to put at least 20% down on a place of $400,000 or higher. We will input the 20% on $400,000, which is $80,000.

We will then use our current rate on a 5 year term, which is 5.19% and put BC as the province we are living in as that is where we are based.

How To Use an Affordability Calculator Part 4

Pictured below we have your monthly expenses. We are going to work Canadian averages to calculate normal expenses.

On average the Canada will spend in a month $300 on groceries and an average of $740 in car fees (monthly loan, insurance cost, gas and car maintenance fees). The average Canadian also spends about $200 on communication devices (phones), $120 on recreational activities, and about $60 a person on utilities.

We doubled each average amount to account for a household of 2 people. We did not include potential debts an individual may have (credit card debt, student debt, etc.) and we did not include additional medical fees.

How To Use an Affordability Calculator Part 5

Pictured below is the calculation created based on the variables that make up the financial situation we used for this scenario.

Here it shows that you could likely afford a home up to $486,773. It shows you the money you likely have left over per month which can go towards your mortgage payment.

Obviously an affordability calculator is a baseline and does not account for potential of salary increases in the future, financial burdens that arise from emergencies, unforeseen events, having children and/or other monthly expenditure needs.

Conclusion

In conclusion, the affordability calculator provided by the Canada Mortgage and Housing Corporation is a valuable tool for individuals looking to determine their purchasing power in the housing market. By inputting relevant financial information, such as income, expenses, and desired down payment, the calculator generates an estimate of the maximum home price that can be afforded.

However, it is important to remember that the affordability calculator is just a starting point and should not be considered as the final word on affordability. It does not take into account factors such as potential salary increases, unexpected financial burdens, future life changes, and additional debt obligations. These factors can significantly impact one’s financial situation and should be carefully considered when making housing decisions.

Therefore, while the affordability calculator provides a helpful guideline, it is crucial to conduct a comprehensive financial assessment and seek professional advice to ensure a sound and sustainable home purchase. Consulting with a mortgage specialist or financial advisor can provide personalized insights and guidance based on individual circumstances. For this reason, we would love to set up a time to meet with you.

Give us a call from the number on this website and we guarantee that we will either answer your call promptly or get back to you within 90 minutes. We understand the importance of timely communication and want to ensure that your questions, concerns, and inquiries are addressed promptly. Our dedicated team is eager to assist you and provide the support you need throughout the home-buying process.

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Empowering Homebuyers: The Importance of an Affordability Calculator for Mortgages

Why is this article important: Purchasing a home is a significant milestone for many individuals and families, but it often comes with the daunting task of securing a mortgage. While the idea of owning a home is exciting, it is essential to approach this financial commitment responsibly. One crucial tool that can help potential homeowners make informed decisions is an affordability calculator. In this blog post, we will explore why an affordability calculator is needed for mortgages and how it can empower individuals to make sound financial choices

Introduction

Entering into the real estate market or upgrading is a thought that goes on in the minds of millions of Canadians every day. Affordability is a key issue in any personal and professional debates on where you may draw the line on possibilities within your scope of finances.

There are different limits you can take as a person, either stretching yourself as thin as possible to get the best home you can afford, or getting a place under your budget, that is more affordable and allows you to be set up for potential emergencies and create more life balance in your day to day purchases.

Determining Affordability

Determining affordability involves considering factors such as income, existing debt, monthly expenses, and the down payment amount. However, this can be a complex process without the aid of a reliable affordability calculator.

• Realistic Financial Assessment: One of the primary reasons an affordability calculator is needed for mortgages is to provide a realistic assessment of one’s financial situation. It enables prospective homeowners to evaluate their financial capabilities objectively, taking into account their income, existing debts, and ongoing expenses. By entering accurate data into the calculator, individuals can gain a clearer picture of what they can afford and avoid overextending themselves financially.

• Preventing Over-Borrowing: An affordability calculator serves as a safeguard against over-borrowing. When individuals set their sights on a dream home, they may be tempted to stretch their finances beyond their means. However, committing to a mortgage that is too large can lead to financial strain, increased debt, and potential default. An affordability calculator helps individuals set realistic expectations by calculating an affordable loan amount based on their financial situation, ensuring they don’t borrow more than they can comfortably repay.

• Planning and Budgeting: Mortgage payments are a long-term financial commitment that should be factored into one’s budget. An affordability calculator assists in the planning process by providing an estimate of monthly mortgage payments based on various loan terms, interest rates, and down payment amounts. This enables individuals to create a comprehensive budget that incorporates their mortgage expenses and other financial obligations. By having a clear understanding of how their mortgage will impact their budget, potential homeowners can make informed decisions about their housing choices.

• Comparison Shopping: The mortgage market is diverse, with numerous lenders offering different loan products, interest rates, and terms. An affordability calculator allows individuals to compare the affordability of various mortgage options. By inputting different loan scenarios, individuals can evaluate how each option affects their monthly payments and long-term financial goals. This information empowers borrowers to make well-informed decisions about selecting a mortgage that suits their needs and ensures they are not overpaying for their home.

Conclusion

The significance of an affordability calculator for mortgages cannot be overstated. Purchasing a home is a major financial decision, and the responsible approach involves assessing affordability accurately. An affordability calculator provides individuals with a realistic evaluation of their financial situation, helping them avoid over-borrowing and make informed choices. It also facilitates effective planning and budgeting by estimating monthly mortgage payments, enabling homeowners to incorporate this commitment into their overall financial picture.

Additionally, the ability to compare different mortgage options empowers borrowers to find the most affordable and suitable loan for their needs. By utilizing an affordability calculator, individuals can navigate the complexities of the mortgage market with confidence, ensuring a sound financial future as they embark on the path to homeownership.

Are you ready to embark on the journey of homeownership or upgrade from your current position? Look no further! Our experienced team of mortgage brokers is here to help you every step of the way.

Reach out to us today to schedule a consultation. Our team will assess your financial situation, provide you with a clear understanding of your affordability, and guide you through the mortgage application process. By working with us, you’ll gain peace of mind, knowing that you have a trusted partner by your side.

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Bank of Canada Kept Key Interest Rate To 4.5%

Today the Bank of Canada launched their decision to keep the rates steady. This was widely expected as the Bank of Canada will want to continue to monitor the delayed effect of already completed hikes and see what decisions should be made down the road. 

Bank of Canada Kept Key Interest Rate To 4.5%: Why Did the Bank of Canada Keep Rates the Same?

The Bank of Canada has not seen enough evidence that the inflation rate is lowering. Rate hikes normally take a minimum of 3 months to get a full effect on the economy, and the Bank of Canada will need to see more evidence before starting to lower the rates.

Bank of Canada Kept Key Interest Rate To 4.5%: Does this mean We Are Safe?

Unfortunately, with the way this economy has been in the past many months, it is not with 100% certainty what is to come. The uneasiness of a recession is still looming and it can still very much happen depending on what market impacts take place in the weeks and months to come. 

Overall, many markets have been trading sideways for many months and it is anyways guess right now which direction it will go in the short term. Sideways training can be great for a certain period of time, but history shows that sideways trading is never here for good. 

Bank of Canada Kept Key Interest Rate To 4.5%: Promising Signs?

The economy in Canada has been motoring and March brought a boost of 35,000 new jobs, once again beating economist forecasts.

Statistics Canada reported that 18,800 full-time jobs were created in March, along with 15,900 part-time positions. The census forecast was 7,500 for the month, blowing the charts by a significant amount. 

The unemployment rate also stayed at 5% for the fourth straight month

Finding a job has still been very difficult for many depending on the sector and it is important not to get down on yourself. Most of these added jobs were in specific categories such as transportation and warehouse, business, building and support services, and finance and insurance. 

Bank of Canada Kept Key Interest Rate To 4.5%: Is This Good?

This all sounds like great news, but it is important to understand it from an inflation standpoint. 

These creations of jobs and unemployment rates are not directly related to getting inflation back on track and are actually not the signs the Bank of Canada wants to see. The Bank of Canada has warned that Canada’s low unemployment rate will need to rise before price pressures are fully tamed.

Bank of Canada Kept Key Interest Rate To 4.5%: What is Likely to Happen Moving Forward?

The opinions on where the Bank of Canada may go in the future is very dependent on many factors and variables. Policymakers and economists are divided on if rate hikes are more likely, but most are predicting that cuts won’t come till the end of this year at the earliest. 

Conclusion

The Bank of Canada made a decision today to keep the rates steady. This means that a wait and see approach will continue for the foreseeable future. 

We will always update you on Bank of Canada decisions and how they will impact you. 

It is important to understand how this can affect you and the rates to expect in the near future. Spring has always been a popular time to look to move or enter the real estate market, and we are anticipating an increase compared to this winter.

We are always available for a call and would be happy to discuss your options and the rate impacts you can expect. We update our current rates daily on our website so that you can always see them up to date. To check them out, go here.

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Costs of Buying a Home

Buying your first home for the first time is very exciting, whether it be an apartment, condo, townhouse or house. It could come at wildly different stages for people. For some, they want to buy a house as their first major purchase, as early as possible. For some, they want to travel and live freely before starting the search of home ownership. For others, they want to take it in stages, first renting, then purchasing a car loan, then buying a puppy/kitty and then hearing up for the big purchase of a home.

In our blog last week we talked about the some tips and tricks to know about when buying into the real estate market for the first time. Today, we are going to talk about what the costs of buying a home and what you can expect when going into the purchase of a real estate property. We are going to break down each cost and what you could expect. Often times you will likely hear your friends, coworkers or others talk about how closing their purchase was difficult because of all the addition expenses they were not expecting. Well, we want you to be prepared.

Here is the breakdown of the Costs of Buying a Home:

Property Appraisal Fees

This fee determines what the property’s market value is and is often a requirement to getting a mortgage loan. An appraisal takes in account the quality of the construction, home features, defects, location and current the current housing market.

This fee could vary likely from $350-800.

Building Inspection Costs

It is important to not just just into a purchase before understanding exactly what you are getting into. For this reason, it’s strongly recommended that you include an inspection as a condition of your offer to purchase. This will help you understand any defects that come with the house, including water leaks, the presence of asbestos, and what renovations and repairs may be needed in the future.

It is best to not cheap out on this part and hire a certified inspector. Make sure they are a member of an association or professional order so that in case of malpractice, you will have legal recourse. It is worth the cost although you can expect $500 or more.

Legal Fees

Using a legal professional is mandatory. These legal experts prepare and supervise the signature of a number of important documents (such as the deed), and are also responsible for title search and registration. 

Mortgage Loan Insurance Premium

If you put down less than 20% you will have to pay a mortgage insurance premium. It is mandatory under 20%, and in Ontario, Quebec and Saskatchewan the provincial sales tax is added to the premium and must be paid when you purchase the home.

Sales Tax on New Properties

It varies province to province on how much tax you must pay on the property, and can be as low as 5% on Alberta or 15% in New Brunswick.

Additional foreign buyers taxes apply in some regions.

Welcome Tax or Land Transfer Tax

This tax is very much dependent on the region you purchase in and is a significant source of revenue for municipalities and provinces.

Pro Tip: In some provinces, such as Ontario and British Columbia, a First Time Homebuyer may be eligible to have this tax refunded.

Renovations

Are there parts of the house you want to renovate or might need to renovate? Remember to keep these costs into perspective of your total cost to understand where your budget may stand and what renovations can be done instantly and which ones may have to wait.

A typically bathroom renovation averages from $10,000 – $15,000 and a kitchen $25,000 – $75000.

It is important to note that renovations can increase your homes value on top of making it a home you prefer to live in. We recommend living in the home for a few months before deciding exactly what you want to renovate.

Moving Costs

Moving costs are likely imminent depending on your situations.

Renting a truck usually costs a few hundred dollars and hiring movers can be $50 – $200 an hour. 

Decorating Costs

Consider decorating and furnishing costs into your budget.

Annual Fees

Do not forget about annual fees such as:

• Heating, electricity and has
• Internet, cable and telephone
• Home Insurance
• Strata fees (if applicable)
• Property Taxes
• School Taxes

Conclusion

We understand these costs of buying a home are a lot to take in, but it is essential to remember that owning a property/home is an investment into your future. We wanted to lay put all of these costs of buying a home in a convenient blog so that you can understand what to expect. We are always available to chat and would love to help you on your journey!

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Affordability Through Market Correction

In the past few years, it is a common topic of discussion that housing prices have skyrocketed since the pandemic began.

Since 1980, BMO estimates that home prices have increased 3% per year in real terms, which roughly reflects real (inflation-adjusted) wage growth and interest rates. As noted above, it is well known that that was not the case in the past few years. Well, according to BMO in a release to investors, home prices have climbed 38% above trend, meaning that prices have jumped over a third in the past two years, which is a big splash above the normal baseline.

These deviations, known as overvaluation, do not normally stay around that long, although it is important to note that we have not seen an overvaluation in Canada this big in at least 40 years.

Why is this important?

Well it leads to our topic today about affordability. There is a lot of stress and worry in recent months, some recession based, some media based, and others stressed about how the value of a homeowners home or a purchase into the market for first time home buyers is going to look.

When looking at a potential dipping market in the future, you can look at it two different ways. For a homeowner, you may be scared that you are going to lose value in the price of your home and ultimately fear that every day you do not sell is the more value you will lose. For first time home buyers, you may be happy because the value of real estate is dipping again and it may be a chance to get into the market.

Let’s break down both realities.

For homeowners, let’s look at the angles to help you feel less stressed about the correction in this housing market.

First key to point out is the word correction. The housing market is correcting, not crashing. With the Bank of Canada hiking up key interest rates, it starts to signal a change in the economy, not necessarily at a fast rate, but over time. The impact of these rate hikes by the Bank of Canada is now being noticed, but remember it is a correction, not a crash.

A crash would signal that home prices would plummet down far, potentially to as low as pre-pandemic, or even lower. That is not the case, as it is believed that housing prices will drop no more than 15% of 2022s early year prices by the middle of 2023. Remember, early in the blog we stated that BMO released that prices increased 38% in two years. This means that even with a 15% drop, the real estate market will still be higher than the beginning of 2020. This means that the value of your home should not drop as much as you may think.

A second key point to consider is timing. Do not try to time the market, do what you need to do to best serve you. When you feel that you are in a business to sell and/buy then you make that decision and do not let the market influence you. Rates and values fluctuate all the time and perfecting an entry into the market is not necessary. Remember that if you buy and sell within a similar region, the sale of your property is likely to have lost a similar valuation percentage as the property you just bought. 

Hopefully those two key points above make you feel better and at ease. Remember, don’t let the media persuade your decision. Analyze the market, contact a professional, and make a decision when it is best for you.

For first time home buyers, hopefully the information above helps you understand what this means for you. A dip in the real estate market is a big plus because the prices will not be as high as they are today, with the potential of the real estate market going up again in the future. That being said, rates have changed a lot over the past many months, so please reach out to us to help you find the best possible deal at the best rate. Do not let the high rates scare you, as we said above, rates fluctuate all the time and finding the perfect time to enter the market is not necessary. 

Hopefully this blog gave some insight into what to expect in the coming months. Always feel free to reach out to us when you are ready to enter the market, sell your home, change your mortgage, refinance, or more!

The post Understanding Proper Truth of Affordability Through Market Correction appeared first on GLM Mortgage Group.