Tag Archive for: first time buyers

mortgage changes in bc real estate

Navigating through mortgage changes in BC real estate

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Recent changes in the housing market present exciting opportunities for homebuyers. As your Comox REALTOR®, I can guide you through these updates. A mortgage broker can help you build effective plans to achieve homeownership goals. In this way, you can establish what you are able to afford. This is one way to streamline your search for a property.

Knowing these new rules and guidelines will help with strategy and future goals of climbing the “real estate ladder.”

Expanded amortizations for first-time homebuyers

Starting December 15, first-time homebuyers will have access to 30-year amortizations. This change can be of benefit in two significant ways:

  1. Lower income requirement. By extending the amortization period, the income required to qualify for a home purchase decreases. This means more buyers can meet the necessary criteria.
  2. Reduced monthly payments. A decrease in monthly payments will make homeownership more financially manageable. For instance, on a $600,000 purchase, the monthly payment could drop by approximately $250, providing greater flexibility in budgeting.

Increased insured mortgage cap to $1.5 million

High income, but difficulty saving for a down payment? An increase in the insured mortgage cap to $1.5 million can accelerate your path to homeownership. Previously, purchasing a $1.4 million home required a down payment of $280,000. Now, as of December, clients can potentially purchase the same property with a down payment of about $115,000. This will save a whopping $165,000.00 in upfront requirements.

This change is also advantageous for “right-sizers” who want to downsize. It allows the buyer to allocate more funds from the sale of their larger home toward retirement. Then you can put less down on a new, smaller property. However, you should keep in mind that closing costs, typically between 2 and 4 percent of the purchase price, need to be accounted for in each scenario.

For a $600,000 purchase price, anticipate that clients will need an annual income of approximately $150,000 to meet today’s stress-test requirements.

Switching lenders at renewal: A business opportunity awaits from mortgage changes in BC real estate

While you may not initially think about how switching lenders can benefit you, it’s essential to understand that mortgages encompass more than just interest rates. The Canadian Mortgage Charter now allows insured mortgage holders to switch lenders at renewal without undergoing a stress test. This change opens up opportunities for borrowers to shop around for better rates and terms, potentially saving thousands of dollars.

Tax-efficient savings strategies around mortgage changes in BC real estate

As well, two important tax-efficient savings methods have emerged that can empower you on your journey to homeownership:

  1. RRSP withdrawal limit increase. The amount that can be withdrawn from an RRSP has increased from $35,000 to $60,000 per borrower. This change provides additional funds for you to put toward your down payment.
  2. First-time home saver account. Introduced in 2023, this account allows you to save $8,000 per year in contribution room, which reduces your taxable income.

Unlike RRSP withdrawals, funds from this account do not need to be repaid and any gains earned within it are tax-free. This account, however, has a sunset clause in 2028, making it vital for clients to act quickly to maximize its benefits.

These recent changes create valuable opportunities for purchasers. Make informed decisions on your path to homeownership. Speak to your mortgage broker about the implications and opportunities surrounding expanded amortizations, increased mortgage caps, flexible lender options, and tax-efficient savings strategies.

Call me if you would like to connect with a competent, knowledgeable, and experienced mortgage broker.

gen z home buyers in comox valley

Relocating or lifestyle changes are worth it if Generation Z adults can get into the home ownership market.

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According to a survey conducted this year by Royal LePage, 83% of 18 to 38-year-olds in British Columbia believe that home ownership is a worthwhile investment. Of those who are not yet homeowners, 77% say they plan to purchase a primary residence in their lifetime. Even though they realize it is expensive to own a home, it is a priority for them.

The positive association with owning real estate amongst the younger generation was not altogether unexpected. What is surprising and promising is the practical and purposeful way they are tackling the affordability barriers.

They are focused on saving for a down payment which is often the most difficult hurdle buyers face.

Purchasing in larger urban markets like Vancouver might not be attainable. However, smaller markets such as the Comox Valley may reap the benefits. The overall sentiment from this demographic is that owning their home, regardless of the property type, is a valuable and worthwhile long-term investment.

To achieve this, they are willing to make lifestyle adjustments or find alternative ways to enter the market. This may include purchasing with friends or family. It may mean buying a property with the intention of renting part of it to a tenant. It can even mean relocating to more affordable areas.

For many of these young buyer hopefuls, current higher lending rates are a major barrier. Keeping potential buyers in the rental market longer.

Now that rates are edging lower, we may begin to see more of these potential homeowners move away from renting and into purchasing.

Among respondents in British Columbia who do not currently own a primary residence, 75% say that owning a home is a priority. Approximately half of all who responded (51%) really believe this is an achievable goal. The other 49% are split between being unsure whether they will be able to buy and those who are convinced they will not be able to own a home.

When asked why the goal of home ownership is important to them, the vast majority say they would like their own permanent place to live. Other factors they consider are the stability of owning and the restrictive landlord-tenant policies when renting.

Homeownership is a highly valued milestone for many in the Generation Z and young millennial demographic. This makes it a key priority for their future.

While some young buyers expect to receive financial assistance from their families, others are assessing their finances and making the necessary adjustments to reach their goals. They are doing a thorough analysis of their income and spending habits, and are cutting back on expenses where possible.

Remember that opportunities exist in every market. Don’t feel pressured to act immediately. Take the time to ask questions, understand, and become comfortable with the opportunities available to you.

I am here to help you with that goal and explain some of the options and possible solutions. Get in touch today!

Summary

● The Royal LePage® 2024 Demographic Survey on the Next Generation of Buyers revealed
that 84% of respondents nationally believe in home ownership as a worthwhile investment,
with variations across provinces. 1
● 51% of respondents nationally currently own their primary residence, while 35% are renting
and 13% are living rent-free.
● 74% of non-homeowners consider owning a home a lifetime priority, citing reasons such as
seeking stability and financial benefits. 2
● 54% of those prioritizing home ownership believe it is achievable, with 20% thinking it is not
achievable.
● 75% of those prioritizing home ownership plan to purchase a home in their lifetime, with
varying timelines for purchase, including 40% aiming to buy within the next 5 to 10 years. 3
● The Home Purchase Survey by Hill & Knowlton highlighted various steps taken towards
home ownership, such as saving for a down payment and reducing discretionary spending.
● Respondents reported delaying or eliminating major life decisions to save for a home, with
some receiving financial assistance from family. 4
● Canadians showed openness to alternative options for affording a home, including rental
income and co-owning programs.
first time buyers mortgage pre qualification vs pre approval

Mortgage Pre-Approval vs. Pre-Qualification

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Are you a first-time buyer wanting to buy your first home?

Maybe you are already a homeowner and are thinking about making a move.

Whatever your purpose and current situation is, there are things you can do in advance. When it comes to getting a mortgage, these things can be done to make the mortgage process easier!

Pre-Qualification for Buying your first home in Comox

Getting pre-qualified for a mortgage will give you a general idea of what you can afford. This helps you to focus on a particular price range when you start working with a realtor and shopping for your new home. Pre-qualification will look into your financial position and identify your budget for a home. It will also define what you can afford for monthly payments. It will let you know what top-end price you can manage. In this way, you won’t be disappointed. Say, for example, you go out looking, to find a house you love, only to learn you will not be able to make the monthly mortgage payments for that property. This scenario only leads to frustration!

Pre-Approval: Getting pre-qualified will give you a ballpark estimate of what you can afford for Buying your first home in Comox.

Pre-approval will say what you actually do qualify for in a mortgage. It will tell you what that mortgage amount is, based on your current income and credit history. The lender will state this in writing so you can be confident when you start your home search. A pre-approval usually specifies a term, interest rate, and mortgage amount. It is typically valid for a brief period, assuming various conditions are met. The period of time could be 2 or up to 4 months. This means you can shop for that home that’s in your budget and would have to find and complete a purchase within that time frame.

There are a few benefits to pre-approval which include:
● Confirming the maximum amount you can afford to spend
● Securing an interest rate for 90-120 days while you shop for your new
home
● Letting the seller know that financing should not be an issue. This is extremely important in competitive markets. If there are lots of buyers and not as many properties to choose from, it could be the difference
between having an offer accepted or being left out.
● Keep in mind that once you get your pre-approval, you do not want to jeopardize it.

Until your mortgage application and sale is completed, be sure you don’t do the following:

  1. Quit or change jobs
  2. Buy a new car or trade up
  3. Transfer large sums of money between bank accounts
  4. Leave your bills unpaid
  5. Open up new credit cards.

You do not want your financial or employment details to change at all until you have closed on the new mortgage.

Do you need help figuring out where to start when it comes to buying your first home in Comox? Reach out to me today and I would be happy to lend my expertise! Get in touch with me now!

bank of mom and dad

The bank of mom and dad: Taking extremes to secure children’s homeownership dreams in steep markets

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In this economy, the Bank of Mom and Dad is more popular than ever.

It’s no secret that it’s harder to buy a home now than when they were young. Canadian parents have passed billions of dollars to their adult children in recent years. It is intended to give them a leg up when entering the housing market or in changing circumstances. Up against ever higher prices, limited supply, stringent mortgage requirements and steep interest rates and taxes, they want to help.

The unprecedented transfer of wealth is in part due to a fear of missing out. , Parents want to do all they can to ensure their kids are able to realize homeownership before it’s completely out of reach.

Embracing extreme measures before homeownership completely out of reach

In the past five years, this has gone beyond providing a loan or helping with the down payment. Parents are now, in some cases, making installment payments or becoming guarantors. The latter makes them liable for mortgage payments if their son or daughter defaults. Many are going on title as co-signers to help their offspring qualify for a mortgage.

Other tactics being used amount to pulling funds out of their retirement savings or using equity from their own home. These, including a second mortgage or home equity line of credit to assist, potentially puts their own retirement at risk.

Suggest clients get legal advice if asked about parents loaning or gifting money to kids

It’s wonderful to be able to help get your struggling offspring launched. Some are getting a little too comfortable in the basement. Realtors, parents and their kids need to be aware of the potential risks in these situations.

If things go sideways, realtors and parents may be exposing themselves to an expensive and time-consuming lawsuit. When talking about parents loaning or even gifting money to their children, it would be advisable for them to get legal advice.

As an example: “Imagine a situation with a pre-construction home and rising interest rates. There’s a risk that a child may not be able to secure a mortgage by the time the sale closes. They may face exposure for damages from the developer … but exposure may be limited by their limited assets. A parent, on the other hand, may have another property or other assets, and face significant exposure because they’re named as a buyer on the agreement of purchase and sale.”

Those who come from families without deep pockets have fewer options.

More families are making the move to Alberta or further east where it is more affordable than BC or Ontario.

Unfortunately, parental generosity is increasingly necessary if younger generations are to get ahead. Not everyone wants to own their own home, but for those who do, it is more and more difficult. This is where parents or sometimes grandparents are stepping in to help out.

Gifting, early inheritances and some of the other ways mentioned, are creative ways families are getting involved.

It’s not uncommon for “children” as old as 40 and over to be the recipients of their parents’ generosity when it comes to housing.

Contact Janice to learn more!

The basis of this article comes from Royal LePage blogger Susan Doran.