The current mortgage rate environment truly is an amazing opportunity for Canadians!

It’s interesting to compare today’s mortgage opportunities to the peak of the market in 2008. With a $300,000 mortgage at a 40-year amortization and a 5.79% interest rate in 2008 compared to today’s 3.09% five-year fixed rate at a 25-year amortization means today’s payment would be $159 less and you would own your home 15 years sooner!

While the past isn’t always a reflection of what’s to come, the reality is that five-year fixed-rate mortgage rates over the past two years are the lowest in history and there are some great deals on properties out there! :

• 2012: 3.09
• 2011: 3.59

What you need to do with this info: If you don’t own…look at your options to BUY YOUR FIRST HOME.

Even though rates have nowhere to go but up at some time in the future, upon renewal you’ll have paid off enough of your mortgage that you should not have payment shock, and you’ll qualify with options maximized at today’s lower rates. If you continue to rent, your landlord has the ability to raise your rent in accordance with inflation, you receive no equity for your increase in payment and your only choice is to move. In BC this past year, landlords had the ability to raise rent by 4%.

Despite what you may have heard, real estate is affordable in BC. There are only small pockets in the premium markets that are out of reach for most Canadians. The reality is, if you make $40,000 per year, you can own a condo in many hot municipalities for a payment that may even be less than your current rent! The property ladder does not start at the top with a million dollar home – the sooner you start, the faster you can move up the ladder.

Example of a successful buyer this week with The Angela Calla Mortgage Team:

James, a 27-year-old single man, makes $19.31/hour working full time as a shipper for a tool company in Surrey. He has been with his current employer for the past year and was paying $1,250 a month in rent. He had managed to save over the years approximately  $10,000 with some diligent planning.  After consulting with our team on his options, he purchased a 2-bedroom, 2-bathroom condo on the Surrey/Langley border (close to his work) for $17,500 below the assessed value for $184,500. This unit was completely updated so he didn’t have to spend a penny on upgrades. It’s situated right across from the shopping centre, has a large patio and the unit suits his lifestyle. He can save money by having his friends over at the clubhouse, comfortably turf his gym membership as the building has a great gym and he now lives 10 minutes away from work. He could even walk to work (when we begin to see some real summer) and rent out his parking spot or spare ro om if he wanted to earn additional income. So this fundamentally fits into his budgeting with all of those aspects considered. His mortgage payment is $845/month (on a 25-year mortgage), plus strata fees (including heating) of $286. His property taxes work out to $56/month. His total costs per month are now $1,187 – which is $63 less a month than he was paying in rent! Breaking it down even further, his total costs work out to $40 dollars per day.

There are lots of examples of people we have helped just like James make up to a 2-bedroom purchase – not just in Surrey, but also in Langley, Burnaby, New Westminster, Port Coquitlam, Port Moody, Coquitlam,  Maple Ridge, Pitt Meadows, Delta, and yes even areas of Vancouver!  Don’t let news of changes in the mortgage industry prevent you from entering the property market and building equity in your own home!  

Our team of experts will clearly explain the upcoming mortgage changes and help build a plan based on your unique needs and financial situation.  Getting preapproved for a mortgage and learning your options is a simple process. All it takes is a 15-minutes phone conversation to answer some basic questions, and then for you to send over a payslip. Some would suggest it’s harder to get a concert ticket in the lower mainland!

Consider this: James is below the average income in BC according to this survey that says the average hourly wage is $23/hour: www.welcomebc.ca/wbc/immigration/choose/economy/income.page. He lives comfortably  and still managed to save based on his choices on a single income. James doesn’t have parents who had the ability to gift him the money for his down payment, and he doesn’t have a secondary education (just a high school diploma).  What made him successful was that he took the time to educate himself and seek out the right team to help him build a plan while he’s just 27 years old. The right knowledge is very powerful and instrumental in your success.

Keep these facts in mind: We live in one of the most desirable places in the world; Our vacancy rate is below 2%; and 25% of British Columbians are landlords by either renting out a room or a suite. Regardless of the timing in the market, the key to success is always about affordability and fundamentals. When the simple planning is in place and you’re clear on your goal, you’ll be successful in your endeavour if you chose to become a homeowner.

If you or anyone that you care about is curious about their options, needs to update their preapproval with the recent changes or just wants help building a plan, The Angela Calla Mortgage Team is here to help.

Angela Calla, AMP
Mortgage Expert
Host of “The Mortgage Show” on CKNW AM980 Saturdays at 7pm

 email: callateam@dominionlending.ca