Now is a great time for first-timers to consider taking the plunge into homeownership – while taking all the fundamentals into consideration. Owning real estate is a cornerstone of financial freedom, and it’s not an investment made for short-term gain. Following are four key points that make it hard to suggest why you wouldn’t take the plunge:
You have to live somewhere, so if you’re going pay into something, why not your own mortgage? Homeownership makes sense as long as you obtain the proper terms to suit your changing lifestyle (for instance, the option to port your mortgage if need be), and you have worked out a budget that works for you and keeps your living expenses within your means. Considering the allowable rent increase for landlords this year is 4.3% (www.rto.gov.bc.ca/content/news/default.aspx), this is something worth noting. While not all landlords will choose to raise rent for their tenants, they do have the ability to do so! Vacancy rates are at an all-time low and net migration is remaining very strong (http://publications.gc.ca/collections/collection_2011/schl-cmhc/nh12-218/NH12-218-2011-1-eng.pdf).
Low interest rates
We’re still seeing interest rates at all-time lows, with the average 5-year fixed rates still well below 4%. If you have an inflation hedge mortgage strategy in place (automatically set up for our clients as part of the Angela Calla Mortgage Team service to optimize your mortgage in a changing market), you’ll have a balance that’s significantly lower. So, regardless of rates increasing at some point or property values remaining stable, you’ll be positioned to reduce your living expenses. This is all part of the crucial budgeting process that takes place when you get preapproved with the Angela Calla Mortgage Team.
There are several municipalities where you can own up to a two-bedroom condo for $200,000, including Port Moody, Port Coquitlam, Coquitlam, Surrey, Langley, Delta, and so on. An applicant who makes $35,000 gross annual income can qualify for a mortgage in this range (provided they do not have significant outside debts, have a good credit rating, and have a 5% down payment – in this example $10,000 – either saved or as a gift). The monthly payments would be approximately $800, plus strata fees and taxes estimated at $300. This is a total expense of approximately $1,100 a month, which works out to approximately $37 a day! The average rent in Vancouver is $1,100 a month. For some, this will be obtainable with the right goals and guidance. This may not work for all, but it shows you, it IS possible.
There are new rebates available to you for 2012 if you’re buying a brand new home: for HST (www.hstinbc.ca/making_your_choice/faqs/new_housing_rebate/); and a buyer’s bonus for up to $10,000 (www.angelacalla.ca/blog_post?id=6674&title=Understanding-the-Buyers-Bonus-Angela-Calla).
Homeownership is not for everyone, and careful consideration is required when you’re reviewing your options and budget. With the right time and knowledge, owning your own home is a cornerstone of financial freedom. It’s what we don’t know that costs the most! So before you rule out homeownership, speak to the Angela Calla Mortgage Team and receive all the facts!
Angela Calla, AMP Dominion Lending Centres Host of The Mortgage Show on CKNW AM980 Saturdays @7pm one of Canada’s Top Mortgage Agents and AMP of the year by CAAMP in 2009 can be reached at 604-802-3983 or firstname.lastname@example.org