Tag Archives: mortgages

Mississauga Neighbourhood Ranked One of the Last Affordable Areas in the GTA

 

If you want to buy a home but you’re not a millionaire, there are only so many affordable neighbourhoods left in the Greater Toronto Area (GTA), and even then, becoming a homeowner is difficult if not near impossible—especially with higher interest rates and more vigorous mortgage stress tests.

However, one neighbourhood in Mississauga was deemed one of the last affordable in the GTA in a recent Toronto Life article.

As everyone know, Mississauga is not the most affordable city to buy a home in general. According to a recent Royal LePage report, the aggregate price of a home (combining all home types, including two-story homes, bungalows and condos) sits at $758,750. A two-story home typically costs buyers $873,194 (which is down from the $1 million+ highs we were seeing this past winter).

But at a time when the housing market is still hot and it’s hard to find a reasonably priced home anywhere, one pocket of land in Mississauga still hits the mark as a hot GTA neighbourhood.

There’s hope for non-millionaires who just want a half-decent house in a nice area with good schools,” says Steve Kupferman of Toronto Life.

Can you guess where?

According to Toronto Life, the Hurontario neighbourhood (namely Heritage Hills) is one of the last affordable neighbourhoods – of 20 – to buy a home, coming in at number 17.

Boasting an average sale price of $651,671, Toronto Life says “it’s easy for middle-class families to score an affordable home just steps away from the urban core.”

The magazine calls out the surrealness of seeing a massive cluster of distinctly urban high-rises from the window of your suburban low-rise. That said, they were right to single out the neighbourhood built around a large ­public park, as it’s pretty ideal for families—especially since it boasts paths to the two schools in the area: St. Matthew Elementary and Huntington Ridge Public School.

The house Toronto Life zeroed in on? A detached three-bedroom house on Bourget Drive that was listed for $789,888 and sold for $775,000.

Can you believe that, back in February, a cozy home sold for more than $200,000 over asking? How times have changed!

But what counts as a hot neighbourhood in the GTA, you ask?

According to Toronto Life’s list of the last affordable neighbourhoods in the GTA, it’s “a good-sized house in a safe neighbourhood, with decent schools and leafy green space and a commute that isn’t soul-­crushing.”

Without breaking the bank on a million-dollar home, of course, because not all of us are millionaires (yet?!).

This list was curated based on real estate data across the GTA, as well as information from brokers and residents. Researchers also examined access to parks, schools, shopping areas, and transportation into downtown Toronto to determine the best places to live for under a million bucks.

“They’re the last best hope for the desperate house hunter—and the neighbourhoods everyone will be jockeying to buy into 10 years from now,” says Kupferman.

A home is, of course, a huge investment, and you don’t want to be overwhelmed with debt just for a place to call your own. Though that might still be the case if you’re trying to buy a home in the GTA anytime soon, regardless of the neighbourhood.

But, some neighbourhoods are more affordable than others, so you might want to snatch up a home in the Hurontario area while you still have a chance.

“Only virtual millionaires, or ­non-millionaires with millionaire parents, or non-millionaires willing to commit to a lifetime of crippling debt, could afford to break into the housing market,” Kupferman says in the article. “Everyone else had to settle for cramped condos and crumbling fixer-uppers.”

As for other hot GTA neighbourhoods, The Junction Triangle in Toronto topped Toronto Life’s list, with Mimico and West Rouge close behind. Northwest Brampton, Central West Ajax, and Eglinton East sit at the tail end.

You can check out the other neighbourhoods on the list here.

Map courtesy of Toronto Life

Cover photo courtesy of Google Maps

Source: insauga.com – by Ashley Newport on July 14, 2018

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Smart strategies for single women trying to buy a home

Shop during the right seasons, when prices traditionally are more negotiable and inventory is better.

The real estate website Estately recently conducted a study showing how the continued gender wage gap in America affects home affordability and ownership for women.

To answer this question Estately used 2016 U.S. Census data to compare men’s and women’s median salaries in the 50 most populated U.S. cities.

Based on those salaries (and assuming a monthly mortgage payment of 28% of the gross monthly income) the site used a mortgage calculator to determine the maximum home price each salary could afford.

Armed with all of this information and after a review of the homes currently for sale in major cities across the country, Estately identified what percentage of homes men versus women could afford by city.

The results in some urban centers were bleak. Seattle for instance, has the biggest wage-based housing gap. Men can afford nearly 150% more homes than women. Colorado Springs, Miami, San Diego and San Jose also topped the list with significant gaps. For instance, in Colorado Springs men can afford 122.5% more homes than women, while further down the list in San Diego, the difference is still a significant 68.5%.

With these results in mind, we asked real estate and personal finance experts to share their top tips for single women seeking to purchase a home.

Don’t let the down payment scare you away

Coming up with the funds to make a down payment on a home can often seem impossible, particularly when so many Americans have sizable student loan bills and more.

Andrina Valdes, division president at Cornerstone Home Lending, urges buyers not to let this part of the process discourage them.

“Over and over again, potential home buyers report saving for the down payment as the biggest hurdle to homeownership. When you’re relying on one income to save up for it, the problem can seem insurmountable,” says Valdes.

Read: As house prices rise, this is how much more you need to save for a down payment

The good news is there are all kinds of down payment assistance programs that can help individuals get into a home for less money down.

The Federal Housing Administration loan is popular among first-time and single-income home buyers thanks to its 3.5% down payment requirement. There are also programs offered by the Department of Veterans Affairs and USDA loans that may require no down payment at all, says Valdes.

Line up a guarantor or co-purchaser

The reality is that many single income households, whether they’re run by men or women, need assistance buying a home in today’s market.

Experienced agent Julie Gans of Triplemint suggests lining up a qualified guarantor, co-purchaser or someone who might be able to gift money for your home purchase.

“These three options help buyers with lower income, lack of reserve funds or the total overall funds to purchase properties,” said Gans. “Finding the right [property] that will allow these options are important and help women and single income families be successful in their purchases.”

Consider a fixer upper

A growing trend among home buyers with limited means has been buying older properties and rehabbing them, says Ralph DiBugnara, president of Home Qualified.

“There are a few mortgage products in the market right now that make that easier,” said DiBugnara. “Fannie Mae has a loan called Home Style and FHA has what’s called a 203k loan. They both allow you to not only finance the purchase price but also construction costs in the loan to help your home look new. This is one way women can buy less inexpensive homes and make them new, also giving them a much higher valued property at completion.”

Look at homes well below your means

Real-estate analyst Julie Gurner, of FitSmallBusiness.com, says it’s critical that single income households buy properties that are well below the amount they’ve been preapproved for.

“You see that gorgeous home at the top of your range? Pass on it, and you’ll be glad you did,” said Gurner. “Single women and single income families have to be especially mindful to buy a home below their means…It gives them an additional expense cushion every month. Things come up. Doctor visits, your car breaks down, or your furnace breaking can be a big financial hit if you don’t have the ability to absorb it. On months where nothing goes wrong, you have the ability to save.”

As a single income earner, it’s important to protect yourself financially and be able to provide the necessities that make life stable. Having a home below your means can give you both and a great place to live.

House hunt during the right season

When it comes to finding an affordable home, time of year can make a big difference.

That means shopping during the right seasons, when prices traditionally are more negotiable and inventory is better, says Valdes.

Also read: How to get certified as a woman-owned business

Recent data from Trulia shows that there’s a 7% spike in starter home inventory during the fall, making it an ideal time to find a good deal. On the flip side, starter home inventory drops by more than 20% during the summer, making the warmer months a less appealing market.

Minimize credit card debt

As you embark upon your housing search, it’s critical that you reduce existing debt. This helps on a variety of levels.

You might like: One big reason it’s so hard for first-time buyers to find the right starter home

For instance, not only does it make you a better mortgage applicant, it will also help once you’re in your new home dealing with a whole host of new expenses.

Gans, of Triplemint, suggests tackling credit card debt in particular.

“Pay off all credit cards prior to purchase to lower your income to debt ratio,” advises Gans. “This reduces your liability and makes you look more appealing to a seller.”

Source:  Credit.com –  MIA TAYLOR

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What is a second mortgage? 5 tips you need to know

In certain circumstances, you may even have to think about getting a second mortgage. This is a mortgage typically taken out by homeowners who need cash for emergency repairs, working capital for business or investments, renovations, funding education, paying for a wedding, or even to consolidate other debts and lines of credit.

Let’s take a closer look at exactly what is a second mortgage, and what it means to you.

An overview of second mortgages

A second mortgage can mean two things: a mortgage you take out on a second home, some refer to literally as a second mortgage, and a mortgage which sits on top of a primary mortgage. The latter is the most accurate use of the term second mortgage, and is what we will be discussing today.

In this sense, a second mortgage is not a mortgage you get on a new home — it’s actually a secondary mortgage that you can take out on your existing property.

Second mortgages extract equity from a home, which allows homeowners to access capital when they need it. The basic form of second mortgage comes in the form of an lump sum loan.

With a standard equity loan, you can borrow up to 85 percent of the value of your home in major cities in B.C., Alberta, and Ontario. For most other cities in Canada, the maximum is typically 80 percent.

Over time, you will pay off the entirety of the loan and the interest, much like you would with a car loan. Regardless of the loan option you pursue, you should make sure you understand all the intricacies of second mortgages before getting started.

How a second mortgage works

What is a second mortgage and how does it work? As we mentioned above, a second mortgage is a secondary loan you can take out on top of your current home mortgage. They are typically held by a different mortgage lender than the one who lent you your primary mortgage. Getting a second mortgage enables you to access equity from your home without making any changes to your primary mortgage.

The distinction between primary and secondary mortgages is an important factor to keep in mind. Rather than simply increasing the principal of your initial mortgage loan, second mortgages have their own terms, rates and rules, which means you pay it off independently of your primary mortgage. When you get a second mortgage, you will continue to pay your primary mortgage, along with additional mortgage payments for your new loan.

Before you can apply for a second mortgage, you will need to find out how much equity you have in your home, your home’s value, and your credit score. All of these details will affect your ability to secure a second mortgage, and they also influence second mortgage rates and terms.

Next, you will need to shop around for the best rates from various banks and lenders. As always, it’s best to partner with a knowledgeable mortgage professional who tailor a loan product to your specific needs.

TALK WITH AN EXPERT 866-243-2207

After choosing a lender, you will fill out an application for a second mortgage. If you are approved, you can review the terms of your loan before signing an agreement.

In many ways, applying for a second mortgage is similar to applying for a primary mortgage. A major difference, however, is that second mortgage rates are typically higher than those associated with primary mortgages. This is because lenders that offer second mortgages typically have to assume more risk of delinquent payments or loan defaults.

The higher interest rate is also a result of the primary loan taking precedence over the secondary one. For example, should there be a forfeiture, the secondary lender will only get money after the primary one is paid in full. This makes secondary lending riskier.

Second mortgages can range greatly, but a borrower with good equity and credit history could get a 6.99% or 7.99% rate. While this may seem high, it’s low compared to most unsecured credit lines and credit cards

Below you will find some tips when it comes to second mortgages:

Tip #1 – Second mortgages are commonly used for…

Individuals and families may face a variety of circumstances that might lead them to consider a second mortgage loan. Generally, those who apply for a second mortgage do so out of necessity because they need capital quickly. In the interest of freeing up financial resources from home equity, they will assume the higher rates that come along with a second mortgage.

The following are some of the most common reasons people apply for second mortgages in Canada:

  • Working Capital: Getting access to your home equity is a primary funding method for those looking for working capital. This can include opening a new business or funding a current one, investing in businesses, retirement, or real estate, and any other forms of investing that requires a lump sum of capital.
  • Debt consolidation: If you have several loans and lines of credit from various lenders, banks or agencies, the payments, loan terms and interest rates may overwhelm you. When you have to concern yourself with numerous loans, you may be more likely to miss payments or pay excessive amounts of interest. A second mortgage loan allows you to pay off debts and consolidate loansinto one manageable mortgage agreement.
  • Renovations and repairs: It is common for home appliances and roofs to fail unexpectedly and necessitate emergency repairs. This kind of work on your home can be costly, and you might not have much time to save money for the repair. In other situations, you may simply want to make an improvement to the appearance or function of your home. Whatever the reasons, a second mortgage could allow you to finance these improvements.
  • Avoiding high penalties: Finally, a common use for a second mortgage is people who may have a first mortgage with a low rate locked in, and their penalty is high to break in order to access funds. It is far cheaper to get a 1-2 year second mortgage than pay a high breakage fee. This can provide access to funds for debt relief or investment capital. When the first mortgage matures, the two loans can then be blended into one.

Tip #2 – Helps those with bad credit

One of the top benefits of second mortgages is that it is possible to get one even if your credit history is mediocre or poor.

If you have paid off a significant amount of your primary mortgage loan, you have a record of making consistent and on-time payments and you have a lot of equity in your home, a lender may overlook your credit score (within reason) and approve you for a second mortgage.

Because a lender evaluates your suitability for a loan based on your equity and track record with your primary mortgage, you may even have an easier time getting a second mortgage than you would a standard loan—assuming you have been making your payments on time and you have plenty of equity.

Second mortgages are also a great way to clean up bad debt, such as high interest consumer debt, debt that is in collections, or even tax arrears.

Tip #3 – Private lenders are often more flexible

All federally regulated banks must operate within certain laws and guidelines. These rules reduce risk for the lender, but they often cause them to overlook reliable borrowers simply due to minor disqualifications.

Because every person is different, it’s important to ensure that your case is examined individually so that you have the best chance of getting the loan you need at a fair rate. To accomplish this, your best course of action can be to work with a private lender.

A private lender is a business—rather than a traditional bank or financial institution—who agrees to finance your loan. In the past, private lending was equated with individuals loaning out money at high interest rates. Although some still do this, private lenders include professional organizations, like CMI, who can offer a variety of loan products at competitive rates.

Tip #4 – Common costs associated

As with any loan, you may be subject to additional fees, including closing, legal, and appraisal fees.

When it’s all said and done, you may be on the hook for several thousands of dollars worth of fees, so make sure you know what to expect from your lender before you sign anything. This is why it’s important to work with an experienced broker who can guide you in the right direction.

TALK WITH AN EXPERT 866-243-2207

Tip #5 – Know how to find a second mortgage (talk to a professional)

Financial choices are not always totally clear, and it’s important that you examine all the options available to you to determine which decision is best for you and your family.

As a general rule, you should not make a big decision about your finances if you feel pressured or rushed. That said, you are considering a second mortgage because you are in a tough financial spot, and likely need some quick cash. This why it’s so important your partner with a knowledgeable and reputable broker to help guide you through the process in a timely manner.

Considering that there are so many different factors at play when it comes to second mortgages, you also shouldn’t attempt this process on your own. Look for guidance from a mortgage professional who you trust and who is looking out for your best interests.

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For most, a mortgage is painful. For the wealthy, it’s a money-making tool

Canadians typically consider mortgages as a burden, to be paid down as quickly as possible, or at least before retirement.

It may seem counter-intuitive, but for the wealthy, mortgages are a tool to make more money.

Carrying a mortgage when you don’t need one might seem like a head-scratcher. Why borrow when you’ve already got plenty of funds at hand?

But as F. Scott Fitzgerald purportedly once said, “The rich are different from you and me.”

Wealthy people take out mortgages against their real estate holdings and use the money to invest.

It sometimes makes sense for high-net-worth people to take on new debt, says James Robinson, mortgage agent at Dominion Lending Centres in Toronto.

“Using your real estate holdings to borrow money for investment purposes – either your principal residence or any other investment or personal-use property – falls under the ‘wealthy people become wealthy by using other people’s money’ category,’” Mr. Robinson says.

“If you can invest at a higher rate of return than you can borrow, you will increase your wealth and, therefore, your net worth.”

There are also tax advantages, though Mr. Robinson advises investors to seek professional advice about tax implications. In Canada, mortgage interest is not tax deductible; however, the interest paid on funds borrowed for investment is, so borrowing has to be structured carefully to avoid running afoul of the Canada Revenue Agency.

Remortgaging or taking a line of credit secured against property can also be advantageous for investors who are affluent but don’t quite reach the high-net-worth (HNW) category.

Financial institutions generally consider HNWs to be people with $1-million in liquid assets, while those with $100,000 to $1-million are considered “affluent” or “sub-HNW.”

One reason that HNW clients can consider taking on a mortgage is that “normally, they’re the ones who have access to assets for security [their houses and other properties] as well as the income required to service the debt,” says Paul Shelestowsky, senior wealth advisor at Meridian Credit Union in Niagara-on-the-Lake, Ont.

For those who are barely at the HNW threshold but want to boost their investable assets, “unless you can obtain a preferred rate from your lender, using secured debt is the only advisable way to borrow to invest,” Mr. Shelestowsky says.

Mr. Robinson cites several good ways to borrow to invest.

“The most common strategy used is to simply refinance your principal residence to access some of the equity you have built up over the years, and use the additional funds to purchase an investment property,” he says.

Wealthy borrowers who refinance in this way increase their asset base through leveraging, but this also is contingent on the value of real estate going up, Mr. Robinson adds.

“If you own $600,000 worth of real estate and prices rise by 5 per cent, you have increased your worth by $30,000. If you leverage and now own $1.2 million worth of real estate and prices rise by 5 per cent, you have increased your worth by $60,000.”

What could possibly go wrong? A few big things, the experts say.

For one, it’s never certain that the value of real estate will rise. There’s always the risk that you will be paying off a mortgage on a property whose value is drifting sideways, or even dropping. This could be happening, too, as your market investments are nosediving.

“Remember that when you leverage and asset values fall, the same multiplying effect occurs in the opposite direction. Don’t get caught in a get-poor-quick scheme,” Mr. Robinson says.

Real estate values do tend to go up over time, but it is not a straight line, he adds. In Ontario and other parts of Canada, the years from 1989 to 1996 were brutal for real estate values.

Debt-holders must be patient, says Andrea Thompson, senior financial planner with Coleman Wealth, part of Raymond James Ltd. in Toronto. “Investors must be able and willing to sit with a paper loss and continue to collect the monthly income, rather than panic and sell at a loss.”

Investors considering taking a mortgage should also be mindful of rising interest rates. The Bank of Canada is holding the line on rates for now, but it has hiked its key lending rate three times since last July, Ms. Thompson says.

High-net-worth borrowers also should consider the type of mortgage. “Looking at a variable rate or open mortgage might be preferable to some who want more flexibility, if they want to collapse or modify their strategy if and when interest rates rise,” Ms. Thompson says.

A different way to go, Mr. Robinson says, is to take what some lenders now offer as an “all in one” borrowing product, secured by real estate.

“This combines a mortgage with a home equity line of credit to allow you excellent flexibility in your borrowing as well as the ability to keep your borrowing segmented for interest calculation and tax deductability,” he explains.

Even the wealthy should be cautious in this volatile investment climate, Mr. Shelestowsky says.

“An overarching theme from the investment world is ‘lowered return expectations’ going forward,” he says. “Target expectations have been drastically reduced across all investor profiles.”

 

Source; SPECIAL TO THE GLOBE AND MAIL 

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Mortgage 101: 10 Mortgage terms every first-time homebuyer should know

Getting started on your homeownership journey? Familiarize yourself with the “local language,” a.k.a. mortgage speak. This introduction to 10 key mortgage terms and phrases will boost your homebuying IQ and have you ready to meet with a mortgage broker to talk about your options.

Amortization period

The amortization period refers to the number of years it will take to pay off your mortgage through regular payments. Most mortgages, including Genworth Canada-insured mortgages, are amortized over 25 years.

DID YOU KNOW? You can pay off your mortgage sooner (saving interest in the long run) by:

  • Making payments biweekly instead of monthly;
  • Making an extra principal or lump sum payment on the anniversary date of your mortgage;
  • Boosting your payment by 10-20% on the anniversary date;
  • Making the same payments each month (or better yet: biweekly), even as your principal borrowed amount gets lower.

Fixed rate mortgage

With a fixed rate mortgage, the interest rate on your home loan is set for the term of the mortgage. Fixed rate mortgages offer the peace of mind of consistency: you’ll know exactly how much you’ll owe at the end of each mortgage term.

See also: Variable rate mortgage

Gross debt service (GDS) ratio

GDS refers to the percentage of your household’s gross monthly income that goes toward your housing payments – mortgage (principal + interest), property taxes, heating and, if applicable, 50% of condo fees. Lenders use your GDS and TDS (total debt service) ratios to assess your mortgage application and to determine how much to loan you and what interest rate to apply. Genworth Canada programs require a GDS ratio of no greater than 39%.

See also: Total debt service (TDS) ratio

High-ratio mortgage

A high-ratio mortgage is one for which the homebuyer makes a down payment of less than 20% of the cost of the home. All high-ratio mortgages must be covered by mortgage loan insurance (also known as “mortgage insurance”).

See also: Low-ratio mortgage

Low-ratio mortgage

Also known as a conventional mortgage, a low-ratio mortgage is one where the homebuyer has made a down payment of 20% or more of the home’s purchase price. No mortgage insurance is required for this type of mortgage.

DID YOU KNOW? You can use your retirement savings to help buy your nest egg. The federal government’s Home Buyers’ Plan lets you borrow money from your RRSP to put toward the down payment for your first home.

See also: High-ratio mortgage

Mortgage loan insurance

Also known as “mortgage default insurance” or just “mortgage insurance,” this financial product is mandatory on all high-ratio mortgages. Your mortgage lender pays the insurance premium and then passes the cost on to you; you can pay it in one lump sum or carry it on your mortgage for monthly payments.

Mortgage term

Not to be confused with amortization, mortgage term refers to the time period covered by your mortgage agreement. It can range from one to five years or more. After each term expires, the balance of the mortgage principal (the remaining loan amount) can be repaid in full, or a new mortgage can be renegotiated at current interest rates.

Principal

The amount initially borrowed for your home purchase. The balance of this amount will go down as you make regular mortgage payments. (Your mortgage payments go toward a portion of the principal, as well as the loan interest and, for those with high-ratio mortgages, mortgage insurance.)

Total debt service (TDS) ratio

TDS refers to the percentage of your household’s gross monthly income that goes toward housing costs (i.e., mortgage, property taxes, heating, etc.) plus your other debts and financing (i.e., car loans, credit cards, etc.). Banks use this calculation, along with your gross debt service ratio, when assessing your mortgage application. Genworth Canada programs require a TDS of no greater than 44%.

See also: Gross debt service (GDS) ratio

Variable rate mortgage

Also known as a floating rate mortgage or adjustable rate mortgage, this type of mortgage has an interest rate that fluctuates with the prime lending rate. The main benefit of variable rate mortgages is lower interest rates, but in return, mortgagors (homeowners) take on risk: if the prime rate goes up, a larger chunk of your mortgage payment will go toward the interest, not paying down your principal. The result: your mortgage could take longer to pay off and cost you more in interest.

Source: HomeOwnership.ca

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New Canadians’ Mortgage Guide

Starting a new life in Canada? Buying your first home is one of the best ways to put down roots and establish yourself in your new country. According to Genworth Canada’s 2017 First-Time Homeownership Study, a full 19% of first-time homebuyers were born outside of Canada, 10% of whom arrived in the past decade. Wondering how to start your journey to homeownership? Read on for our New Canadians’ Mortgage Guide.

Step 1: Study your options

Responsible homeownership is about buying a home you can afford, so for starters, take a look at our library of articles about affordability. Read up on topics such as how to choose the right home for your budget and learn about financing options for new Canadians.

Genworth Canada’s New to Canada program can help you buy your first home with a down payment of as little as 5%. See how it works in this short video.

Share the knowledge with your family, too. Our New to Canada microsite offers content in Chinese, Punjabi, Korean, Spanish and French.

Step 2: Establish credit history in Canada

Banks and other lenders look at your credit score to determine your level of financial responsibility. Your credit score is determined by your financial behaviour: Do you pay your monthly bills (including cell phone) on time, or have you skipped payments? Do you have credit cards or lines of credit, and if so, how much do you have left to access?

TIPS: Never skip a payment (always pay at least the minimum),  and keep your credit utilization– the amount of your credit limit that you actually use–low. Don’t carry a balance over 30% of your credit limit; the lower the better.

The better your credit score, the more likely you are to be approved for a mortgage – and at a more favourable interest rate.

Because your Canadian credit history starts in Canada (foreign credit history isn’t taken into consideration by lenders), it’s important to establish positive patterns as soon as possible:

  • Open a savings or chequing account at a Canadian bank or credit union, and use it for your payroll deposits, as well as withdrawals and transfers.
  • Apply for a small loan or credit card. Make some purchases each month, and pay off the balance or make regular payments each month, to prove you are responsible with credit.

Step 3: Build your savings

Use a separate high-interest savings account, investment account or set aside funds in a TFSA (tax-free savings account) to build toward your home down payment. You can purchase a home with as little as 5% down, but in high-demand cities like Vancouver, Calgary and Toronto, a competitive real estate market means it can take longer to save for an adequate down payment.

TIP: First-time homebuyers can borrow RRSP funds to help towards a down payment under the federal government’s Home Buyers’ Plan.

Check out our Financing hub for an entire section of articles about saving for a down payment, including this video on how to set financial goals.

Step 4: Research neighbourhoods and communities

While you’re saving and working on building your credit history in Canada, take some time to daydream! Checking out neighbourhoods and communities where you might like to live is a great way to stay motivated. It can also help ensure that you have a smooth transition to your new home.

Think about where you’d most like to live. Would you prefer the excitement of a big city, the quiet family vibe of the suburbs, or the natural splendour of the rural countryside?

Research the amenities you’ll need, whether that’s public transportation, walkable communities, schools, places of religious worship, shops and other priorities.

Consider making weekend excursions to potential communities to explore the local amenities. Since Sunday afternoons are a traditional time for open houses, think about scheduling your visits so you can squeeze in a couple of house or condo tours, too.

Step 5: Start assembling your real estate team

Finally, as you get closer to house-hunting time, start building your real estate team. Ask friends, colleagues and neighbours for recommendations on professional REALTORS®, real estate agents, mortgage specialists, real estate lawyers and home inspectors.

It’s important to hire professionals who are familiar with the real estate market in your preferred neighbourhood or community. Interview a few candidates and research customer reviews online, so you can find the right pros to help you embark on your journey to homeownership in Canada. 

Source: Homeownership.ca

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Is it cheaper to buy a house than a condo in the GTA? This expert thinks so

While many first-time buyers look to condos as a relatively affordable option, one Toronto housing market expert says that it is actually less expensive to buy a low-rise home in the GTA.

According to Realosophy Brokerage co-founder John Pasalis, when you control for the size difference between low-rise and condos in the GTA, condos are more expensive per-square-foot.

In the Maple neighbourhood of Vaughan a 1,385 square-foot rowhouse costs $685,000, while a condo of a similar size in the area would likely cost $684 per-square-foot, or $947,000. It’s just one example of a price difference that can be seen across markets in the GTA.

Pasalis believes that this discrepancy in prices can be chalked up, in part, to investor demand.

“The majority of new condominium construction is driven by investor demand — not demand from families,” he writes in a recent blog post. “Investors are willing to pay much more (on a per-square-foot basis) than end users are.”

Pasalis says that investors prefer smaller units, which typically have a better return on investment, which means that developers are creating units that are too small for families, at prices they cannot afford.

“When developers are pricing a unit, they’re thinking to themselves, why would I charge this much when I can get this much?” Pasalis tells BuzzBuzzNews. “And those prices don’t make sense for a two- to three-bedroom unit, which is likely why we’re not seeing as many of those units being built [in the GTA.]”

In order for a condo to be good-value-for-money for a young GTA family, Pasalis says that low-rise prices would have to increase at a much faster rate than they currently are.

“The rate of appreciation for low-rise homes in the 905 region isn’t going to be very high in 2018,” says Pasalis. “So I don’t see this trend changing in the next year or so.”

While Pasalis admits that for families with a budget of $400,000 or less, a condo may be the only option for homeownership, he says that those with one of $700,000 or more should consider their options.

“They can choose to buy a two-bedroom 1,000 square-foot condo in Maple for that price, or a three bedroom 1,385 square-foot row house with a finished basement and backyard. For most, it’s a pretty simple choice,” he says.

Source: BuzzBuzzHome.com –  

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