Moving to a new country or being a non-resident can bring both excitement and challenges. If you're considering purchasing a home in Canada, it's essential to understand the unique aspects of the mortgage process for immigrants and non-residents. As a mortgage agent in Orangeville, I specialize in assisting individuals like you. In this blog, I'll provide valuable information and guidance to help you navigate the Canadian mortgage process with confidence.
As a mortgage agent in Orangeville, I understand the importance of having a clear understanding of the role and value that we bring to the table. Buying a home is a significant financial decision, and it's crucial to have the right guidance throughout the mortgage process. In this blog, I'll shed light on the role of a mortgage agent and explain why working with one can make a world of difference. So, let's dive in!
Let me first say that carrying unsecured debt such as credit cards, loans from quick cash stores, etc., is never a good idea. You should budget yourself to eliminate these nuisance debts as quickly as possible. If you wish to start building a net worth, those debts have to go. The budgeting process you use can be used after to start building your future.
There is such a thing as good debt and bad debt. The above are bad debts, mortgages are good debt…Car loans are more bad than good but at times necessary. Your car loan and your car should be a reflection of your income and not your ego. When you have eliminated the bad debt, you can focus on building an investment portfolio. Diversification is important, and it is OK to start very small. After you have eliminated all bad debt, my suggestion is to live on 70% of your take home income. Keep 10% where it is accessible for emergencies, invest 10% in long term investments such as RRSP, TFSA or real estate, and be charitable with the other 10%.
In Ontario and across Canada, home-buyers that meet the lending guidelines can purchase a home with only 5% down. This is not limited to first time home buyers. There are restrictions. If the purchase price is over $500,000.00 they will need 5% of the first $500,000.00 and 10% of the difference. The buyer is restricted to a maximum of 25 year amortization. The home has to be a home they will live in. It can be a secondary residence such as a cottage and it can be a home occupied by other family members. It cannot be a rental or investment property . The purchase price has to be under $1,000,000.00. The property can be a duplex. Properties with 3 or 4 units require 10% down. There are minimum credit score requirements.
Purchase plus improvements. Mortgage lenders can advance additional funds for improvements that meet their guidelines. Finishing a basement, installing a new kitchen or bathroom, etc., would qualify for this. The borrowers income has to support the larger amount, and the work needs to be completed before the funds are released. This is an opportunity for home-buyers to transform a home that may not be ideal into one that is. They will have one mortgage with the extra funds rolled in. One payment.
The inevitable interest rate hikes after covid are now upon us. The Bank of Canada in its effort to keep our economy going reduced rates almost to zero. It worked as a temporary measure , but could not last forever. Historically, the median for interest rates is around 7%, so anything below that is a bargain. It was also anticipated that inflation would rise after Covid, but it is going a little faster and higher than anticipated. Acceptable inflation is 1.5 to 2.5%, today we are at 8% and rising. The bank has really only one tool to combat inflation, and that is the interest rates. We have seen them move quickly, and that will continue. We will be back in the 6% range for mortgage rates before the dust begins to settle.
The media is portraying a scenario where no one can afford their homes and will be forced to sell. They forget very quickly that the stress test was implemented to prevent this. Basically everyone that received a 2% mortgage was stress tested at 4%. All buyers can afford a 2% bump. Also, if rates were to move up 3% over the next 2 years, it would be in line with wage hikes to offset that. Canadians will find a way. Arrears today in Canada are less than .05% and have been so for the past decade. Very few will be forced to sell.
The past few weeks have been eye opening indeed in the real estate market. Prices levelling off, more listings, longer sale times, and rising interest rates. What is happening and what does it all mean?
As the weather gets better, listings will always increase. With increased listings, buyers have more options, and prices tend to settle down. This is still a sellers market. Inventory is still 25% of what it would be in a normal market. A “normal" is a market that favours neither the buyer or seller. Canada still has a severe housing shortage which will not get better in the next decade. The law of supply and demand will keep house prices from plummeting. They will level off, fewer buyers will overpay, and the flurry of activity we have experienced will recede. The anticipated increase in immigration, the decrease in emigration, higher cost of construction, will all contribute to the issue of supply and demand.
Original Article Source Credits: CANADIAN MORTGAGE TRENDS , https://www.canadianmortgagetrends.com/
Article Written By: Steve Huebl
Original Article Posted on: June 22, 2021
Original Article Source Credits: Better Dwelling , https://betterdwelling.com/
Article Written By: Kaitlin Last
Original Article Posted on:
Original Article Source Credits: CPA Canada , https://www.cpacanada.ca/
Article Written By: MARGARET CRAIG-BOURDIN
Original Article Posted on: 5.28.2021
Link to Original Article: https://www.cpacanada.ca/en/news/canada/2021-05-28-saving-tips
Original Article Source Credits: Government Of Canada , https://www.canada.ca/
Article Written By: NA
Original Article Posted on:
Link to Original Article: https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html