3 Things First-Time Homebuyers are Doing Right

first time homebuyers

Flickr: spierisf

There’s been a lot of talk in the media lately about whether or not homeownership is a good investment. As a late 20-something, I was raised to believe that building equity in a home would be one of the best investments I could ever make. But as prices continue to go up, just saving the initial investment for that home – a down payment – seems further and further out of reach. And I know I’m not the only hopeful first-time homebuyer who is feeling the pinch.

Last month, BMO released a survey that showed we – first-time buyers* – have had to increase our budgets to an average of $316,000; that’s up 5.4% from the $300,000 we were budgeting in 2013. Since the national average home price is now up to $401,419 – a 6.0% increase from March of last year – our increased budgets, on average, are on par with what’s happening in Canadian real estate. But can we actually afford these home prices?

As it turns out, we can. Of course, it can take some serious penny-pinching, budgeting and lifestyle-changing efforts to make it happen – but we’re up for the challenge. Here are three things first-time homebuyers are doing right, before entering homeownership. Continue reading

Bank of Canada Interest Rate Announcement: April 16, 2014

Interest Rate Annoucement

For the 29th consecutive announcement in a row, the Bank of Canada (BoC) has revealed that the overnight lending rate will remain at 1 per cent – a position its held since September 2010.

The overnight lending rate – which is the interest rate at which banks lend money to one another – is expected to remain unchanged until mid-2015; that would mark nearly five years at 1 per cent, which would be the longest span of inactivity in more than 60 years. This is good news for variable rate mortgage holders whose rates are attached to Prime, as an increase to the overnight lending rate could result in an increase to some lenders’ Prime rates and, therefore, variable mortgage rates. Continue reading

Is a 3-Year Variable Rate Mortgage Term Right For You?

paperwork

Flickr: nerdcoregirl

Two of the biggest decisions you’ll need to make regarding your mortgage financing are which mortgage rate type and mortgage term you want. Would you prefer a fixed or variable mortgage rate? And how long do you want to commit to that rate for? Each combination makes sense for different reasons, and the decision is usually personal. To get some insight, we decided to interview homeowners across the country, to see which rate types and terms they chose and why. Today, let’s look at what a 3-year variable rate is and who is choosing it.

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Save Money on Your Mortgage Using the Three-Legged Stool Method

three-legged stool

Flickr: D68 design+art

With today’s record breaking housing prices, homebuyers are taking out larger mortgages than ever before. With larger mortgages comes higher mortgage payment amounts and added interest costs, so the incentive to save money wherever possible is high. If you’re wondering what the most effective way to save money on your mortgage is, there’s more than one answer – and I want you to use all of them. Keep reading to find out what I mean.

Factors That Affect the Cost of Your Mortgage

There are three major factors that will affect how expensive your mortgage is over time:

  1. The principal or mortgage amount,
  2. The mortgage rate, and
  3. The amortization period.

These three factors are like the legs of a stool – holding up the cost of your mortgage. Continue reading

Monthly Mortgage Update: April 2014

Kerri-Lynn McAllister

It’s spring (despite what Mother Nature says) and that means it’s time for another round of mortgage rate wars. But before the Bank of Montreal (BMO) had the chance to unveil its controversial 2.99% rate again, Finance Minister Jim Flaherty called it quits.

Flaherty was infamous for a phone call he made to BMO last spring, urging the bank to practice more “responsible lending” following the 2.99% release. So, now it’s up to new Finance Minister Joe Oliver to man the phones.

Rate wars are on, but are all rates created equal?

The Bank of Montreal has set a precedent, by springing (pun intended) its 2.99% 5-year fixed mortgage rate for the third season since 2012. Other Ontario credit unions, such as Meridian and Alterna Savings, have also dropped their rates to similar offerings – 2.95% and 2.98% respectively. And the 5-year rates on RateHub.ca have hovered between 2.84% and 2.94% for the last week. Continue reading