Financing options exist for savvy buyers

Many Canadians, especially those who belong to the so-called Generation Y, are less than confident when it comes to their chances of financing a home purchase.

Data from real estate firm Royal LePage shows that more than 72 percent of survey respondents born between 1980 and 1994 said they were pessimistic about their chances of becoming homeowners due to housing prices.

In addition to young homebuyers, 66 percent of baby boomers who took the survey also said they were worried about being able to afford a home.

"Baby boomers have built homes for themselves," said Phil Soper, CEO of Royal LePage. "It's their children that are seeking to create a similar atmosphere of their own, even though new impediments exist for this younger generation." Continue reading

Understanding homeowners associations

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While most of the focus of the homebuying process understandably rests on financing, different types of properties demand a certain amount of forethought. For instance, if an individual purchases a property that is governed by a homeowners association, wouldn't fully understanding what that means be just as important as haggling over mortgage rates? The rules and regulations associated with homeowners associations can have a major impact on homebuyers. It's with this in mind that Canadians who decide to purchase a property that is part of a homeowners association should make sure they completely comprehend what they're getting into before doing so. Continue reading

Homebuyers should invest now

Despite mortgage rates remaining near all-time lows, many Canadians are not planning on taking the plunge into homeownership any time soon.

According to a poll from Ipsos Reid, only 15 percent of Canadians surveyed said they plan to buy a house during the next two years. This marks a decrease of 27 percent from the previous year, as well as the largest decline in buying intentions in the history of the yearly poll, which the Royal Bank of Canada has been conducting for 20 years.

The poll, which included 3,000 Canadians surveyed between January 31 and February 8, shows that 75 percent of respondents attributed declines in buyer intentions to mortgage restrictions put in place by Finance Minister Jim Flaherty. Continue reading

Negotiating mortgage rates

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According to a survey of 300 Canadian mortgage holders by The Globe and Mail, 82 percent of respondents said they were able to obtain better mortgage rates by negotiating.

"Of the survey respondents with five-year fixed-rate mortgages, interest rates varied widely, and those who haggled for a rate lower than what their lenders advertised paid less overall," the news source reports. "Among the group that bargained with their lenders, 45 percent said their interest rates were 3 percent or less, compared to 32 percent of those who did not try to get a deal. Similarly, only 5 percent of the hagglers were paying more than 4 percent interest, compared to 16 percent of the group that didn't dicker."

While this survey features an admittedly small sample size, the picture it paints is clear: Mortgage borrowers can save money by taking the time to negotiate their home loans. The following are strategies borrowers can use to make sure they're getting an affordable deal when taking out a mortgage.

Shop around
When you're picking up groceries at the market, you may not take the time to compare prices, but when it comes to something as important as a home loan, shopping around is key. There are many different types of mortgage lenders, and each may quote a different price. Continue reading

Making basements an asset, not a drawback

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For those living in colder climates, as well as younger buyers, homes that feature basements are more desirable than others, according to recent studies of North American homebuyers. Additionally, data shows that regardless of age or geographical location, energy efficiency is also important to homebuyers. It's with this in mind that property owners who purchase a house with a basement should understand how they can maximize energy savings while also having an extra space for living or storage.

Top and bottom
Unfortunately for homeowners who prefer basements, the tops and bottoms of houses are often the worst culprits when it comes to energy loss. Attics and basements are more susceptible to letting air slip out, and because these areas are used so little compared to the rest of the home, it can be easy for homeowners not to realize they have a problem. Continue reading

Low rates still available despite challenges

Following mortgage restrictions he put in place last summer, Finance Minister Jim Flaherty continues to keep a close eye on the mortgage market, intervening when he sees fit.

In recent weeks, he has singled out financial institutions known for lending home loans at low mortgage rates and criticized them, leading to the banks canceling their low advertised rates. Many industry observers, including those in Flaherty's own party, are not happy with this.

"Me, personally, I would not dictate to businesses what prices to decide," said Conservative cabinet Minister Maxime Benier. "It's the market. It's supply and demand that decides the prices. It is the case for interest rates, it is the case for other products, too."

Other analysts take issue with the seeming randomness of the financial institutions being criticized. Continue reading

Canadians confident in low mortgage rates

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A new poll from the Canadian Imperial Bank of Commerce sheds some light on Canadians' feelings regarding the current housing market.

Data from the poll shows that 46 percent of Canadians believe that current low mortgage rates will remain the same for at least the next year. This marks a significant increase from the same poll two years ago, when the number came in at 24 percent.

"Our poll suggests that some Canadians are growing accustomed to the low rates we are experiencing, however it's important to take a long term view when deciding which mortgage is right for you," said Colette Delaney, executive vice president of mortgage, lending, insurance and deposit products at the CIBC. "You need to plan ahead for your next mortgage term and consider the impact to your budget if you renew at higher rates a few years down the road."

Meanwhile, 45 percent of Canadians said they would opt for a fixed-rate mortgage if they had to decide today. This number was even higher among 25- to 30-year-olds, with 54 percent saying they would select a fixed-rate mortgage. However, 26 percent of Canadians said they would choose a variable-rate mortgage. Continue reading

Saving on home loans

While household debt in Canada is at an all-time high, economists are saying progress is being made.

A report from Statistics Canada shows that the average Canadian household owed $164.97 in market debt for every $100 of disposable, after-tax income earned during the fourth quarter of 2012. This marks a new high for household debt, up slightly from $164.07 during the previous quarter.

However, Julian Beltrame, writing for The Canadian Press, reports that analysts are saying figures show improvements when it comes to debt, particularly related to housing.

"But the latest data represent progress in the effort to rein in risky levels of household debt in Canada … ," Beltrame writes. "The fourth-quarter increase in the debt ratio was the smallest in a year, while household net worth actually increased by 1.4 per cent, thanks to gains in the value of stock holdings and pensions. House debt to total assets and debt to net worth have come down over the past year. As well, household equity as a proportion of real estate they owned remained at about 69 per cent." Continue reading

Effects of mortgage restrictions continue to be felt

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While mortgage rates continue to hover near historic lows, there's no doubt that Finance Minister Jim Flaherty's mortgage tightening rules have cooled the Canadian housing market. Now, according to Will Dunning, chief economist at the Canadian Association of Accredited Mortgage Professionals, Flaherty's financing restrictions will also cool down another area of the Canadian economy: employment.

As reported by Canadian Mortgage Trends, a recent report from CAAMP forecasts that 190,000 jobs will be lost between the years 2013 and 2015 due to the mortgage tightening rules. This includes 70,000 jobs from the new construction market, along with 120,000 jobs in the resale market.

"To put this in perspective, the entire Canadian economy generates roughly 20,000 jobs a month…," writes Rob McLister for Canadian Mortgage Trends. "If his projections are correct, the new amortization rules eliminate almost 80% of a full year's worth of job production.

CAAMP shared these findings with policymakers in late February. We suspect the data won't result in any imminent rule loosening as the government wants to monitor the impact of July's changes further." Continue reading

Tips for selling a home

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Spring isn't just a busy season for homebuyers. When the weather begins to warm up, homeowners also have a better chance of selling their properties. While homebuyers are figuring out mortgage rates and home loans, home sellers should be focused on making their properties ready for the market. The following are some strategies home sellers can use to help speed up the process.

Finding the right price
More than any other factor, an inflated price can drive away homebuyers. While many homeowners may be attached to their properties, it's important to realize that a home's price should be based on the current market, not emotional investment.

Hiring a professional appraiser is one way to figure out how much your home is really worth. Not only will these professionals take into account the property itself, as well as any additions homeowners may have made, but the market as a whole. Location and demand both affect what buyers are willing to pay, so it's important for home sellers to adjust their expectations accordingly. Continue reading