Should You Buy A Home Now? Real Estate, Mortgage & 5 Strategies to Help You Decide‪!‬ Money Hacks by Clem

Apparently, it’s going to take more than a global pandemic to put the brakes on Canada’s rollicking real estate market. In fact, many changes brought on by the pandemic are influencing buyer behaviour and transforming some long-standing trends.

While a home-buying plan still largely depends on the key factors of cost and location, today’s historically low interest rates and the vast number of jobs that are now done from home are encouraging some Canadians to rethink what kind of future home could suit their ideal lifestyle. In other words, more real estate decisions are being based on where people want to live, not where they feel they must.

Big city vs. small town

Given lower interest rates, the increased amount of time people are spending at home and the fact that many of the amenities that make big cities so attractive have been scaled down because of the virus, home buying in smaller communities is surging.

Renters rushing to buy

The pandemic has influenced the type of housing preferred by today’s active buyer. Single-family homes, which may have seemed out of reach for some renters, suddenly seemed more attainable when interest rates fell in 2020.

Favourable conditions

There’s a lot of speculation about the effects the pandemic will have on the Canadian economy and how long they will last. But given the current combination of favourable conditions, including historically low interest rates, positive economic forecasts and a swell of new buyers clamouring to find a home of their own, there’s tremendous confidence that Canada’s real estate market will continue to thrive.

A mortgage is a fact of homeownership

Unless you can pay cash for a new home, a mortgage will be a fact of life, possibly for many years. Qualifying for and retaining a mortgage can be exciting – it means you’re on your way to owning your new home! But it’s also a big responsibility.

Calculating the weight of mortgage rates

According to CREA, the average price of a single-family home in Canada was $607,280 in December 2020.[6] After subtracting a 20 per cent down payment ($121,456) from this average price, the remaining amount on a mortgage would be $485,824.

Over the course of a typical 25-year mortgage with a two per cent interest rate, you would

· make 300 monthly payments of $2,059

· pay $485,824 in principal and $131,931 in interest, for a total cost of $617,755

Home buyers can expect interest rates to change over time, which will influence the total cost of carrying a mortgage. Even relatively small rate increases can significantly affect how much you will eventually pay.

Regardless of the amount that’s owed on a mortgage, consider making prepayments when possible or maximizing interest paydown through integrated banking products that easily adapt to your changing circumstances and goals.

Buying a house, whether to live in or as an investment, involves plenty of decisions. Here’s what you need to do to make sure you’re buying within your price range so you don’t become cash strapped and miserable just for a roof over your head.

1. Make sure your mortgage payment plus strata fees, utilities and property taxes doesn’t exceed 35% of your income.

2. Buy to hold – we’re not in a market to expect explosive growth any longer and you should always plan to keep the property for the next 2-5 years.

3. Run the numbers to make sure that you have at least $30,000 available after your home purchase

4. Don’t always hone in on the interest rate and instead look at the flexibility provided by each mortgage plan.

5. Run a comparison on the cost of ownership compared to renting and investing the difference. I can help with this.

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