With the Bank of Canada recently raising the overnight rate to 1.5 percent — the fourth jump since last summer – according to the Canadian Real Estate Association, it’s never been a more challenging time for first-time home buyers.
Buying your first home should be exciting! We want to make the process as memorable and stress-free as possible. So we listed a few ways to alleviate the pressure and financial hit of purchasing a home.
Use a Mortgage Broker
The most obvious reason that people choose to obtain a mortgage through a Mortgage Broker is that Brokers have access to multiple rates and lenders. Because of this, Mortgage Brokers have access to rates that may not always be advertised widely, and can be significantly lower than those advertised by banks or credit unions.
Practice your mortgage
It may sound odd but this is the best way to see what having a mortgage is really like. Are you still saving for a down payment or wondering how a mortgage feels? Live as though you’re already paying a mortgage, plus any maintenance expenses and property taxes, and save the difference over what you’re paying in rent. You’ll soon learn how your current budget holds up before committing to a mortgage that may not be ideal for you.
Pass the mortgage stress test
The income you need to pass the stress test during the mortgage application process depends on the size of your down payment. Those buying a home with 20 percent down or more must qualify at whichever rate is higher: the actual contract rate offered, plus two percentage points, or the rate set by the Bank of Canada’s five-year mortgage benchmark. Those with down payments less than 20 percent face only a stress test set at the five-year benchmark.
Are you ready to take the steps towards a stress-free mortgage? Contact us and speak to a Mortgage Broker so we can get you started!