3 Tips for Finding Your Ideal New Home- The Perfect Fit

Moving to a new city is exciting – new  sights, new sounds, maybe even a new job. Let’s not forget, however, one of the largest tasks when it comes to relocating: finding a new home. House searching can seem daunting, but not if you’re equipped with the right mindset and tools. To get you on track, we’re sharing a few home-buying tips:

Know what you want. When you’re in the market for a new home, it’s easy to get swept away with Pinterest boards full of “must-haves” and dream décor but it’s important to be realistic with yourself. Your new home should be conducive to your personality and daily lifestyle; if you’re an avid at-home cook, prioritize a large kitchen. Being able to articulate what you want and need will help your REALTOR find exactly what you’re looking for.

Do your research. Oh, the beauty of the Internet! Before you begin booking appointments to check out new living spaces, be sure to do a quick search of the area. This will allow you to pinpoint a few neighborhoods that intrigue you. Is it the beautiful beaches and boardwalk in Parksville, the beautiful community of Nanoose Bay, or possibly the quaint easy life style of Qualicum Beach that you like? Want to be close to schools, in more family neighborhoods, or near walking trails with properties with bigger acreages? – and don’t forget to keep your price point in mind when searching!

Project the future. Avoid narrowing your focus on solely the here and now; a home is a great investment, and you want to treat it as such. Thinking about where you may be in five to ten years will help you pick a home that can grow with you, both in your career and your family.

Have other home-buying tips that you’ve found to be helpful? Share with us in the comments below!

Ottawa tightens mortgage requirements and targets foreign money

Finance Minister Bill Morneau announces new rules

A major shift in mortgage rules means that Canadians taking on loans to buy homes may not qualify to borrow as much as they previously could.

The rules announced by federal Finance Minister Bill Morneau are aimed at making sure homebuyers aren’t taking on mortgages they can’t afford if interest rates rise. The change means that all homebuyers, regardless of how much they have for a downpayment, will be subject to a mortgage rate stress test beginning Oct. 17 that has, up until now, been reserved for those with less than 20 per cent down.

The big change

Buyers with a downpayment of between five and 20 per cent – who hold what are known as high-ratio mortgages – must be backed by mortgage insurance to protect the lender in the event the homeowner defaults on the loan.

Because they are considered higher risk, those buyers must pass what’s called a mortgage rate stress test to qualify for insurance backed by the federal government through the Canada Mortgage and Housing Corp.

That stress test measures whether the buyer could still afford to make payments if mortgage rates rose to the Bank of Canada’s posted five-year fixed mortgage rate.

That rate is usually significantly higher than what a buyer can negotiate with banks or other lenders. For instance, TD has a five-year fixed rate mortgage at 2.59 per cent, while the Bank of Canada’s rate is 4.64 per cent.

The stress test also sets a ceiling of no more than 39 per cent of household income being necessary to cover home-carrying costs such as mortgage payments, heat and taxes.

Until now, buyers with more than a 20 per cent downpayment have escaped such scrutiny.

The federal government says it’s responding to concerns that sharp increases in housing prices in Toronto, Vancouver and elsewhere could increase defaults in the future, should historically low interest rates finally start to climb.

Other changes

The government is also instituting changes aimed at foreign buyers, big banks and lenders and mortgage insurance on homes valued at more than $1 million.

As it stands, those buying a home with more than 20 per cent down could obtain low-ratio insurance to protect the loan against default. That insurance is sold through two private insurers, but is backed by the federal government, subject to a 10 per cent deductible.

Beginning Nov. 30, new criteria will be in place governing the low-ratio insurance. To qualify, the mortgage’s amortization period must be 25 years or less, the purchase price must be under $1 million, the property must be owner-occupied and the buyer must have a credit score of 600 or more.

The new rules also mean that, beginning this tax year, all home sales must be reported to the Canada Revenue Agency. The gains from sales of primary residences will remain tax-free, but the government is aiming to block foreign buyers from purchasing and flipping homes while falsely claiming the primary residence exemption from capital gains tax.

Finally, the government says it will shift some of the risk of defaults against insured mortgages to banks and other lenders. Ottawa says its shouldering 100 per cent of the cost of a defaulted mortgage is “unique” in the world. How the government plans to share some of that risk with lenders remains to be seen. But experts say, while it protect the government from widespread defaults, it could lead to higher interest rates for borrowers.

It will be interesting to see the impact of these measures on our super-heated market. Please post and share your thoughts!