You live in a house, but is it your home? Being a renter is a position that we all find ourselves in at one stage of life, or another. Consider it a means to an end. Eventually the time comes when you are in position to invest your hard earned cash into your future. Enough of your earnings have gone into lining your landlords pockets, as you pay down his mortgage.
First time home buyers nowadays are far better positioned to obtain a mortgage than in the past. Gone are the days when the only institutions that extended mortgages were the big banks. The rise of mortgage brokers and alternate lending organizations has meant that first time buyers enjoy a position of power, as a result of increased mortgage options and mortgage rates being near all time lows.
Imperfect credit record? No down payment? These are no longer show stoppers when it comes to purchasing property. Real estate agents work together with mortgage brokers, mortgage insurers, and even the government to make a first home a reality for as many Canadians as possible. Working together as a team, your Mortgage Broker and Realtor can make your home ownership dream a reality.
As part of Canada’s Economic Action Plan, the government introduced the First-Time Home Buyers’ Tax Credit (HBTC), and expanded the incentives available under the Home Buyers’ Plan (HBP). Many Canadians have longed to purchase property they can call their own, but have found that coming up with the down payment is big hurdle This hurdle can be overcome with programs such as the first time home buyers RSP withdrawal plan. This government of Canada program allows first time home buyers to withdrawal up to $25,000 from RSP accounts, tax free, for the down payment. There is also the flex down program which allows you to borrow your down payment, as well as gifted down payment options and others.
Finally, First Time Home Buyers are getting the tax breaks, and financial help with the many costs associated with buying a house. This along with mortgage rates being near the all time lows make this a perfect time to stop being a renter and purchase your own home. So how do first-time buyers ensure they are getting the best rates and terms on their home financing?
A recent Bank of Canada report found that first-time home buyers were better positioned to negotiate the terms of their mortgage than those renewing an existing policy. This was also true for homeowners looking to switch banks when it came time for a mortgage renewal. The report was entitled Discounting in Mortgage Markets, and conducted in 2011. It made for some interesting reading, here is the link to the full report:
https://www.bankofcanada.ca/2011/02/working-paper-2011-3
The Bank of Canada concluded that those looking for their first mortgage tended to get the best deals when they put a mortgage broker to work for them. They found that “Over the full sample the average impact of a Mortgage Broker is to reduce rates by 17.5 basis points. Brokers are a significant factor, therefore, in driving discounts.” One of the best things about mortgage brokers is that you don’t pay them. The lender who works hard enough to earn your business does (except for private lenders). Since the 1990s there has been a huge increase in the number of lenders in Canada beyond the six main banks that provide mortgage financing. This increase in competition means better terms and rates for borrowers. Through the use of a Mortgage Broker you have access to over three times the number of lenders you would on your own, and many of these lenders just specialize in providing mortgages so they can offer more competitive rates and products. It is currently estimated that 40% of first-time buyers work with a broker and a real estate agent when purchasing property, and that this percentage is going up as first-time buyers learn about the benefits of using a Mortgage Broker.
Buying a home is one of the most important financial investments you will make, and your family’s future and prosperity depends on getting it right. So, take a few minutes to contact a professional Mortgage Broker and go over the options that are available to you. You may be pleasantly surprised by what you can achieve by putting the experience, and expertise of a Mortgage Broker and a Realtor to work for you.
We at the Best Rate Mortgage Team are available to answer any mortgage questions you may have. You can reach us at 780-418-BEST (2378), or send me an email at bernie@thebestrate.ca. For updated mortgage rates and news along with some great calculators and work sheets to help you decide what mortgage works best for you, go to our web site www.TheBestRate.ca or like us on facebook/bestratemortgage.