Buying a property—new or already lived in—is an important event in a person’s life. It’s also a major investment, one you want to be properly advised and informed about.
We recently consulted a mortgage broker who was happy to share his advice and views on the real estate market.
1. Set your budget
It’s a good idea to ask your real estate broker to help you draw up a budget for your purchase. The goal isn’t to give you access to the maximum loan, but to meet your needs and help you define your flexibility.
2. The advantages of pre-approval
Pre-approval (also known as pre-qualification or rate guarantee) obtained through a mortgage broker is a good strategy to adopt when starting your property search because it gives you a guaranteed interest rate throughout the process. It’s intended to protect you against rate increases, and you can still benefit from rate reductions later on. In general, your broker will be able to guarantee your rate for 120 days, but at a certain period in the year, that guarantee can rise to seven months.
3. Surround yourself with professionals in the field
Make sure you surround yourself with trained and experienced people who will guide you through the process of buying a property. Your mortgage broker, real estate broker and insurance broker are your three best allies for a successful property-buying venture. Ask the people who know!
4. Possibility of buying a property + renovating
Statistics show that 86 percent of buyers will go ahead with renovations within a year of buying a new property. It’s possible to factor in an additional amount on your loan when you purchase the property to avoid having to request another the following year.
“Rare are the times when the purchasing clients will say “The house is perfect and I have nothing to do for the next 10 years!” Canadians’ budgets are tight, and home prices keep rising. Add to that the costs of day-to-day living, the kids’ daycare fees and a restaurant here and there: How’s the new buyer ever going to renovate their kitchen or change their roof? Unless they win the lottery or get an inheritance from a childless great aunt, the roof will have fallen in on those clients’ heads long ago!” laughed Martin Patenaude, a real estate broker at Multi-Prêts Mortgages.
Portrait of the residential real estate market in Canada
Here are the prospects for the housing market in Canada, published in the fourth quarter of 2012 by CMHC.
Sales of existing homes made through the Multiple Listing Service® (MLS®) have slowed this year until now. In the future, they should remain relatively stable on the resale market. According to forecasts, MLS® sales will hit 457,400 in 2012, and rise slightly in 2013 to 461,500.
As sales prospects are essentially stable, the existing housing market will remain balanced throughout the final part of 2012 and into 2013. The average MLS® price should grow to a rate on par with or slightly lower than that of inflation.
And what about interest rates?
Though considerable uncertainty reigns, mortgage rates shouldn’t change this year. Slight increases are expected next year, but the rates will remain historically low.
*Source: LAPRESSE.CA, survey of 9000 people, 69 percent of whom agreed.
Thanks to Martin Patenaude for his contribution.