Friday, October 24, 2014

No Down payment? Here are a few ways around it...

You have a great earn decent`re pretty stable...and, you want to quit paying rent and buy a place of your own. Between the car payment, rent and those nasty student loan payments you just can`t seem to scrape together the minimum 5% down payment. Don’t despair! Here are a few different options available to individuals that do not have a down payment.

1.  Borrow your down payment. If you have room in your ratios (income vs. debts) you may be able to just borrow your down payment from a credit card or a personal line of credit. One thing to keep in mind with this option is that along with your new mortgage payment you`ll also have another added monthly payment to pay off that loan. I can set you up with a few institutions that would be happy to set up a personal line of credit for you to use for your down payment.

2.  RRSP Home Buyers Program. If you have an RRSP (some people even have employer contributed RRSP`s) you can use them for a down payment! You must be considered a first time buyer and your RRSP`s must have been in your account for over 90 days. If you meet the requirements for the program, you`re able to withdraw up to $25,000 tax free! This is a fantastic program for first time buyers. Another great strategy is to take out an RRSP loan to purchase a set amount of RRSP`s. It will force you to save as you make your loan payment every month. Not only will you get a nice tax refund (which you can plunk down on your RRSP loan) but you`ll end up with a nice chunk of RRSP`s which you can withdraw to buy a place of your own. For more information on the program, please go to:

3.   Ask for a gift! Do you have any parents or immediate family members that want to help you out with your down payment? Perhaps you are uncomfortable about bringing this up with your parents or grandparents. Money can be a tricky subject in families but you know, it never hurts to ask. Maybe you assumed your parents or grandparents weren`t willing to help. Whether they are or aren`t this might be a good opportunity to open up some dialogue on the subject. 

For more information, please contact me!

Wednesday, October 8, 2014

When will interest rates rise?

Now that the US economy is showing more significant signs of recovery, the topic of interest rate increases is dominating conversations once again. It’s a widely held belief that once our neighbour to the south starts raising rates, Canada will follow suit—but when will that be?

If you’re a variable rate holder, you’re probably watching the rate conversation closely—and growing frustrated by what you hear. Why? Because, in short, no one knows when rates will rise. Period. That being said, here’s what we do know:

-    The US has recently created more jobs than expected, and the unemployment rate is easing to below 6%.
-    That being said, the chair of the Federal Reserve, Janet Yellen, says there are still “too many” people looking for jobs and, with no obvious threat of inflation, there’s no reason to raise rates just yet.
-    The Federal Reserve committee has said, repeatedly, that it plans to leave the benchmark rate low for a “considerable period” after its quantitative easing program ends—something that is expected to occur next month.

With all that information in hand, most experts believe the Federal Reserve will start increasing rates in the spring at the earliest, while others say it may wait until summer. You can expect the Bank of Canada to start raising rates as well around the same time, although some are anticipating Canada may lag behind a bit.

So what can variable rate holders do in the meantime? If you haven’t already, you may want to increase your payment to prepare for the imminent hikes and pay some extra principal down while you’re at it. If you can, match your payment to the going 5-year fixed rate. If that’s a bit too much of a shock, consider raising your payment to an interest rate that’s 0.5% higher than what you’re already paying.

As always, if you have any mortgage-related  questions – variable or otherwise – feel free to drop me a line!