Diane Birk

Love Where You Live.......Real Estate in Vancouver

The Bank of Canada ("BOC") announced today that it is holding its target for the overnight rate at the "effective lower bound" of 0.25%. 


Cameron Strong, CEO, Invis Mortgage Intelligence notes that "Canadian mortgage holders can expect no further rate drops, nor increases, until 2022. It is expected the Bank of Canada will keep its target rate at 0.25% until well into 2022 to aid our economic...

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As expected, the Bank of Canada held the benchmark rate steady at .25%. So far in 2020, Canada has experienced an energy sector shock, a shutdown of its service sector industry, real capacity destruction due to the coronavirus, and there is fear of a second wave of infections. However, despite the grim Canadian data of 16% unemployment, negative GDP growth for 2020 of 8% and a TSX stock market plunge...

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As the longest spring in memory finally gives way to summer, it's nice to see people safely enjoy the sunny weather. IWehope that you and yours are in good health. There continues to be uncertainty about the shifting mortgage market. Here are the most common questions:
 

Should I break my fixed mortgage to get a lower rate?
If you're only partway through your term, you'll need to pay a penalty...

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The Bank of Canada announced today that it is keeping its benchmark rate unchanged despite a weaker economy in the fourth quarter of last year and expectations that growth in the near term will be weaker. Should the recent slowdown in growth be more persistent than forecast, we may see a rate cut. In particular, the Bank will be watching consumer spending, the housing market and business investment....

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The Bank of Canada announced today that it is keeping its key rate unchanged, noting that the global economy appears to be stabilizing with growth expected to edge higher in the coming years, although uncertainty relating to ongoing trade conflicts continues to be a risk. A resilient Canadian economy, with investment spending stronger than expected, has allowed the Bank to hold rates while...

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The Bank of Canada announced today that it is keeping its key rate unchanged, making Canada an outlier as many countries around the world have responded to a weakening global economy by lowering rates. The Bank noted that Canada's economy has held up well but will be tested as trade conflicts and uncertainty persist. Going forward the Bank will be closely watching our main sources of strength which...

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While persistent trade tensions are affecting global economic momentum, the Bank of Canada announced today that it is keeping its benchmark rate unchanged. While growth in Canada has been strong, the Bank expects this to be temporary with economic activity expected to slow in the remainder of the year. The Bank believes the current accommodative interest rate policy to be appropriate, although they...

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The Bank of Canada announced today that it is keeping its benchmark rate unchanged as persistent trade tensions are having a material effect on the global economy. These ongoing trade conflicts cloud the outlook for the Canadian economy, which is returning to potential growth. As a result, the Bank deems that the current accommodative interest rate policy remains appropriate.


The next rate-setting...

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The first-time buyer incentive, launching on September 2nd, is a shared equity program designed to reduce mortgage payments for qualifying first-time buyers who have the minimum 5% downpayment required for an insured mortgage. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home. This incentive isn't payable until you sell the property and is not charged interest.


Mortgage Payments - CMHC's First-Time Buyer Incentive


No Incentive

5% Incentive

10% Incentive

Purchase Price

$500,000

$500,000

$500,000

5% Down

$25,000

$25,000

$25,000

Incentive

$0

$25,000

$50,000

Mortgage

$475,000

$450,000

$425,000

Mortgage +
Mortgage Insurance

$494,000

$463,950

$436,900

Monthly Payment

$2,310

$2,170

$2,043

Monthly Savings


$140

$267

Yearly Savings


$1,680

$3,024

Assumes 25 yr am, 5 yrs, 2.89%


There are a few caveats. If your household income is more than $120,000, you aren't eligible for the program. And your total borrowed amount (including the incentive portion) can't be more than four times your household income. With a household income of $120,000, the maximum purchase price would be approximately $505,000 with 5% down, and about $565,000 for a 15% downpayment.


You are required to pay the incentive back after 25 years or when you sell the home, with the repayment amount based on the property's fair market value, whether it has increased or decreased in value. If you received a 5% incentive and your $500,000 home increases in value to $600,000, then you are required to repay $30,000. If the value deceases to $450,000, you'll repay $22,500. You can repay the incentive at any time without penalty.

This new incentive program has certainly added another layer of complexity to the already complicated mortgage world. Getting expert advice throughout your mortgage years is more important than ever.


Source:  Invis Financial

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How much do you need?
Not surprisingly, most Canadian homebuyers purchase a property with the absolute minimum downpayment. The thing is, the minimum can vary, so you want to be sure you know how it's calculated.


Will you live in the home? If the house will be owner-occupied, then you need 5% down for the first $500,000 of the purchase price, and 10% for any amount over $500,000 up to $999,999. If the purchase price is $1,000,000 or more, the minimum down is 20%.


Hoping to skip the cost of mortgage default insurance? Then you'll need at least 20% down. Any downpayment less than 20% of the purchase price requires this insurance, which will be added to your mortgage principal.


Buying a rental or recreational property?If it's not going to be your own principal residence, then you'll need 20% down. Genworth and CMHC have a vacation/second home program that allows you to put 5% down but mortgage default insurance will be required. Rental properties require 20% down.


Are you new to Canada? If you're a permanent resident, then you'll need the same downpayment as a Canadian citizen: 5% for the first $500,000 and 10% after that. If you are a non-permanent resident, then you may need 10% down. And if you're not a resident of Canada, then you'll need at least 35% down from your own resources (not borrowed).


Smart ways to come up with a downpayment

If you're looking to buy a second home, then your best path to a downpayment is often to refinance your existing home. A review of your situation is the best starting point.

If you're saving for your first home, here are some ways to come up with the cash:

  1. A financial gift: If you're lucky enough to have financial support from a parent or other blood relative, you'll need to get a form signed that says the funds are a gift and that you are not required to pay the money back at any time.
  2. Your RRSP: You can withdraw up to $35,000 tax-free from your RRSP or $70,000 per couple. The recent federal budget increased this from $25,000 and also announced that in 2020, this program will be available to divorced individuals. You will be required to pay the funds back over 15 years.
  3. TFSA/Investments: If you withdraw from your TFSA to boost your downpayment, you're allowed to re-contribute, so you never lose your TFSA room. If you haven't set up a TFSA, then do it today and set it up so money goes in every month.
  4. Early inheritance: Many parents and grandparents would rather help with the purchase of a home while they're alive rather than having their children wait for an inheritance.
  5. Sell assets: For instance, a vehicle, or jewelry. You need to show 3 months of bank statements to support your downpayment, and explain any large deposits.
  6. Money from outside of Canada: If you're bringing funds from outside of Canada, you'll want to have those funds in Canada for at least 30 days before closing, and you'll need to provide 3 months of financial history from the original account they came from.

Often homebuyers are actually closer than they think to buying that first or next property. 


** This information is current as of May 7, 2019, and lending practices are subject to change at any time.  


Source:  Invis Financial

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The Bank of Canada announced today that it is keeping its key rate unchanged. The Bank noted that while a slowing economy was anticipated in late 2018 and early 2019, the slowdown was in fact "sharper and more broadly based" than expected. While there was growth in employment and labour income, consumer spending, the housing market, exports and business investment all fell short...

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The Bank of Canada announced today that it is keeping the key rate steady. The Bank continues to judge that the policy rate will need to rise into a neutral range to achieve the inflation target, but that will happen over time. Going forward, rates increases will depend on key factors – global trade uncertainty, the housing market, and developments in the oil sector. The next rate-setting day...

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As many economists expected, the Bank of Canada announced today that it is increasing the overnight rate .25 per cent, noting that the "policy interest rate will need to rise to a neutral stance to achieve the inflation target." As for the pace of future rate increases, the Bank will take into account how the economy is adjusting to higher rates, household debt levels, and global trade policy developments....

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The Bank of Canada announced today that it is keeping the overnight rate unchanged as they monitor the evolution of NAFTA negotiations and the outlook for inflation. Household debt levels are improving, the housing market is stabilizing, and business investment and exports are “growing solidly”. The Bank noted that higher rates will be warranted but they “will continue to take a gradual...

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As many economists expected, the Bank of Canada announced today that it is increasing the overnight rate .25 per cent, the fourth increase since last summer, given strong economic improvements. The economy and job market are performing well, housing is beginning to stabilize, oil prices have gone up, exports are strong and businesses are spending. The Bank also wants to keep inflation near target. The...

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A mortgage pre-approval can be an important part of your pathway to building wealth, giving you a real-world picture of your options: that is, your opportunities as well as your limitations.


A mortgage preapproval will tell you how much you qualify for (you may be pleasantly surprised), what your mortgage payments will be, and you’ll get an interest rate that will be held for a specific time period,...

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It’s easy to get caught up in home buying frenzy and just focus on finding that perfect home. During all that excitement, be sure to take some time to get acquainted with a few key terms. Here are the four types of insurance you’ll encounter.


HIGH-RATIO MORTGAGE INSURANCE
If your downpayment is between 5% and 20%, you are required to have “high-ratio mortgage insurance”. This...

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The Bank of Canada announced today that it is holding the overnight rate steady after raising it twice this past summer. The Bank noted that the recent strength of the Canadian dollar has slowed inflation and export growth, and that there is “substantial uncertainty” around geopolitical developments and the renegotiation of NAFTA. The Bank has therefore deemed that “the current stance...

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Effective January 1, 2018, home buyers who don’t require mortgage insurance — those with a down payment of 20 per cent or more — must qualify for their mortgage at a higher rate.

 

This new stress test won’t apply to people renewing their uninsured mortgage.

 

Canada’s Office of the Superintendent of Financial Institutions (OSFI) announced these rule changes today....

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When you find the condo or house of your dreams and want to make an offer, do you need a financing condition? Unless you can pay cash for the home, then yes you do. That little phrase – “conditional on financing” – is an important protection for buyers.

 

When an offer to purchase is made “conditional on financing”, we gain the time needed i.e. 3 to 5 days to...

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Diane Birk
Cellular: 604-760-4884
Head Office: 604-984-9711
Fax: 604-984-3350
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