This month, I’m featuring an article by my mortgage guru, Peter Majthenyi from Mortgage Architects.
This is for all of your renters out there so you can stop building up someone else’s home equity and net worth!
If you are a landlord, I apologize. 🙂
In this article, Peter discusses how new mortgage options can make owning a home a reality…
Buying a home is a big financial step, and it’s hard to know when you’re really ready to buy. No wonder that many Canadian renters are still sitting on the white picket fence when it comes to home ownership.
The exciting news is that it could be time to make your move. There’s a few reasons why.
To begin, it’s pretty simple math: if you can afford to rent, chances are that you can afford to buy your own home. Your monthly mortgage payments may be similar to your rent!
That monthly rent cheque doesn’t need to be money out the window; it could be money that’s building you equity in your very own home.
Let’s take a look at how rent and mortgage payments might compare.
If you’re paying $1250 in rent each month, for example, you could be carrying a mortgage of $186,726. If you’re paying $1500, that’s potentially a mortgage of $235,100. Forking over $1750 each month? You could be paying off a mortgage of $283,475!
How are the mortgage payments so affordable?
Firstly, right now you’re benefiting from historically low mortgage rates. Secondly, you now have access to longer-amortization mortgages that lower your monthly mortgage payment. (The examples above were based on that combination: a 5.3% rate and 40-year amortization, plus 3.70% insurance premium, property taxes and heat of $285 per month).
In addition to longer amortization mortgages, interest only mortgages are another option for reducing monthly mortgage payments and maximizing purchasing power.
Think you can’t buy a house because you haven’t saved up a downpayment? Think again.
There are several excellent mortgages available with zero downpayment required. In general, all you need to qualify is a good credit record, and the ability to meet your payments comfortably. Mortgage insurers and innovative lenders believe that Canadians benefit from homeownership – and they’re helping to make it more accessible.
Even if you’ve had past credit problems, new credit repair mortgages can help transition you to a brighter future. That’s more good news for renters!
One more hurdle that some renters worry about is showing enough income to qualify for a mortgage. If you’re self-employed, for example, there are mortgage options available that don’t require you to verify your income. If you have a good credit history and reliable income-earning capacity, then you may qualify for a no income verification mortgage loan.
Still sitting on the fence?
Think about this: every time you sign a rental or lease agreement, you are signing a long lasting contract that has no profit potential whatever – at least, not for you.
When you sign a mortgage loan agreement, not only do you sign onto home ownership, but you also sign up for a great equity-making opportunity too.
Buying a home makes both financial and emotional sense. There are the intangible pleasures that home ownership offers: increased freedom, privacy, and a sense of community, for example.
Then there are the more tangible rewards: for decades, Canadian homeowners have been able to leverage their property purchase into a large financial return.
You’re at a moment of real opportunity right now: this may be the perfect time for you to get on the right side of that picket fence!
If you have been thinking about owning a home, but don’t know what is possible, I encourage you to give me or Peter a call to find out. You may be pleasantly suprised!