Mortgages

SPECIAL SECTION 2 THURSDAY, MARCH 21, 2019 MORTGAGES & HOME BUYING By Jennifer McFee IF YOU'RE PLANNING TO BUY A HOME, GETTING A MORTGAGE SHOULD BE ONE OF THE FIRST ITEMS TO TACKLE ON YOUR CHECKLIST. W hether you're renewing your mort- gage, porting an existing mortgage or applying for the first time, each situation is unique. Lenders — in- cluding banks, credit unions, trust companies and mortgage brokers — can be a valuable source of information. They can help their clients choose a lending term, decide on fixed or variable interest rates, create a payment schedule, and guide them through the entire process. For anyone who wants to buy a home with a down payment of less than 20 per cent, mort- gage loan insurance is required. Through Canada Mortgage and Housing Corporation (CMHC), the Green Home program offers a partial refund on the cost of mortgage loan insurance for those who buy, build or renovate for energy efficiency. "If you're putting less than 20 per cent down, there are certain qualifications that CMHC is going to look for. For example, there has to be a minimum down payment in place. The property has to be located in Canada and be suitable for year-round occupancy," said Lynn Power, who is part CMHC's client relations team in the prairies and territories. "We can only spread the payment over 25 years, and the purchase price has to come in below $1 million. You cannot have an insured mortgage above $1 million." The borrower's budget also needs to be in line so that their gross debt service, which covers housing costs, does not exceed 35 per cent of their monthly household income. In addition, their total debt service, which covers housing costs and any other debts, cannot exceed 42 per cent. Lanny McInnes, president and CEO of Mani- toba Home Builders' Association, notes that the mortgage stress test has created a large impact on the local market. Through the stress test, borrow- ers need to prove that they can afford payments at a qualifying interest rate that is higher than the actual rate on their mortgage contract. "In 2017, we saw a pretty significant increase in housing starts, specifically in Winnipeg but in other parts of Manitoba as well. One of the driving factors was that the federal stress test on mortgages was going to be expanded starting in 2018. We also had the potential of interest rates going up, and then in Winnipeg we had the introduction of the impact fee on new construction," McInnes said. "At the beginning of 2018, the market cooled considerably because of that rush to meet those things coming into place. Over 2018, the stress test has taken a significant number of first-time home- buyers out of the market." Because of the mortgage stress test, it's been tougher for many people to make that jump from renting an apartment to buying their first home. "With the stress test, the real goal of the federal government was to cool down the overheated housing markets in Vancouver and Toronto," McInnes said. "But it had a negative impact on markets that really didn't need that tool to be implemented, like Winnipeg and Saskatoon." Recent meetings in Ottawa focused on how to make the housing market more accessible, he added. "Along with the Canadian Home Builders' As- sociation, we recommend potential changes to the mortgage stress test to see if it can be reduced or if there's a way that they can avoid a one-size-fits-all blanket policy for all of Canada," McInnes said. "We've also pushed to allow for longer amortiza- tion periods, so going back to the 30-year mortgage rather than the maximum 25-year mortgage. For the first-time homebuyer, that would help them to enter the market. Opting for a longer mortgage term would provide a bit more certainty and could cover some concerns that policymakers might be trying to alleviate with the mortgage stress test." Above and beyond the financing, they're also looking for different levels of government to ad- dress the housing supply. "We're looking at cost-neutral changes to build- ing codes, better alignment between transit fund- ing and housing, and better planning. We're also looking at streamlining regulations and red tape," McInnes said. "All of those things would help bring down the cost of building a new home, whether it's single- detached or multi-family. That would make the dream of being a homeowner more achievable for a lot of people." BECOMING A NEW HOMEOWNER IS AN EXCITING TIME, WITH MANY THINGS TO CONSIDER AND IMPORTANT DECISIONS TO BE MAKE. IT IS COMMON TO FEEL OVERWHELMED WHEN BECOMING A HOMEOWNER FOR THE FIRST TIME. THESE TIPS WILL HELP GUIDE YOU ON YOUR HOME-BUYING JOURNEY. 1. Know what you can afford and stick to it. It can be too easy to want to overspend when it comes to purchasing a home, so knowing what you can afford will save you from setting your sight too high. Find out what you can afford in minutes with Cambrian's Home Affordability Calculator and stick to that amount so you don't over-extend yourself financially. 2. Get pre-approved for a mortgage. In today's housing market, getting your offer to purchase accepted is not easy and presenting an offer that is conditional on obtaining financing may just make you miss out on buying your dream home. Having a pre-approved mortgage establishes you as a serious buyer and can give you an advantage over competing offers. Getting pre-approved also lets you know how exactly how much you can afford to buy and what your mortgage payment will be. At Cambrian, we hold our low mortgage rate for 120 days when you are pre-approved, so you can get busy finding your home. You can apply for your mortgage pre-approval online or at any of our 11 branches. Plus we pay $500 cash for a new mortgage. 3. Research the market and know what you are looking for. It is important to have a clear understanding of the current real estate market. This will give you an idea of which houses are overpriced and which are underpriced. It is also important to know what you are looking for in a home: Are you looking for a condo, townhouse or a single- detached home with an attached or detached garage? Finished or unfinished basement? Taking time to create your wish list of need- to-haves and nice-to-haves will save you time when you start looking for your home and make your decision easier. 4. Start your home search with our free FindMyHome Search Tool. Once you know what you are looking for, it's time to begin your home search. Viewing several homes will give you a better understanding of what is available, how your wish list aligns with your budget and where you may need to compromise. Our free online FindMyHome Search Tool allows you to search active house listings, research neighbourhoods, save your favourite properties and get alerts when price or availability changes. Check it out on our website at www.cambrian. mb.ca/findmyhome 5. Work with a Realtor that you can trust. Finding the right Realtor is important. You need someone you can trust, who understands the market and knows what you are looking for in a home. When you are ready to visit properties, our FindMyHome Search Tool will allow you to connect with our trusted network of associated Realtors who will help guide you in your home purchase decision. Plus, if you buy a property with one of our associated Realtors, you will qualify for the FindMyHome Cash Back equal to 0.5 per cent of your purchase price. Complete Home-Buying Experience at Cambrian Credit Union At Cambrian Credit Union, we know that home ownership can be a little scary at first. That is why we offer a complete home-buying experience for our members, including an online home search tool, trusted Realtors, quick pre-approval, low mortgage rates and the best cash-back offer in the market. Find all you need to buy your first home at Cambrian.mb.ca/personal/mortgages/ mortgages/buying-your-first-home -Cambrian Credit Union 5 TIPS FOR FIRST-TIME HOMEBUYERS NAVIGATING THROUGH THE MORTGAGE PROCESS Chester & Ruth, Morris www.accesscu.ca Call us for an appointment 1.800.264.2926

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