Our mortgage rate update for April 24th, 2019.
Time to get our April 17th Mortgage Rate Update!
Another beautiful week in Grande Prairie! This week the 4 year and 5 year rates dropped just a little bit. If you want to doublecheck if these are our most current rates, click the picture to be moved to the rates page of our website!
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Job growth stalls in March
The employment report had long been a lone bright spot in an economy that had sunk across the board, so the March slump is not surprising. According to today’s jobs report from Statistics Canada, employment fell by 7,200 last month, mostly in full-time positions in the service sector. Canada’s jobless rate held steady at 5.8%, close to a multi-decade low and wage growth ticked modestly higher, although, at a 2.4% year-over-year gain, it remains lower than the reading earlier this cycle.
Employment was up 290,000 over the prior six months, so it was only a matter of time that the jobs numbers would reflect the weakness in the overall economy.
Post April 5th, 2019
Our take on the March Federal Budget Announcement for Grande Prairie Homebuyers
March 27, 2019. Our office has received a ton of questions about the March Federal Budget Announcement for Grande Prairie. This included incentitives planned for first-time hombuyers.
The only immediate change, is that first time buyers can use up to $35,000 in RRSP money for down payment, up from the previous $25,000 allowed. You will still need to re-invest this into an RRSP within a 15 year time frame. If you take out $35,00 that means you should put at least $2,333 back into your RRSP each year. Should you forget to return money to your RRSP, the goverment will have you pay tax for each forgotten portion.
First Time Home Buyer Incentitive
The second announcement by our federal government introduced the First-Time Home Buyer Incentive. The Canada Mortgage and Housing Corporation will provide first-time buyers up to 10% of the purchase price of a new construction home. They will also give 5% of the purchase price for a resale. There’s no clear plan for how you the borrower will be required to pay for the loan. This leaves many questions unanswered, and makes it impossible to predict the benefits of this incentive. It remains very unclear if the government will take an equity position in your home or if you would have an interest-free loan.
You need to understand how this loan will be repaid
For borrowers, understanding how this loan is required to be repaid is important. If the government is taking an equity stake in your home, the amount that you the homeowner would have to repay will grow as the value of your home increases. In this case, I question if this is a good thing for borrowers at all? Potentially you are giving up a lot of your equity at sale time.
DLC’s Economist, Dr. Sherry Cooper, had this to say about the budget announcement,
“It’s all about increasing demand for housing without doing much to increase supply, and you don’t need to be an economist to know that if you increase demand without increasing supply, you’ll end up with higher house prices, which is the oppose of the intention.”
Encouraging new construction would have been better
Rather than encouraging more buyers to compete for inadequate housing inventory, Cooper believes construction inducements would have been more beneficial.
“The government could have done things to increase supply, like changing the rules around zoning and the Greenbelt to open up more land,” she said. “They could even subsidize housing construction or eliminate some of the red tape and other delays in construction. There are other things that could have been done to incentivize the construction of new housing.”
The March Federal Budget Announcement for Grande Prairie has also placed limits on the First-Time Home Buyer Incentive:
- Maximum household income of $120,000
- At this time only purchase price’s below $400,000 will qualify.
These will further limit how useful this program is for you!
As we are made aware of updates to this announcement, we’ll let you know!
19 MAR 2019
FEDERAL BUDGET 2019–ACTIONS FOR HOMEBUYERS
In its fourth fiscal plan, the Trudeau government spent its entire revenue windfall leaving the deficit projection little changed. In this election budget, Finance Minister Bill Morneau announced $22.8 billion over six years in new spending initiative mostly for homebuyers, students and seniors. Trudeau promised in his first budget to have eliminated all red ink by this year. He will instead head for an October election with an annual deficit of nearly $20 billion. Ottawa is projecting a string of double-digit deficits through the end of 2022.
The key debt-to-GDP ratio is expected to be 30.8% this fiscal year and edges downward only very slowly to 30% over the four-year forecast horizon.
Today’s budget offered help to young homebuyers, many of whom find it very difficult to afford to purchase in some of our more expensive cities. There were two measures targeted at first-time homebuyers:
Maximum Withdrawal from RRSPs Is Increased
The simplest to understand is the $10,000 increase in the federal Home Buyers’ Plan (HBP) maximum tax-free withdrawal from RRSPs to $35,000, effective immediately. This allowable withdrawal for first-time buyers will now also apply to people experiencing the breakdown of a marriage or common-law partnership who don’t meet the usual requirement of being a first-time homebuyer.
The new limit would apply to HBP withdrawals made after March 19, 2019.
Those taking advantage of the higher HBP limit will have to keep in mind that the repayment timeline is unchanged. Home buyers must put the money back into their RRSP over 15 years to avoid full ordinary income taxation on HBP withdrawal. Now Canadians using these funds will have to repay a maximum of $35,000 – instead of $25,000 – over the same period.
The Boldest Move: The CMHC First-Time Homebuyer Incentive
A $1.25 billion fund administered by the Canadian Mortgage and Housing Corporation (CMHC) over three years will provide 5% of the cost of an existing home and 10% of the price of a new home through what amounts to an interest-free loan to be repaid when the property is sold. The money would go to first-time home buyers applying for insured mortgages. The key stipulations are:
• Users must have a downpayment of at least 5%, but less than 20%;
• Household income must be less than $120,000;
• The purchase price cannot be more than four times the buyers’ household income.
For example, say you’re hoping to buy a $400,000 home with the minimum required 5% down payment, which works out to be $20,000. With the new incentive, you could receive up to $40,000 (for a new home) through the CMHC. Now, instead of taking out a $380,000 mortgage, you’d need to borrow only $340,000. This would lower your monthly mortgage bill from over $1,970 to less than $1,750. The incentive is 10% for buyers purchasing a newly built home and 5% for existing homes.
Homeowners would eventually have to repay this so-called ‘shared mortgage,’ likely at resale, though it is unclear how this would work. CMHC might share in any capital gain (or loss)– receiving 5% or 10% of the sale price (not the purchase price). At the time of this writing, these details had not been hammered out.
These stipulations effectively limit purchases under this plan to properties priced at less than $500,000 ($480,000 maximum in insured mortgage and incentive, plus the downpayment), which is close to the national average sales price of $468,350 (which is down 5.2% from the average price one year ago). However, the national average price is heavily skewed by sales in Greater Vancouver and the Greater Toronto Area, two of Canada’s most active and expensive markets. Excluding these two markets from the calculations cuts close to $100,000 off the national average price, trimming it to just under $371,000. What this tells us is that the relief for first-time homebuyers is pretty meagre for young people living in our two most expensive regions.
Arguably, the max price point of $500,000 for this plan is where the affordability challenge only really begins in our higher-priced housing markets. The most acute affordability problems surround medium-sized and larger condo units or single-detached homes in the GTA and GVA; yet, most of these are beyond the price range covered by the CMHC plan. The impact, of course, would be broader in other regions, but affordability in many of those is historically quite normal. The most significant impact will be in low-priced new builds.
Also, mortgage applicants under this plan still have to qualify under the federal stress test, which ensures that borrowers will be able to keep up with the payments even if interest rates rise by roughly two full percentage. The incentive, however, would substantially lower the bar for test takers, as applicants would have to qualify for a lower mortgage.
Before the budget, many stakeholders had been arguing that with the rapid slowdown in the economy and the Bank of Canada unlikely to raise interest rates this year, the B-20 stress test is too onerous and should be eased.
The government is hoping to have the plan up and running by September.
Bottom Line: These housing measures are focused on the demand side of the market, rather than encouraging the construction of new affordable housing. And while the budget does earmark $10 billion over nine years for new rental homes, it does not propose tax breaks or reduced red tape for homebuilders.
Getting your dream home financed in Grande Prairie?
Ready to build the home of your dreams & get your dream home financed in Grande Prairie? Here’s how to make the process smooth with your mortgage broker. Hopefully reading this article, along with tips from our mortgage brokers here at DLC in Grande Prairie, we can get your home mortgaged smoothly for you!
First, go get a pre-qualification
First step, go get a pre-qualification with your mortgage broker. To do this visit one of our qualified mortgage brokers at Dominion Lending Centres HT Mortgage Group.
Come prepared with:
- Letter of employment and current pay stubs
- Last two years of T4’s and Notice of Assessments
- 3 months banks statements confirming down payment verification
- Floor plan and building specifications, along with your contract from your New Home Warranty Builder
- If self-employed, we’ll also need your last two years of company financials, and your last 2 years of T1 Generals
A pre-approval will give you an idea of what your total build budget will be, and ensure that your new home matches your wish list. Remember this is all to get your dream home financed in Grande Prairie.
“Getting a Pre-Approval is super important!” Kaitlyn Moore – Mortgage Broker
Plan your build
Now that your pre-qualified to build a new home, it’s time to investigate who will build your home for you. We are lucky enough to have several local home builders with loads of experience, all that carry new home warranty. Many of these builders will help you to purchase the town lot you’d like to build on as well. Or perhaps you already own an acreage with an older mobile home and you’d like to build a new house on the property? Last, maybe it’s your dream to be out of town, and the goal is to buy and build on bare land. We’ve got a mortgage for all 3 options to get that dream home financed in Grande Prairie!
“Make sure your builder is NHW registered.”Gert Martens, Mortgage Broker
Don’t go with the first builder you speak to, or the cheapest builder! Do your research, whoever is building your home will impact your life for many years to come! Jodi Scotton, Mortgage Broker
Here are some of the details that will need to be hammered out before you visit your mortgage broker again:
- Where is your home going to be built and what is the address and legal land description of this location
- Do you have your house plans complete
- What type of finishing are going into your new home and does your builder’s contact include all of these things
- Timeline about when the builder expects to start and finish the build
- New Home Warranty registration number
“Get Quotes for Utilities! You can mortgage the cost of utilities, such as putting in a well, or getting a powerline out to your acreage, but you need quotes to ensure this will be included in your financing. Utility hook-ups can cost a lot, so it’s important to plan them into your build.”Doria Zacharia, Mortgage Broker
“Be really specific about what type of finishes you expect your home to have, so that the original contract matches your expectations and prevents cost overruns over time.” Megan Lemay, Mortgage Broker
You may wonder, if I’ve already gotten a pre-approval, why do I still need a financing condition on my purchase contract?
A mortgage lender needs to confirm they are comfortable with the home your building, along with the cost of this construction. To do this they have an independent appraiser review your purchase contract, plans and location. The appraiser confirm that the market value of your home, is greater than, or equal to , the cost of this construction at completion. If a home is too custom, it’s market value may be less than the cost of your build and the lender may make you do a larger down payment. The lender also wants another chance to double check your down payment and ensure you have enough assets to get a build done.
Dream home financed in Grande Prairie – You’ve done it!
Congrats! Now that your build has been approved, your lender will advance the draw money directly to your lawyer, who will then pay your builder along the way. You are that much closer to having that dream home financed in Grande Prairie. You won’t make mortgage loan payment until your home is 100% complete. Be sure not to make any changes to your financial situation between starting your build, and your move in date.
“Be aware of your current debts and don’t apply for any credit until the build is done” Alycia Larocque
There a million different scenarios we could discuss when it comes to building a home. For example: How is the building process different when I buy a pre-built manufactured home, is this the same process as getting a local builder to construct my home on site?
To make a plan for your specific building situation, give us a call here at DLC HT Mortgage group today!
Updated March 14th, 2009
What’s the Difference between a Broker and a Bank in Grande Prairie?
Choice! Your mortgage broker will help sort through a variety of lenders, to find the lender that suits you best. Different lenders will accept different types of income, have different underwritting policies or different ways of lending. And of course, since we work for you, not the banks – we negotiate a better mortgage rate for you.
Different Lenders Accept different types of income
Have you ever gong to a bank for a mortgage and heard, ” I’m sorry your dream home is out of reach given your income?”. Although you might be out of luck at that bank, it doesn’t mean you should stop trying! There are a variety of incomes that some banks will not use to qualify you for loans. Child tax benefit, rental income, vehicle allowances are just a few types of incomes that not every lender will accept.
Let’s look at rental incomes.
My Home in Grande Prairie has a $200,000 mortgage, so $1250 a month, and I have a lease for $1800 a month.
- Lender 1 – $1700-1250 = $450 x 50% = net rental income $225 a month
- Lender 2 – $1250 x 1.4 = $1750 $1700- $1750 = net rental income $-50 a month
- Lender 3 – Only considers rental income as a valid income with two years history of rental income on T1 general tax documents. You have a good accountant who has made it possible to record a capital loss both years. Averaging out the rental income reported to the govement over two years…. Net rental income $-100 a month.
Given a choice rental property owners would choose Lender 1. “But how do I find out which lender has the best rental income formula?” Well that’s where calling your broker comes in. We spend all week, week after week understanding and learning which lender is best for various situations. Your banker… may be able to expain how they calculate rental income, but they will not have any indepth or accuate knowledge on how the competitors calculate rental income. So call a broker, they specalize in this sort of comparision.
Child Tax Benefit Income
Truthfully there are very lenders who will accept child tax benefit income, but if you need just a little more income to qualify for that dream home we know of a couple that lend in Grande Prairie. The same applies to how much overtime you can use to qualify, or if you can use a vehical allowance. Not every lender accepts ever income type, so trust your broker to find a lender that maximizes and makes use of multiple income sources.
Different Mortgage Types Between lenders
Fixed Rate or Variable? Reverse mortgage or a Home Equity Line of Credit? Manulife One account or a flex down mortgage? Interest Rate adjustible Penalty or three months interest? Open mortgage or closed? Portable? Able to end mortgage term without fee’s if I’m dead?
The Canadian mortgage space has many unique products. One great example is the CHIP Home Equity Reverse mortgage, which can help lower income seniors solve cashflow issue’s. (A senior with lowered income may not qualify under normal refinance programs.) We also have access to flex-down mortgages which can allow a portion of your mortgage to be interest only. Ideal for rental property owners trying to lower borrowing cost’s in the short term.
Grande Prairie, Alberta Mortgage Rates Feb 6, 2019
Everyone always has downpayment questions. How much do I need to put down on my first house? If I put more down do I get a lower rate? Do I need to put a different amount down if it’s not my first house? What is the downpayment if it’s a rental home? So this week we post our Grande Prairie, Alberta Mortgage Rates and talk a bit about downpayment.
How much do I need to put down on my first house?
As long as it’s for your primary residence:
As of February 2019 in Alberta, current mortgage rules are that you only have to put 5% down on your first house, or your second or even 20th home. If you are buying a home that’s meant to be your residence you can do just 5% down. Given Grande Prairie’s Residential Average Home Price (September 2018) of $320,744 that 5% would be $16,038.
You could get a lower rate in Grande Prairie with a higher downpayment
That doesn’t mean it’s always a good idea to just put 5% down. If you put 35% down here in Grande Prairie instead of 5%, many companies will give you their best rate. Putting 5% down gets you a home in Grande Prairie, but not always the best mortgage rate.
Put more than 5% down to avoid mortgage default insurance
If you can afford to put 20% down on a home in Grande Prairie, you can avoid having to pay for mortgage default insurance. Mortgage default insurance is mandated in law by the Canadian government. As of February 2019, it is required to have default insurance on your mortgage if you put less than 20% down. Given Grande Prairie’s Average Home Price of $320,744 when putting 5% down or $16,038 you will pay $12,188 when mortgage default insurance is added to your mortgage. Go here to calculate that mortgage default insurance for any scenario. You don’t have to pay it up front, but that mortgage default insurance does add up!
Your Credit Score can affect downpayment
Mortgage lenders will consider your credit score when you go to get a mortgage as well. If you have excellent credit then 5% down is no issue, but maybe your score has dropped below 670 when you pull your credit report. What if your credit score is only 620? A lower credit score may mean that you have to put more than the standard 5% down here in Grande Prairie to make mortgage lenders comfortable issuing a mortgage.
This house won’t be my primary residence
How much downpayment do I need to purchase a rental home in Grande Prairie, Alberta? You will need to have a downpayment of a least 20% ready to purchase a rental home. Let’s take our average home price of $320,744 for Grande Prairie in September 2018 again that is $64,149 as downpayment. Given your credit score, the number of rentals you already own, or the condition of the home you are purchasing you may be required to put down much more than 20%. One good point, putting at least 20% down you avoid mortgage default insurance.
There are many situations that can change what amount of Downpayment is required here in Grande Prairie Alberta. For clarification, or just to have a professional run the numbers call our office here in Downtown Grande Prairie at 780-513-6611.
Call us from home, you don’t have to go outside to get a mortgage!
Here at HT Mortgage Group, part of Dominion Lending Centres in Grande Prairie, we understand. Call us from home, you don’t have to go outside to get a mortgage! Just call our office at (780) 513-6611. We are having a terrible coldsnap this week, Environment Canada even issued an Extreme cold warning for Northern Alberta. As I write this is it -36 C, but with Windchill it could dip as low at -47 C! Don’t risk getting frostbite, stay warm and call us from home!
Yes you can even send documents electronically!
Nowadays, you can send us payslips, T4’s, tax receipts and other income paperwork electronically. We use a secure documents portal to protect your confidential documents. You can ask your realtor to send over your purchase agreement and your MLS listing to us as well!
If you check out the Our Agents section, we have every one of our mortgage agent’s cell phone’s and email address’s listed, but just in case you don’t want to head over to another page to check them out here they are again:
|Cell: 780-831-9024||Web: www.pamelalobban.ca|
Call us from home, you don’t have to go outside when it’s this cold!
Our office is open Monday to Friday from 9am to 5pm – and we do have staff who are here, braving the cold everyday – if you like going outside in this weather. Our Keurig is ready to serve hot coffee to any intrepid customers who do visit us today!