With rising interest rates, buyers have become hesitant in purchasing a home. Several Canadian buyers are wondering if now’s the right time to purchase or if they should wait longer. Real estate prices have dropped significantly since February 2022 and that’s why you should buy a house within the next four months.
Down payment amount, mortgage insurance, closing costs, and land transfer tax all depend on the property’s selling price. With the prices going down, you now have to pay a lower upfront amount for all these expenses.
Buy more, save more
Waiting for the interest rate to drop is a safe decision but many homebuyers can’t wait that long. Buyers who are downsizing, going through a separation or divorce, or moving cities can’t afford to wait. I’ve got good news for you!
If you purchase a property within the next four months, you’ll save several thousands of dollars, if you would have purchased it back in February 2022. Here’s a table with the breakdown to help you understand:
|February 2022||October 2022|
|Avg. Sale Price||$732,568||$617,000|
|Rate||2.89%||Fixed 5.19% | Var 5.05%|
|Min. Down Payment||$48,256||$36,700|
|Land Transfer Tax||$11,126||$8,815|
|Mortgage (Incl. MI Prem)||$711,683||$603,212|
|Mortgage Payment||$3,327||$3,575.62 | $3,527.25|
Down Payment $11,556
Land Transfer Tax $2,311
Mortgage Insurance $4,160
Your monthly payments will be higher slightly but that’s only temporary. When the mortgage interest rate in Kingston goes down in the next few months or years, I’ll help you refinance and lower the monthly mortgage payments.
When you get a variable mortgage rate, you are only required to pay three months of payment as penalty when refinancing. That’s an exit strategy that’ll help you save money in the long run, despite the penalty you’ll pay.
How do I get a great mortgage deal?
1. Lower your debt to income ratio
According to the Canada Mortgage and Housing Corporation, to get the best interest rate, you should keep your Gross Debt Service (monthly expenses including housing) ratio below 39% and Total Debt Service ratio below 44%.
2. Make your income stable
Assess your monthly expenses against your salary and find ways you can save more money. You can take up a part-time job or start a side hustle to increase your monthly salary.
3. Improve your credit score
Clear outstanding credit bills and fix any errors on your credit report to improve your credit score. After clearing the debt, ensure that you don’t use more than 70% of your credit limit.
4. Shop around for a lower mortgage rate
Interest rate differs from lender to lender, so it’s a great idea to shop around when making a major purchase. Different lenders have different mortgage terms that can affect your monthly payments. Research about the lenders, ask friends and family for advice, and lastly, work with an experienced mortgage agent in Kingston. Mortgage agents act as brokers between the lender and you. They’ll collect your financial information and broker a deal on your behalf without costing you any fees.
Mortgage broker Leo Ragusa will help you find the best mortgage deal out there.