Considering the pandemic, is this a good time to buy a home in Canada? While COVID-19 has been one of the most awful events in recent history, there have been some unexpected bright sides to come of it. Not to make light of the situation, however, people are struggling with income and staying ahead of their debt.
According to Yahoo Finance, “Anyone currently in the real estate market, or planning to get in can expect low mortgage rates for the foreseeable future.” If your finances remain intact, and your credit score is respectable, now may be the best time to buy a house.
Purchasing a home is the largest financial transaction of your lifetime. In fact, there was an increase in sales of homes on the market, month over month. Is this a good time to buy a home? Many people would argue that, yes, it is. Here are some things to consider before making an offer.
High-Interest Debt
If you have high-interest debt you might think twice about purchasing a house. If you’re carrying a balance on your credit card, you should concentrate on paying it off before you consider homeownership. When you’re a homeowner, never fail to make your mortgage payment. If you don’t pay your mortgage the bank will foreclose on your home, so it should be your top priority.
Low Mortgage Rates
Mortgage rates are currently at historic lows. Right now you can get a 5-year fixed-rate mortgage at less than three percent and a variable rate mortgage even lower – at 2.09 percent or lower. Now is an optimal time.
It is a good idea to take advantage of low mortgage rates and pay down your mortgage as quickly as possible. Interest rates won’t be low forever – chances are they’ll be a lot higher when you renew your mortgage. Often there’s no better investment than your home.
Seller’s Market
Many mortgage markets across Canada are considered seller’s market – that means sellers are able to call the shots. In popular housing markets like Toronto and Vancouver, bidding wars are commonplace. If bidding on a home sale gets too high, buying may not be an option right now.
On the other hand, if home prices keep rising you could find yourself priced out of the market next year. If you’re willing to purchase in an up-and-coming neighbourhood you can avoid a bidding war and get your dream home today.
Stricter Mortgage Rules
Although mortgage rates may be low, it’s more difficult than ever to qualify for a mortgage. The maximum mortgage amortization has been trimmed from 40 years to only 25 years on high-ratio mortgages. Essentially, that means the carrying costs of a home have significantly increased. Before buying, it’s a good idea to draw up a budget ahead of time to see if you can still afford a home with the highly monthly mortgage payments.
A Home is a Good Long-Term Investment
A home is a good long-term investment. Not only is it a roof over your head, but you can also rent it out to increase your income and pay down your mortgage even sooner. By paying down your mortgage you’ll build up equity in your home and help boost your net worth.
If you’re still asking “Is this a good time to buy a home,” it really depends on your financial situation. Considering the mortgage rates at the moment, anyone in the market with the funds should take advantage. However, the pandemic has many families struggling to get by as it is.
