There are several reasons why now is an ideal time to purchase your first home, upgrade to the house of your dreams, purchase vacation property or buy a real estate investment property.
One important fact is that interest rates are unlikely to rise for the short term, as inflation dips. The annual rate of inflation softened in August, casting more doubt on the need for the Bank of Canada to raise interest rates this month. With home prices stabilizing and rates near all-time lows, it’s an ideal time to buy a property.
Making Your First Home Purchase
If you’re a first-time homebuyer, you may feel you can’t afford to purchase a home because you haven’t managed to save your down payment. But there are many solutions available today that can help first-time buyers with their down payments.
Many lenders will allow for a gifted or borrowed down payment. And of those lenders that will not provide this alternative, many offer cash-back options that can be used as a down payment.
Better yet, there are programs available from some financial institutions where they will offer a “free down payment” or a “flex down”. Of course, you will end up paying about 1% more in your interest rate, but the program will help you get in the homeownership door and start accumulating equity earlier. You must, however, stay with the original lender for the full initial five-year term or else you’ll have to pay the down payment back.
Last year, a $5,000 increase was made to the RRSP Home Buyers’ Plan, meaning first-time homebuyers can now withdraw up to $25,000 from your RRSPs for a down payment – tax- and interest-free.
And if you’re part of a couple making a home purchase together, you can each withdraw up to $25,000 from your RRSPs.
If you already own a home and are concerned that now may not be the best time to sell because the market has slowed down, remember that what you may lose on selling your home, you’ll gain on the purchase of your new home – so everything will balance out.
As always, if you have any questions about buying or selling a home, your answers are just a phone call or e-mail away!