Monthly Archives: May 2017

6 ways to attract Millennial homebuyers

Posted By Financial Independence Hub | May 12, 2017

By Emma Bailey

Special to the Financial Independence Hub

Millennials may eschew many traditional values, but members of this demographic remain committed to one primary tenet of the “American Dream” — homeownership.

While a large number of young people have put the brakes on buying a new home because of student-loan debt, mortgage restrictions and a sluggish job market, the largest bunch since the baby-boomer generation is beginning to enter the real estate market en force. The sheer size of this group and the fact they were born and came of age in an era of rapid technological innovation puts them in a position to transform both the real estate market and what is desirable in a home.

To keep pace, real estate agents and home sellers alike are having to alter the way they market and present homes in order to attract millennial homebuyers. Does your property have what it takes for millennials to take notice?

Walkability and Amenities

The millennial generation places a higher value on “experiences” than they do on material goods. In this demographic, a home is typically perceived as a base for the rest of one’s life, rather than the center of it. Instead of a classic house in the suburbs with a white picket fence, millennials are more likely to prefer property in an urban setting within walking distance of local attractions. There is also a larger interest in non-traditional and mixed-use properties, such as warehouses that have been converted into lofts.

Convenience

In an effort to save money and reduce their ecological impact, many millennials are forgoing cars in favor of alternative transportation. As a result, millennial buyers tend to prefer home shopping in locations that have easy access to public transportation and a minimal commute to work. If your property is close to a metro system or even a local bike-share hub, you can expect younger individuals to reach out with interest.

Connectivity

3 common mistakes by first-time homebuyers & how to avoid them

Posted By Financial Independence Hub | May 11, 2017

By Sean Cooper

Special to the Financial Independence Hub

You’ve probably heard it plenty of times: buying a home is the single biggest financial transaction of your lifetime. But purchasing a home can also be a great long-term investment — when it’s done right.

Buying a home for the first time can either set you on the right financial path or be a drain on your finances. It completely depends on how you go about it, and is why time is well spent reading great resources, such as the LowestRates.ca first-time homebuyer’s guide.

I wrote about the most common mistakes first-time homebuyers make in my new book, Burn Your Mortgage. Here are some highlights:

1.) Buying “Too Much” House

The simplest way to eventually be mortgage-free is to not take on a massive mortgage. The lower your mortgage, the less time it takes to pay off.

Getting pre-approved for a mortgage tells you how much home you can afford. But just because the bank says you can spend up to $800,000 on a home doesn’t mean you should. The word “can” is key here, and is what many homebuyers overlook. You don’t want to spend so much on a home that it’s a drag on your finances. Otherwise you could find yourself “house rich, cash poor,” with little money to save, let alone have fun with. Instead of your castle, your home could feel like a prison, with your mortgage a life sentence. By buying a home you can comfortably afford you maintain the financial wiggle room to deal with a financial emergency, such as losing your job or suffering severe damage to your home.

2.) Forgetting to Budget for Closing Costs

Closing costs are referred to as the transactional cost of real estate and are often overlooked by homebuyers. They’re anything but a drop in the bucket though, typically adding up to between 1.5% and 4% of a home’s purchase price. Common closing costs include home inspection, real estate lawyer fees, land transfer tax and appraisal fees.

How CDIC would protect Deposits if Home Capital goes bankrupt

Posted By Robb Engen | May 10, 2017

Canada has not seen a bank failure since Security Home Mortgage Corporation, a Calgary-based company, went bankrupt in 1996, putting $42 million in bank deposits at risk.

Two decades later we have another mortgage company, Home Capital Group, teetering on the brink of bankruptcy. Deposits at Home Capital were expected to fall to $192 million this week, down 90 per cent from the roughly $2 billion it held at the end of March. To stay afloat the embattled company took out a $2 billion lifeline (at a punitive interest rate) and suspended its dividend.

It truly is a run on the bank, and clients of Home Capital, which includes subsidiaries Home Trust and Oaken Financial, are concerned about their deposits. Should they be? Perhaps not. Home Trust is a member of Canada Deposit Insurance Corporation (CDIC), which handled the Security Home Mortgage Corporation collapse in 1996 and restored client deposits within three weeks.

But clients aren’t taking any chances. As Rob Carrick pointed out on Twitter, even GIC deposits are being redeemed early:

✔ @rcarrick Am surprised at the number of people who say they’re considering paying a penalty to redeem CDIC-protected GICs from alt banks, trusts etc.

Rob Carrick

10:26 AM – 8 May 2017

Graduating from College? Your financial future starts now

Posted By Financial Independence Hub | May 8, 2017

By Jackie Waters

Special to the Financial Independence Hub

Graduating from college is a huge milestone. You’re now ready to start your career, and you’re excited about getting a house or apartment, a car, a new work wardrobe, and more. But all of those things cost money. And don’t forget repaying student loan debt, insurance premiums, utility bills, food costs, and a long list of other expenses. Since you’re facing these new expenses, it’s essential to create a solid financial plan.

Make a budget and manage your debt

Experts recommend starting your monthly budget by thinking of the “50-30-20” rule. After receiving your first paycheck, you’ll know your net income, which is how much you receive after paying taxes and insurance premiums. From your net income, put 50 per cent towards needs such as rent, utilities, and food; another 30 per cent towards non-necessities or “wants;” and the final 20 per cent towards debt repayment and savings. However, if your student loan debt is substantial, flip the percentages so that 30 per cent goes towards debt repayment and savings, and 20 per cent goes towards wants.

Student loans are usually broken up into several loans with varying interest rates. The best way to tack them is to pay off the loans with the highest interest rates first. Pay the minimum towards the balances with the lowest interest rates, and make larger-than-the-minimum payments on the loans with the highest interest rates. “The biggest mistake you can make is paying the minimum into each loan and waiting until you make more money when you’re older to deal with them,” warns Time.

Look to the future

Life is full of unexpected surprises, so an emergency fund is crucial. If your car needed a major repair, if your laptop needed replacing, if you lost your job – what would you do? If you have an emergency fund, you’ll be able to pull from there instead of from your monthly budget. People often face going into debt because they have no way to cover unexpected expenses. To prevent this from happening to you, plan for the unexpected by putting a small amount of each paycheck into a savings account.

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