Family Formation & Housing

For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.

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.

It’s still possible for Singles to buy their own home: Here’s how

Posted By Financial Independence Hub | May 4, 2017

By Marc Kulak

Special to the Financial Independence Hub

Buying a home can be daunting, especially for people who want to buy on their own. And that number is growing. In fact, according to a survey we at TD Canada Trust recently conducted, single homeowners represent a quarter of Canadians buying or intending to buy a home.

A large part of this trend is driven by unexpected life circumstances: Canadian homebuyers who are divorced (69%) or widowed (35%) more likely to purchase solo, along with a growing number of single Canadians who say they’ll go it alone (67%).

From personal experience, I know that being creative –- and realistic –- on ways to afford to own a home is going to get you in one faster. Here are a few ideas to get you started:

Buying solo doesn’t mean living solo

Just over one-quarter (27%) of single Canadians who have or intend to purchase a home alone would consider having a tenant to make solo home ownership more affordable, while just under one-quarter (23%) said they would consider a roommate. Having rental income can help pay down the mortgage principal more quickly. Be sure to qualify for your mortgage without rental income so you have flexibility if you decide a roomie or tenant is not for you.

Think beyond the picket fence

Before you make any commitments, do your research and seek out professional financial advice to know what you can afford. For example, you can check out the TD Mortgage Affordability Calculator online to see what budget works best for your situation. Remember, it’s not just a mortgage payment you have to manage – other costs including property taxes, insurance, and ongoing maintenance will add up. Your mortgage payments should be low enough so you can take care of all your monthly expenses, meet your savings goals and still have some wiggle room. It’s also important to have slush funds set aside to cover emergencies and household maintenance.

Protect your investment

The Long & Short of it: Long vs. Short-term Mortgages

Posted By Robb Engen | May 1, 2017

Interest rates have nowhere to go but up. No doubt you’ve heard this line if you’ve bought a home or had to renew your mortgage at some point in the past decade, followed by an eager banker or mortgage broker urging you to “lock in” now.

Most homeowners in Canada prefer fixed-rate terms for predictability and peace of mind, with five-year terms being the most popular.

Yet despite its popularity, the five-year fixed rate is likely the least advantageous term for borrowers.

Going Long: 10-Year Mortgage Term

For those looking for greater protection against (eventual) rising interest rates, a longer term is worth a look. A 10-year fixed rate mortgage today can be had for as low as 3.69 per cent.

Another reason to consider a longer mortgage term: a safeguard against the possibility of a housing crash. What happens if prices fall 20 per cent or more in the next few years, wiping away your home equity before it’s time to renew? A 10-year term, while more expensive than a shorter term, does offer a double-dose of protection in case prices fall or interest rates rise substantially. Continue Reading…

The stress of moving sideways in high-priced housing markets

Posted By Financial Independence Hub | April 26, 2017

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Think breaking into the Toronto real estate market is tough? Try making a lateral move; there’s a whole new crop of challenges facing those looking to cash in on their home’s equity, according to a recent bank report.

While much has been made over the plight of first-time buyers, they’re not the only ones feeling the pinch. Home owners with a long-term position in the market and who have become considerably house-rich — namely baby boomers — are also put off by the market’s challenges.

And while this generation has received criticism for hunkering down in their family homes rather than adding them back to the supply of low-rise, detached housing, the fact is many would love to cash out: but they face the same hurdles as their millennial counterparts.

According to a recent poll conducted by CIBC, two in five Canadian homeowners planning to sell their homes are poised to profit on their home sale — but 62% are reluctant to put it on the market due to the high cost of buying another home.

“In today’s market, homeowners are facing a conundrum as to whether to buy, sell or stay put,” says David Nicholson, vice-president of CIBC Imperial Service. “Buying or selling your home is one of the biggest decisions you’ll make. That’s why it’s important to make the decision for the right personal and financial reasons and see past the noise in the marketplace. Evaluating the pros and cons as part of an overall financial plan can help you decide what’s best for you.”

Sixty-seven per cent of boomers (aged 55 and up) indicated they wished to downsize to a smaller home, condo or nursing / retirement home.

The search for affordable options

Most downsizing boomers aren’t looking to acquire another million-dollar detached property, but recent price surges within the condo market may leave them feeling as though their options are limited. The Greater Toronto Area market has infamously experienced a 33% year-over-year price increase, and much of that double-digit growth has spilled over into the condo segment.

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