The new changes that have been put into motion by the Canadian Minister of Finance will have a significant impact on first-time buyers. The impact is the limit on a first-time home buyer’s borrowing capacity.
In Guelph and the surrounding area, most first-time home buyers choose to purchase a townhouse condo. Most “nice” detached, free-hold homes are out of the price range of a first-time home buyer. I believe that the average price of a detached home in Guelph is over $350,000.
You can purchase a “nice” town house condo in Guelph for approximately $225,000 – the condo fee is on average $200/month, and property taxes would be approximately $2800 per year. The average household income to support a mortgage with 5% down is approximately $55,000 in this scenario (without any household debt). Under the new lending guidelines, with a decreased amortization to 30 years from 35 years, the household income would need to be approximately $5000 more per year. Big deal? Actually it is. What I’m finding in my business is that many first-time homebuyers require two jobs just to carry a mortgage on a decent home. Given the country is in a recession few employers are giving their employees pay raises.
I believe expectations will change among first-time buyers on what they can afford to purchase – and there will be a change in expectations on what sellers ought to sell their home for.
So here’s one important point to consider. If you know someone who is looking to buy a home in the next six months ensure they speak to a mortgage broker, who has the experience to help. In this market – experience counts.
No comments:
Post a Comment