First Home Purchasing a Time for Seeking Mortgage Advice

Home purchasing is still, for most, the first step in wealth accumulation and management.  Wednesday's Globe and Mail special information supplement on Canadian mortgages stated the case quite clearly: "A first home can create tax-free wealth."

"We're still at historically low interest rates, and we're in a declining rate environment," according to TD Canada Trust's V.P., of Real Estate Secured Lending, Joan Dal Bianco.  Ms. Dal Bianco points out that, "compared to rent, it is quite feasible to get into the housing market."  Indeed, in all but the most competitive rental markets, most non-apartment building rentals, house rentals, townhomes and semis etc., will rent out for more than it would cost with a 5% down payment to carry a mortgage on the rental property.

However, before making a home purchasing decision prospective first-time purchasers should consult an experienced Canadian mortgage broker - just as they would engage an experienced realtor - for wise counsel.   Buying a first home is a big life event," Ms. Dal Bianco notes. "It's important for first-time homebuyers to know what they're willing to pay before they get emotionally attached to a home."

With a wide variety of mortgage plans making home purchasing available at an earlier life and career stage for individuals' or couples' who would otherwise be renting, it is important for these first-time homebuyers to seek professional advice regarding the best available products and strategies for making and paying for what is likely to be their largest single lifetime investment.  One mortgage specialist cited by The Globe & Mail commented particularly on relatively new mortgage products with 30 and 40-year amortization rates.  These new mortgage products are increasingly being utilized to move from renter to homeowner earlier than was possible when amortization periods were fixed at a 25-year maximum.  "Increasingly, you see more first-timers take 40-year amortizations, but set up their payments based on a 25-year amortization, Lisa Luinenberg, president of Cortgage Centre Canada observed.  "This avoids higher interest costs, but provides the option of reverting to the lower 40-year paymnent level if something unexpected happens."

The Globe and Mail's helpful survey of the ins-and-outs of the current Canadian mortgage market underscores how important the advice of an experienced mortgage broker is when you are confronted with, if not the biggest, than the first big investment decision of your life.