Planning For A Mortgage
Everything you need to know before applying—and how a mortgage professional can guide you every step of the way.
Purchasing - When Buying a Home is a Good Idea
Purchasing a home is a major life decision—and one of the best investments you can make. Instead of paying rent and building someone else’s equity, homeownership helps you invest in your own future. For self-employed individuals or those with non-traditional income, equity plays a key role. Most Canadian B lenders require about 25% equity, though some programs allow borrowing up to 80% of your home’s value.
It will be yours
The freedom of owning your home cannot compare to the restrictions that renter’s experience. You can paint the walls any colour you like, hammer a nail in any wall, decorate a nursery, landscape the yard, anything you like!
Lifestyle
Homeowners are different from renters. When you live in a neighbourhood or complex that is primarily owner-occupied, your neighbours, like you, have invested in and care about their property. Naturally, they are willing to invest time and money and effort to improve their property and community, which in turn, improved the value of your property.
Freedom from rent
Over time rents tend to rise. If you have a fixed-rate mortgage, your payments of principal and interest remain the same. Imagine how much rent might be in ten, fifteen, or even thirty years from now? Which makes more sense?
Build Equity
Rental payments are gone once you have made them. But, with each mortgage payment, you are buying something tangible, building up equity in your home. The longer you own the home typically the larger your equity.
Keeping up with inflation
A home is an investment that helps you keep up with inflation. Real estate has historically kept pace with and usually appreciates faster than the rate of inflation.
Stability
As long as you make your mortgage payments on time, you can live in your home for as long as you wish. Your landlord will not have control over the sale of your home.
Security of Retirement
Unlike rent which goes on forever, the mortgage on your home will be paid someday, providing you with rent-free living for your retirement.
Leveraging
When you purchase your home, you are leveraging your money. With as little as 5% down, you can acquire 100% ownership, a great return on your investment.
Payback on Improvements
A renter typically gets no financial benefit from any of the improvements they make on the property, either to the home or yard. But as a homeowner, you can realize some or even all of the costs (and maybe even a profit) from improvements when you sell your home.
Trade Up Value
Even if your first home isn’t your dream home, you will be working your way up to it. With appreciation and the possibility of a return on your improvements, it may provide you with enough equity to make a down payment on your dream home later.
Investment property
For some, second single-family homes or condominiums are proving to be good income investments and tax shelters. You will be realizing profits and tax benefits from renters who may not know the benefits of owning a home.
More Space
Both indoors and outdoors, you will probably have more space if you own your own home. Even moving to a condominium from an apartment, you are likely to find you have much more room available – your own laundry and storage area and bigger rooms. Apartment complexes are more interested in creating the maximum number of income-producing units than they are in creating space for each of the tenants.
Forced Savings
Some people are just not good at saving money and a house is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates. Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate. Over time, history has shown that owning a home is one of the very best financial investments.