Date Posted: April 4, 2023
Q: Now for another mortgage minute with Frank Napolitano. He's here to answer some frequently asked questions when it comes to mortgages and the housing market in our city. Morning, Frank. Good morning. All right. Let's get right to it. The budget comes out today, so we often will see if there's anything in there. And we're asking, are there any housing or mortgage changes coming that might help young Canadians who aspire home ownership?
A: We hope there is. We're not confident that there is. We've been lobbying the government association for many, many months. Maybe increasing amortization to 30 years for first time homebuyers would be a nice start, especially with the interest rates as high as they are. But I'm not so sure, or at least we feel like it might not be in this budget. I know that the new home savings plan is out where, you know, a young Canadian will be able to put $8,000 away every year, up to $40,000, and have that as a down payment. But really, there's already a TFSA that they can use. There's already the RSP that they can put money in. So, I'm not sure that that one moves the needle in any way. I think what we need is hopefully interest rates to come down as inflation starts to temper and maybe a 30-year amortization would be a good start for the government. Help us out on.
Q: With the cost of everything going up. We've accumulated some credit card balances and we need a new car. Our bank that we have the mortgage with has turned us down as we missed a couple of credit card payments recently. Our current mortgage is at 2.09% and has two years left. We don't want to break that mortgage. Are there any other options for us?
A: There are, again, just because one bank turns you down, the bank that you have your current mortgage with doesn't mean that another lender wouldn't say yes, especially if you've just got some minor blips on your credit history. If you've got the equity in your home, which many people that have in this case, it sounds like they've got, they’re three years into their purchase, into their home.
Q: My husband lost his job in 2020 and we had no choice but to file a consumer proposal as our debts got out of control. He has since found a better job, and we have one year left to pay off our proposal. But we just received an inheritance, and we'll be paying it off. And we will have funds left over for a down payment towards a house. Will we be able to qualify?
A: It's tough. If the down payment is significant enough, they probably will. They would need a minimum of 20% down. The way it works with the consumer proposal very similar to bankruptcy. Bankruptcy, your debt is just wiped. On a consumer proposal. You agree to pay a certain percentage of it. So, they'll look at your income and say, you're right, you're in over your head. But you should be able to pay 30%, though the creditors might say, give us 30% of what you owe us over a five-year period kind of thing or four-year period.
Q: Is it better off to wait if waiting is an option, then to let those two years pass, build up your credit? If I mean, whether you have the 20%?
A: Well, if you have the 20%, it's a crystal ball at that point. Like do you want to buy a house now. Do you want to continue to rent? Is the option where you're living now still available, or do you have to move? Many factors come into play, but like I don't know what, you know, whether houses are going to be worth 20% more or 5% less. Interest rates should be lower a year or two from now, so maybe waiting a year might be worth it because then at that point the interest rates are back to kind of normal. So, it all depends on some people just are really anxious to be in homeownership because they feel every year they wait, it gets tougher and tougher.
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