Buying your first home in 2019? You’re in luck because you’ll get help for your down payment now.

For first-time home-buyers saving a down payment can be a challenge. Starting on September 1 2019 the federal government will help would-be homeowners by supplementing their down payment with an interest-free loan. I believe this will have a significant positive impact for first-time home buyers especially in the Guelph, Kitchener/Waterloo/Guelph area, where home prices are below the maximum purchase price of about $565,000. 

How does it work?

If you have a combined family income of under $120K the federal government will loan you up-to-10% of the purchase price in a down payment. If you’re buying a house for $500,000 and you have $50,000 already saved up, you could be eligible for another $50,000. The cost savings on your mortgage payment would be about $250/month. 

The loan will be repaid when you sell your home or redo you mortgage in the future. In the meantime, it will also help you get into the housing market.

Should I wait until September to get pre-approved?

Don’t wait to get pre-approved for a mortgage. You want to ensure that when the program starts, you’re financially ready to buy a house. Remember not to trust those on-line 60 second mortgage pre-approval gimmicks most banks have. It’s just a lead generation tool for them (yes you’re viewed as a lead, not necessarily as a client). You’ll want to connect with us so we can go through a real mortgage discussion, and work with someone who knows what they’re doing. At The Mortgage Centre, my team has completed over 10,000 mortgages (PHEW!). We love helping people and doing a great job.

What’s happening with interest rates?

Bond yields influence fixed-rate mortgages, while the overnight lending rate impacts the prime rate, and hence variable rate mortgages. We’ve seen stability in variable-rate mortgages, while fixed rates are on their way down! 

How do you know if you’re a fixed- or variable-rate client? The answer is, “it depends”. Long-term, in most cases, you end-up saving more interest with a variable-rate mortgage, but most first-time home buyers prefer the stability of a fixed rate. The rate differential between fixed- and variable-rate mortgages is so slight that locking-in for another five years is a sound decision. 

I also have clients who go from two-year term to another two-year term. To their surprise this strategy no longer works as we’re in an inverted yield curve environment, which means long-term rates are lower than short-term rates. Why? Because the prospect for a down turn in the economy in the next couple of years is forecasted. 

Remember, mortgages are complicated these days. Work with a professional who knows what they are doing!