Posted by: Vince Gaetano
Check out this article in the Globe and Mail that discusses in detail what buyers are doing to take advantage of record-low interest rates. It is key to keep your financial security in mind while making the most of such low interest rates and this article provides useful tips and strategies on how to do so if you are planning on making a home purchase.
1) Stick to your goals, not the lender’s: Do not always go for the maximum amount that your lender will approve. Keep your own personal budget in mind and stick what you know you can afford. You tell yourself how much you can borrow.
2) Don’t skimp on the down payment: It is wise to put more than a 5% down payment on a home to minimize your risk. Putting at least 20% will also save you the cost of Canada Mortgage and Housing Corporation mortgage insurance.
3) Plan on an interest rate hike: The best way to take advantage of low rates, and to be prepared for their expected rise, is to make payments equivalent to what a higher rate, say 5 per cent, would demand from the get-go. There’s no use in worrying about where interest rates are going to go. The focus should be on getting rid of your debt.
4) Give yourself a cushion: Do your best to have a line of credit when you take out a mortgage, and don’t use it. If you have financial discipline, that line of credit is free insurance
5) Talk to your lender: Work with a licensed Mortgage Agent to ensure that you are employing the best strategies with your home purchase and financing.