How much can they afford? You can provide greater insights around affordability Canadians place high value on homeownership, but recent changes to mortgage rules may have some firsttime buyers concerned that home ownership is beyond their reach. However; you can provide valuable insights in those conversations about how much your clients can afford and what options are available to them. First-time buyers are often looking for more from their REALTOR® than help finding a new home. Staying well-informed about the options contributing to responsible homeownership will help you build lasting relationships. Here are some of the options you can bring to the proverbial ‘kitchen table’ conversation. Mortgage insurance Mortgage insurance is required by most lenders on all high-ratio mortgages (less than 20 per cent down payment). This insurance protects lenders from financial losses in the event that the homeowner defaults on their mortgage payments. It also allows qualified homebuyers to purchase a home with as little as five per cent down. As a result, lenders are able to offer the same competitive interest rates as they would offer to borrowers with more equity. Changes to mortgage rules in July 2012 reduced the maximum amortization period from 30 to 25 years. This may lead some prospective homebuyers to think they can’t yet afford a home. But, according to Genworth Canada, over 80 per cent of Genworth-insured homeowners who qualified for a 30 year amortization would have qualified at 25 years. While this shorter amortization requires larger monthly payments, the benefits of building equity in a home sooner, or taking advantage of a good opportunity when it presents itself, can far outweigh the higher monthly costs. There are also other benefits that come with mortgage insurance such as rebates for buying energy-efficient homes, making energy-efficient upgrades or for undertaking home improvements upon purchase. Another benefit is access to homeowner assistance programs and, exclusive to Genworth Canada, access to a Homebuyer Privileges Program, which provides discounts with select retailers across Canada. Government incentive programs While mortgage insurance makes purchasing a home with as little as five per cent down possible, the cost of
24 | Royal LePage Leading Edge | 2013
We’re pleased to announce that Genworth Canada is now Royal LePage’s preferred supplier for mortgage insurance. Genworth Canada is the largest private Canadian mortgage insurer. Through this new relationship, Royal LePage REALTORS® will have access to innovative tools and resources to help educate homebuyers, expand their sales potential and add value to their client relationships.
homes in some cities makes it difficult to save even that amount. Recognizing the challenges faced by first-time buyers, and the importance of enabling responsible homeownership, the Government of Canada offers a number of incentives to help buyers with their down payments. Here are some of the most popular: • Home Buyers’ Plan (HBP): allows eligible homebuyers to withdraw up to $25,000 tax-free from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home.
