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Making the leap from lifelong renter to homeowner is exciting but it can also be stressful and time-consuming.  Homeownership comes with a ton of responsibility but it results in finally having a place to call your own. A place where you can settle, make all the choices and plant roots.

Here are some tips to help make the transition from renter to owner as smooth as possible.

Create a Detailed Budget

Entering homeownership for the first time is expensive and a big financial change for most. You need to know where your money is going every month. Create a detailed budget where you outline every monthly cost and be sure to leave some room for those pesky costs that pop up every month.

Your budget will guide most of your monthly spending. The more detail you include, the less chance you have of being surprised. If you come under budget some months you can consider making a larger mortgage payment, which will go towards the principal.

Learn to be Handy

Renting can be nice and breezy. When your faucet breaks, you call your landlord and they call the plumber. When you have an electrical problem, you call your landlord and they call the electrician.

Owning a home means being responsible for every broken appliance, leaky faucet and every part of a home that requires maintenance. Learning to be handy and being able to make small repairs can save an owner a lot of money and get your home running at optimal capacity quicker.

There are a ton of DIY classes people can take to improve their skills and knowledge. Home Depot and community centres tend to offer these classes in the GTA.

Do not Overlook…

An important tip for homeowners is to stay organized. If you are upgrading the size of your home, you will have more space so use it wisely. This doesn’t mean acquiring more stuff, but instead, make sure you keep your storage spaces organized and don’t let your garage devolve into a room full of tools and boxes of old clothes.

There might not be a bigger lifestyle change than the one that comes with becoming a homeowner for the first time. Go into the situation with a plan and do your best to execute that plan every month to ensure the transition works and to minimize stress.

All of Canada’s big banks, from Toronto-Dominion, Royal Bank of Canada, Canadian Imperial Bank of Canada, and Bank of Montreal, have significantly raised their mortgage rates. This not only makes it more difficult for Canadians to secure a mortgage, it also makes it more expensive for those looking to renew their mortgage or refinance their mortgage.

Toronto-Dominion Bank was the first to increase its mortgage rates. In late April, TD hiked the posted rate for a five-year fixed mortgage to 5.59% from 5.14%. That represents an overnight increase of 8.7%. The bank also raised its fixed rates on two-year, three-year, six-year, and seven-year home loan rates.1

A few days later, on April 30, Royal Bank of Canada followed suit, raising the posted rate for a five-year fixed-rate to 5.34% from 5.14%; a 3.9% increase. Explaining the unexpected increase in mortgage rates, Royal Bank spokesperson AJ Goodman said in an email that the bank takes various factors into consideration, including “funding costs and market conditions.”

Not wanting to be left behind, the Canadian Imperial Bank of Commerce raised its five-year fixed-rate mortgage on Tuesday, May 1 by 15 basis points, from 4.99% to 5.14%.2 Bank of Montreal was the fourth of Canada’s big banks to increase its mortgage rates. Effective Thursday, May 3, BMO raised the rate on its posted five-year fixed mortgage to 5.19% from 5.14%. Like the other banks, BMO raised the rates on all its fixed-rate mortgages; the rate for a one-year mortgage popped to 3.44% from 3.29% and the rate for a 10-year mortgage advanced to 6.5% from 6.3%.3

The surprising rate hikes are not bad news for everyone. Banks generally give their preferred customers, those with good credit scores, better terms than their advertised posted rates. But if you’re self-employed, have no reportable income, bad credit, or no credit, you can forget about getting preferred treatment from Canada’s big banks.

Why Are Mortgage Rates on The Rise?

The Bank of Canada has been raising its key lending rate, but it’s been doing so in a slow, methodical way. The Bank of Canada understands that Canadian’s are heavily indebted, and the Canadian economy is not exactly on fire.

Unfortunately, the Bank of Canada’s overnight lending rate isn’t directly responsible for all of the borrowing costs that banks pass onto customers. Fixed-mortgage rates, the kind most Canadians have, rise and fall in step with the bond market; and the bond market doesn’t care about how Canadian families will struggle if rate hikes increase.

Right now, bond rates are rising, which is why Canada’s traditional lenders have increased their posted five-year fixed mortgage rates. Toronto-Dominion led the pack with the largest increase: 0.45 of a percentage point, which is a lot when it happens at once.

The Bank of Canada would never do that to Canadian borrowers. In fact, for the remainder of 2018, many economists think the Bank of Canada will increase its benchmark rate by just 0.25 of a percentage point.

Where the Bank of Canada looks at factors such as the health of the economy and indebtedness when it looks at raising rates, the bond market is a reflection of what investors think about the economy—not what the country needs.

Rates on the Government of Canada benchmark five-year bond has risen to a seven-year high of around 2.19%. To put that into perspective, at the start of 2018, the five-year bond yield was at 1.89% and on December 1, 2017, it was at 1.69%. Fixed-rate mortgages tend to move in step with government bond yields of a similar term.

What Raising Rates at Big Banks Means for You

A lot of Canadians are going to get hit hard by the big mortgage rate hikes announced at Canada’s big banks. Of all of the mortgages in Canada, 75% are fixed and susceptible to mortgage rate hikes that are impacted by the bond market.

That 75% of fixed-rate mortgages impacts Canadians from all walks of life. A full 90% of homeowners under the age of 35 have a mortgage; up from 85% in 1999. The number of homeowners aged 55 to 64 with a mortgage has also increased, to 46% from 34%.

Homeowners with a fixed-mortgage will face even more economic headwinds from rising rates if they also have a big balance on their home equity line of credit (HELOC); this allows them to borrow against the equity they’ve built up in their property.

The big question is, how will those with fixed-rate mortgages or financial products impacted by rising bond yields handle the big rate hikes? Because we know more rate hikes are coming.

A lot of Canadians are in debt and rising interest rates could stretch their budgets. Canadian household debt is at record levels. Not including mortgages, the average debt per person in Canada stands at $22,837.4

How Canadalend.com Is Helping Canadians

It doesn’t matter whether you’re looking to renew a mortgage, refinance a mortgage, get a first mortgage, second mortgage, or take out a HELOC, your budget is going to be significantly impacted by rising mortgage rates. But only if you use a traditional lender. The licensed, independent mortgage professionals at Canadalend.com can help you skip the rate hikes.

As the nation’s leading low-cost private mortgage solution provider, Canadalend.com has access to hundreds of different private lenders. Where big banks are federally regulated and need to follow strict lending rules, the private lenders Canadalend.com works with are not bound by the same rules.

Many of these lenders specialize in providing mortgages and other financial products to clients that have bad credit or no credit, are self-employed, or have declared bankruptcy. That means Canadalend.com has a lot more flexibility when it comes to helping you find a mortgage or any other financial product, at the best rates with the best terms.

If you are interested in finding out what kind of mortgage you qualify for contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Sources:

1. “TD Bank raises 5-year posted mortgage rate, Royal Bank also upping rate,” Financial Post, April 27, 2018; http://business.financialpost.com/pmn/business-pmn/td-bank-raises-5-year-posted-mortgage-rate-royal-bank-also-upping-rate.
2. “CIBC follows TD, RBC to raise its five-year fixed mortgage rate today,” Financial Post, May 1, 2018; http://business.financialpost.com/news/fp-street/cibc-will-raise-5-year-fixed-rate-mortgage-rate-by-15-basis-points-on-tuesday.
3. “BMO latest Canadian bank to hike mortgage rates,” The Globe and Mail, May 3, 2018; https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-bmo-latest-canadian-bank-to-hike-mortgage-rates/.
4. “Canadian household debt hits $1.8 trillion as global watchdog warns of risks to economy,” Financial Post, March 13, 2018; http://business.financialpost.com/personal-finance/debt/canadian-household-debt-hits-1-8t-as-report-warns-of-domestic-risk.

Whether you have a good or bad credit rating, you may still find it difficult to secure a mortgage from one of Canada’s traditional lenders. That’s because Canada’s big banks and credit unions take a lot of factors into consideration, such as your credit score, debt ratio, down payment, and annual income, before approving a mortgage loan. They want to ensure you are good with money and that there is a high chance you’ll be able to pay the mortgage back.

Unfortunately, many Canadians don’t meet the big banks’ requirements because each person’s financial situation and history is different. And this is getting in the way of their home ownership dreams.

In fact, if you don’t meet the big banks’ loan requirements in Ottawa, it does more than just hinder your chances of getting a mortgage with the best rates and terms. It could also make it difficult to get a loan from the bank, make it more difficult to refinance, and make it harder to get a home equity loan.

So, what happens if you don’t meet the banks’ requirements? Does it mean you can’t secure a mortgage? That’s where private lenders come in. Canadalend.com work with hundreds of different private lenders, many of whom specialize in helping those denied by the big banks secure a mortgage.

Ottawa Is One of the Top Real Estate Markets to Watch

It’s a great time for people to consider getting a mortgage or other financial product from a private lender. Vancouver and Toronto may be capturing all the attention when it comes to Canadian real estate, but the fact of the matter is, Ottawa is home to one of Canada’s strongest and steadiest real estate markets.

This is true for a number of reasons. First, the federal government is a huge employer, helping keep the Ottawa real estate market strong. On top of that, the city’s technology industry is red hot, online retailer Shopify is expanding the size of its headquarters, and major retailers are expanding into Ottawa.

Second, the tight rental market makes purchasing a home in Ottawa a much more attractive option. Because of the median price for detached homes and condominiums, the new stress test on mortgages implemented by the federal government will have less of an effect on Ottawa home buyers.

In a market like Ottawa, affordability isn’t nearly as much of an issue.

Mortgage Options for People in Ottawa

If you’ve been turned down by the banks for a mortgage, or any other financial product, because you don’t meet their requirements, talk to the mortgage professionals at Canadalend.com. We offer a full range of mortgage financing solutions for those looking to refinance or renew, take out a second mortgage, and get approved for a construction or renovation mortgage, as well as provide a variety of other commercial products for business owners.

We offer some of the lowest mortgage rates in the country. How can Canadalend.com beat the major banks? For starters, the big banks are federally regulated and need to follow strict lending rules. Canadalend.com works with private lenders who are not bound by the same lending rules. As a result, we have a lot more flexibility when it comes to helping you find the mortgage or other financial product you deserve.

Canadalend.com also works with hundreds of different lenders. This makes it possible for Canadalend.com to negotiate the best mortgage with the best rates and terms. This is in sharp contrast to any of the big banks which only try and sell you their financial products, whether it’s in your best interest or not.

Canadalend.com Mortgage Service for Ottawa Residents

Below are some of the mortgage and financial products we provide.

• Private mortgages in Ottawa
• Second mortgages in Ottawa
• Residential mortgages in Ottawa
• Mortgages for those in Ottawa with unreliable income
• Mortgage refinancing in Ottawa
• Mortgages for those in Ottawa with bad credit or no credit
• Commercial mortgages for businesses in Ottawa
• Home equity line of credit (HELOC)
• Mortgages & tax arrears in Ottawa
• Debt consolidation in Ottawa
• Home equity loans in Ottawa
• Mortgages for those in Ottawa who are self-employed

Canadalend.com, Helping Ottawa Residents Secure Mortgages

Applying for a mortgage can be stressful. If you have been turned down by traditional lenders or think your mortgage application will be, call the licensed, independent mortgage professionals at Canadalend.com.

Canadalend.com is the nation’s leading low-cost mortgage solution provider. Because Canadalend.com agents are independent, they are able to draw from hundreds of banks and lenders to help you find the mortgage best suited to your financial and lifestyle needs. Many of these lenders specialize in providing mortgages to clients that have either good or bad credit, are self-employed, have an unreliable employment history, bruised credit, or even declared bankruptcy.

If you are interested in finding out what kind of mortgage you qualify for contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Life changes and your personal finances tend to change with it. So much of your life is tied to your finances so when either a positive or negative shift occurs you need to re-evaluate your entire budget.

For borrowers who experience a change in their financial situation—new job, promotion, unemployed, come into money—they need to understand how they can adjust their home equity loans and mortgages or what strategies they can adopt to ensure their loan terms match their financial situation.

Redo your Budget

Once a change in your personal finances is a distinct possibility, sit down with your budget and review each expense against your new monthly income. This will give you an idea as to whether you need to pay less towards your loans per month or if you can pay more towards the principal amount of the loan.

Notify your Lenders

As soon as you know the details of your new financial situation, make an appointment to speak with your lender to discuss options and determine if you need to negotiate different terms. Depending on the lender (traditional or non-traditional) you could have options as a borrower. Nothing can change unless you initiate the conversation with your lender. In most cases, they are happy to work with you to ensure you can pay your loan or loans.

Your Mortgage and Loans

If you find yourself with more disposable income per month, then you could endeavor to pay off your loan faster. If you lose your job or find yourself in a situation where you need to support a dependent or pay for post-secondary education, then you might be able to negotiate new loan terms which will improve your cash flow. This applies for mortgages, home equity loans or a home equity line of credit. The goal should always be to pay the most towards principal but every situation is unique.

Lenders want you to be able to pay your loans so most will work with you to determine a course of action if your financial situation changes.