First Mortgage / Home - Your Best Recommendations | Mortgages | Discussion forum

Hi there! Welcome back. Long time no see!

This is such a big topic, I hardly know where to start.

Here are a few random thoughts that come to mind...

Talk to your insurer before you buy, to find out if there are any special circumstances with the house you plan to buy. In Toronto, for example, many homes have secret waterways underground which are inflating the cost of full coverage considerably due to increased flooding risk. Insurers know all about these risks but general public does not unless they ask.

Consumer protection laws are much better in Quebec so you may have rights there that the rest of us are not aware of.

Be cautious about home inspections arranged and paid for by seller. Some are not scrupulous, and they know who is paying their bill. A really good realtor can be invaluable in helping you through this. You may need an independent assessment. A good realtor will know the reliability of the inspector. If there are consumer laws that pertain to these inspectors you'd be wise to hire someone based on Gatineau side. A friend of mine once bought a house that had been inspected by vendor's inspector. A couple of months later, he had major expenses due to termites and no recourse.

You can negotiate mortgage rates, and this is probably a buyer's market, so you are in luck. I'm sure you have a great credit rating and you are not over-buying, so negotiate away!

You won't "need" one but you might consider talking to a mortgage broker. You never know!

Make sure everything you are promised orally is in writing.

Be aware that the temptation to pay off the house asap will be strong and that you like to travel. Travel may get short end of stick for some years. Avoid family conflict by talking it through in advance. Houses have a way of eating up all your spare cash!

Beware of "double ending" in the realtor business, wherein one agent acts for both sides. If you are lucky, this will be illegal in QC, but I don't know. It's best to have your own agent rather than hooking up with the one who is acting for the seller. Take some time to find a good agent. A good one is worth it; the rest aren't.

Don't buy mortgage insurance unless you must. Buy life insurance instead - enough to cover the mortgage.

Don't rule out houses that are in "as is where is" condition. They are often just estate sales where the executor or power of attorney can't be responsible for what they doesn't know. Just get a good inspection. These often sell at lower prices.

I tend to favour a longer fixed term for the first term of your mortgage, but I know others will disagree. It might cost you more in the long run, but at least you'll know what you're going to have to pay for the first few years when it's usually most difficult; and, then again, you might be glad if rates continue to climb. There is no perfect answer; it's a matter of risk tolerance.

Mortgage life insurance offered by the lender is often not a good deal. One is actually paying a fixed price for declining insurance coverage.

The mortgage life insurance will pay off the remaining balance of the mortgage. It doesn't pay out the original mortgage amount and leave some extra for the estate.

Look carefully at the conditions on those mortgage rates from alternative lenders, like Home Trust. I looked into one attractive rate and the rate was only for insured mortgages. It would be a higher rate if one has a 20% down payment or more and one is not willing to pay for optional CMHC mortgage insurance.

I think that deciding on the term of the mortgage on the basis of projections about future rates is the wrong approach, especially in your first term. Circumstances can change quickly, and NOBODY knows what rates will be in 2 or 3 years. AltaRed believed Bank of Canada when they told us in 2021 that inflation was "temporary". Perhaps he still believes that but I don't.
I believe this decision needs to be made on the basis of personal circumstances rather than projections.
It's good that you haven't maxed yourself out in your budgeted purchase price but I don't think that justifies relying on projections.
At one of the CUs I belong to, I deal with a fellow who is a Certified Financial Planner (at no extra charge). He tells me that he regularly rates applicants for a smaller mortgage than the big banks are willing to give them. They don't like to hear this, of course, but when he goes through their budget and points out that they have little wiggle room with which to enjoy life while paying off the mortgage, they usually agree, set their sights a bit lower, and accept his offer. I think he's right.

Rates were much higher when we bought our house. It took almost ten years before we could see significant improvement in our equity. The timing will be different with lower rates perhaps, but it's wroth looking at. When you have improved your equity significantly, then you can afford to gamble more with rates. At least, that's my philosophy!

Here's another piece of free advice. You say this is your first home. Don't assume you will necessarily move on to another one. Buy something you think you can be comfortable with for the longer term. Let moving up be a real choice, not a necessity.

I hear some real anxiety and uncertainty now, and I empathize. Buying a house and taking a mortgage is scary, no question! But, then, putting up with landlords forever is also a pain and you are now finding it unacceptable.

What to do??

I don't want to give facile answers. Correct me if I'm wrong, but I think what you are looking for is safe answers, or as safe as possible? Given that you never really wanted to buy or be bothered with the nuisances of ownership, but feel you have no choice now, it seems to me you should be looking for the answers with the least risk and also the least fuss. Is that correct?
I'll wait for your answer on that before I go any further because I am still processing what I think might be best for you.

One thing that occurs to me to ask though: do you have Disability insurance apart from what the employer provides, or do you think what they provide is enough? Very important if you are the breadwinner, with or without home ownership.

I wouldn't feel badly about your existing GICs which are now sub-par. They were above par until this year, so you have made good money on them and it averages out. They will come due soon enough, and who knows what the rates will be then?

I wouldn't put too much faith in Airbnb unless you have someone local to be your troubleshooter when you're away. For someone who doesn't want the fuss of home ownership, be forewarned that renting out can create a lot of unwanted "fuss". Every so often you might get a bad tenant and wish you'd never done it. If you're going to do it, take the risks seriously and then decide. The mortgage payments you make while you're away will still count towards your house, unlike when you pay rent.

A good realtor or mortgage broker should be able to tell you how much you're "worth" in terms of mortgage and property tax payments. Yes, a lender may want more particulars now than they once did. They want to know they aren't investing in a dud - either you or the house! They weren't so fussy when we bought, several decades ago.

Hi there. New to the site, but saw this topic and thought I'd add my 2-cents, for what they may be worth. I'll also admit right from the start that I skimmed through the previous posts, so if I re-litigate something, apologies.

First things first though, congrats on being able and willing to dive into the market!

1. For the mortgage term, I'll agree that it really comes down to personal preference and comfort. For our first purchase, we went 5-yr. fixed. It made it predictable for us and fit our personalities (our families also advised nothing different as that's all they'd ever done). When renewal came up I'd learned a bit more and was ready to consider variable, but personal and market circumstances changed so we went back to a 5-yr. fixed term.

2. Independent mortgage broker! For us, that was the best decision we ever made. Got a recommendation from someone at work, had a meet-and-greet to get a feel for the individual, and never looked back. Got the type of service, advice, and help we never would have gotten at any financial institution. Would highly recommend considering finding a reputable one that you'd be comfortable with.

3. We did 20% down and avoided CMHC the first time around. Didn't do the 20% the second time around as that made sense given our circumstances at the time, otherwise would have done 20% again, hands-down.

4. Tying in to #3: Both had mandatory life insurance through work. But I had both of us sign up for additional life and accident/disability coverage through a third-party provider offered through work, but independent of my employment status with that employer. It was cheap to boot too. Find something affordable, but I wouldn't skip this.

5. As mentioned, avoid having the selling realtor also be your realtor. When we were purchasing the second time around, a lot of the listings we were interested in were being represented by an agent that had been recommended to us. We decided to get a different agent, though they were from the same brokerage.

6. I'd personally avoid the headache of Airbnb and/or of being a landlord. I have family members and friends who have been or currently are landlords, and their experiences have put me off the idea for life. But, as all decisions are, it's entirely a personal one.

Best,

Congratulations on finding a real estate broker you think you can work with! That's a significant step. It sounds like you have someone who is in the business for the long haul and will appreciate referrals from satisfied customers later.

I must have misunderstood our post above #11. I thought you had said you only had life insurance, not disability. Sorry.

I think it's the "unexpected" that can be so scary on buying a home, especially a first one. But it sounds like you have money squirrelled away for that if needed. I think you're about as well prepared as one can be.

I'm surprised the condos are as pricey as the houses, but every market is different.

I think a duplex will be a lot easier to rent out than a basement apartment, if it is financially possible. Most people dislike living in basements. But the rental market is tight right now, at least around here.
I think buying something with rental potential makes sense, but I would suggest you live in the house a little while first and see if that's what you really want if you don't "have" to. See how much of your time the house takes up and how you will mange the rental. When you have a house, there is always something in it that needs your attention!
If you buy a duplex, that pretty much commits you to renting.

I don't have anything more to add right now. Let us know how you get on.

If one can afford a "forever home" from the get go, I dont see any reason to have a "starter home". That only makes the real estate agents, lawyers, home inspectors rich...