Purchasing a home isone of the most significant investments and decisions many Canadians will make. However, prospective homebuyers are often faced with choosing between a new or old home. By weighing the pros and cons of each option, homebuyers can make an informed decision that best suits their needs and financial situation. Let’s look at the benefits and drawbacks of new and old homes.

Buying a New Home

Here are the benefits of buying a new home:
Customization – Homebuyers are often drawn to new homes for the ability to customize the space to their liking. This can include choosing finishes and materials and designing the home’s layout and features.
Energy Efficiency – New homes often have energy-efficient features, such as high-performance windows and insulation, leading to lower utility bills and a more sustainable lifestyle.
Modern Amenities – New homes often have modern amenities like smart home technology, high-end appliances, and state-of-the-art security systems.
Low Maintenance – New homes typically require less maintenance than older homes, saving homeowners time and money in the long run.

Here are the drawbacks of buying a new home:
Higher Costs – New homes often have a premium price tag due to the customization options and modern amenities.
Potential Construction Delays – Building a new home can come with unexpected delays due to weather, permitting, or supply chain disruptions, leading to added stress and costs.
Finishing Expenses – New homes are often incomplete, especially those in new subdivisions. They may have unfinished basements, driveways or even lawns. In some areas, you’ll be required to sod your yard within a specified period of time, an expense that you might not have anticipated.
Lack of Established Neighborhood – New developments may lack the charm and character of established neighbourhoods, which can be a disadvantage for those seeking a sense of community.
Limited Land Availability – New homes may be limited to new developments with limited land availability, which can limit options for those seeking specific locations or lot sizes.

Buying an Old Home

Here are the benefits of buying an old home:
Established Neighborhoods – Old homes are often found in established neighbourhoods with history and character. These neighbourhoods often have mature trees, unique architecture, and a sense of community that is difficult to replicate in new developments.
Lower Cost – Old homes can be more affordable than new homes, benefiting those on a tight budget.
Potential Charm and Character – Old homes often have unique features and design elements that can add to the home’s charm and character.
Larger Lot Sizes – Older homes may have larger lot sizes than newer homes, which can provide more outdoor space and privacy.
Here are the drawbacks of buying an old home:
Repairs and Renovations – Older homes may require considerable work to update electrical, plumbing, and other systems, which can be expensive and time-consuming.
Energy Inefficiency – Older homes may be less energy-efficient than newer homes, leading to higher utility bills and a less sustainable lifestyle.
Limited Customization – Older homes may not offer the same customization options as newer homes, which can be a disadvantage for those seeking specific design features.
Potential for Hidden Problems – Older homes may have hidden problems, such as structural issues or water damage, that may not be apparent during the initial home inspection.

Factors to Consider When Choosing Between a New Home and an Old Home

When choosing between a new home and an old home, there are several important factors to consider:
Budget – New homes are typically more expensive than older homes, but they may come with features and amenities that could justify the added cost. Conversely, older homes may require more repairs and renovations, which can add to the overall cost of ownership.
Lifestyle preferences – If you value a sense of community and established neighbourhoods, an older home in an established area may be the better choice. Conversely, a new home may be better if you value modern amenities and customization options.
Energy efficiency – New homes are typically more energy-efficient than older homes, which can result in lower utility bills and a more sustainable lifestyle. However, older homes can be updated with energy-efficient features to improve their efficiency.
Maintenance and repairs – Older homes may require more maintenance and repairs than new homes, which can add to the overall cost of ownership. Conversely, new homes may come with warranties and guarantees that can help offset the repair cost.
Location – New homes are often located in new developments, while older homes may be found in established neighbourhoods. Consider proximity to schools, work, and amenities when making your decision.

Choosing between a new or old home can be a challenging and personal decision for prospective homebuyers. While each option offers unique advantages and disadvantages, it ultimately comes down to personal preferences, budget, and lifestyle considerations. Whether you choose a new or old home, homeownership is a rewarding and vital investment in your future. Talk to us today to discuss whether a new or old home would better suit your needs.

When you’re in the market for a new property, one of the first things you’ll want to do is apply for a mortgage preapproval. This process can help you determine your budget, refine your house-hunting efforts, and give you an edge in a competitive market.

Let’s walk through the basics of mortgage preapproval, how it differs from prequalification, and why it’s important when buying a home.

What Is a Mortgage Preapproval?

A mortgage preapproval is a preliminary assessment conducted by a mortgage lender to determine the maximum loan amount for which a borrower may be eligible. It involves thoroughly evaluating the borrower’s financial background, creditworthiness, and loan repayment ability. Obtaining a mortgage preapproval is an important step in home-buying as it provides a clear understanding of the price range within which the borrower can search for a property.

Preapproval vs. prequalification

While often used interchangeably, preapproval and prequalification are two distinct terms in the mortgage application process.

Prequalification: Prequalification is an initial assessment based on information provided by the borrower. It typically involves conversing with a mortgage lender or a quick online application. The lender reviews the basic financial details the borrower provides, such as income, debt payments, and assets, to estimate the loan amount for which they might qualify. Prequalification gives borrowers a general idea of their eligibility but does not carry the same weight as preapproval.

Preapproval: Preapproval, on the other hand, is a more rigorous and detailed process. It requires the borrower to complete a formal mortgage application and provide the necessary documentation for verification, such as income statements, bank statements, and credit history. The mortgage lender thoroughly reviews and assesses the borrower’s financial situation, creditworthiness, and ability to repay the loan. A mortgage preapproval is a stronger indication of the borrower’s eligibility and provides a more accurate estimate of the loan amount they can secure.

Preapproval vs. approval

Preapproval and final approval represent different stages in the mortgage application process.

A preapproval is a preliminary evaluation conducted by a lender to determine the maximum loan amount for which a borrower may qualify. It gives borrowers an estimate of their purchasing power, allowing them to search for homes within their budget. However, preapproval is not a guarantee of obtaining the loan. Preapproval depends on the borrower’s financial information provided at the preapproval and is subject to further verification and underwriting during the final approval stage.

Final approval occurs when the mortgage lender has thoroughly reviewed all the borrower’s financial information, completed a comprehensive underwriting process, and determined that the borrower meets all the requirements for the loan. This stage typically happens once the borrower has found a specific property and provided all the required documentation to the lender. Final approval gives borrowers the confidence to move forward with the purchase, as it signifies that the loan is officially approved and ready to receive funding.

How to see what you qualify for

To determine what you qualify for in terms of a mortgage loan, you’ll generally follow these steps:

·       Assess your financial situation: Evaluate your income, expenses, and debts to see how much of a mortgage payment you can afford. Now is a good time to calculate your debt-to-income ratio, an important factor mortgage lenders consider when assessing your home loan eligibility.

·       Check your credit report: Obtain copies of your credit reports from the three major credit reporting agencies (TransUnion, Equifax, and Experian). Review it carefully for any discrepancies or errors on your credit report that could affect your creditworthiness. If you find any issues, work to rectify them before applying for a mortgage.

·       Research lenders and loan options: Explore different lenders and loan programs to find the options that best suit your needs. Consider factors such as interest rates, loan terms, and down payment requirements.

·       Gather documentation: Prepare the documents lenders typically require during the mortgage application process.

·       Get preapproved: Submit a formal mortgage application to a lender and provide the required documentation for verification. The lender will thoroughly review your financial information and issue a preapproval letter indicating the maximum loan amount you likely qualify for.

How to Get Preapproved For A Mortgage

Getting preapproved for a mortgage is an important step in the home-buying process, so let’s break down some key details about how to get preapproved even further.

Collect your documentation

Gather the necessary documents that lenders typically require during the preapproval process. These may include:

·       Proof of income: Provide recent pay stubs, W-2 forms, or income tax returns to demonstrate your employment and income stability.

·       Asset statements: Gather bank statements, investment account statements, and other relevant documents to show your savings and assets.

·       Identification documents: Have your driver’s license, passport, or other documents ready.

·       Employment verification: Prepare documents that validate your employment history and stability, such as offer letters or employment contracts.

Know when to get preapproved

Timing is crucial when it comes to getting preapproved for a mortgage. Consider the following factors to determine the right time:

Getting preapproved before you start searching for a home is generally recommended so you’ll clearly understand your budget and can focus your search on properties within your price range. This shows sellers that you are a serious buyer and can give you a competitive edge in a competitive real estate market.

Get your credit score checked

A good credit score is crucial for mortgage preapproval. Once you obtain a copy of your credit report and check it for any errors you can dispute, study your credit behavior to gain insight into what steps you can take to improve your credit score.

If you have significant credit issues, consider seeking guidance from a credit counselor who can provide personalized advice to improve your creditworthiness.

Receive your mortgage preapproval letter

Once you complete the preapproval process, you’ll receive a mortgage preapproval letter from the lender. This letter confirms the loan amount you qualify for based on the lender’s assessment of your financial information. A preapproval letter is a valuable tool when making an offer on a home, as it demonstrates your ability to secure financing.

Understand how long preapproval lasts

It’s important to note that mortgage preapproval has a limited lifespan. Preapproval letters typically have an expiration date, usually ranging from 60 to 90 days. After the expiration, the lender may require updated financial information to reassess your eligibility. Keep track of the expiration date and proactively provide any requested updates to maintain an active preapproval status.

Mortgage Preapproval FAQs

Before seeking mortgage preapproval, ensure you understand the answers to these frequently asked questions.

How long does preapproval last?

The duration of a mortgage preapproval can vary depending on the lender. As briefly noted earlier, generally, preapprovals are valid for 60 to 90 days. After this period, the lender may require updated financial information to reevaluate your eligibility. It’s important to keep track of the expiration date and be proactive in providing any necessary updates to maintain an active preapproval status.

What factors are considered for preapproval?

Mortgage lenders consider several factors during the preapproval process. These typically include:

·       Credit score: Lenders assess your creditworthiness by reviewing your credit score and history. A higher credit score generally improves your chances of preapproval.

·       Income and employment: Lenders evaluate your income stability, employment history, and current employment status to ensure you have the means to repay the loan.

·       Debt-to-income ratio: Lenders analyze your debt-to-income ratio, which compares your monthly debt obligations to your gross monthly income. A lower ratio indicates a lower level of financial risk.

·       Down payment: The amount of money you can put towards a down payment can influence your preapproval, affecting the loan-to-value ratio and the lender’s risk exposure.

·       Assets and savings: Lenders consider your savings and assets to assess your financial stability and ability to handle potential expenses.

Why should you get preapproved by more than one lender?

Getting preapproved by multiple mortgage lenders can be advantageous for several reasons:

·       Comparison of offers: By obtaining preapprovals from multiple lenders, you can compare the terms and conditions, including interest rates, loan programs, and fees. This allows you to select the lender offering the most favorable terms.

·       Negotiating power: Having multiple preapprovals can strengthen your negotiating position when making an offer on a home. Sellers may view your offer more favorably if multiple lenders have assessed your eligibility.

·       Backup options: If one lender denies your mortgage application after preapproval, having other preapprovals in place provides alternative options and reduces the risk of starting the process from scratch.

Does getting multiple preapprovals hurt your credit score?

When you apply for mortgage preapproval, the lender typically conducts a hard inquiry on your credit report. Multiple hard inquiries within a short period can temporarily negatively impact your credit score. However, credit scoring models recognize that borrowers may shop for the best mortgage rates and allow a grace period. Generally, credit scoring models view multiple inquiries made within a 14 to 45-day window as a single inquiry when calculating your credit score. It’s important to be mindful of this timeframe and aim to obtain your preapprovals within the specified period to minimize any potential impact on your credit score.

Can you get denied a mortgage after being preapproved?

Yes, receiving a rejection for a mortgage loan is possible even after you are preapproved. Preapproval centers on an initial assessment of your financial information, subject to further verification and underwriting during the final approval process. There are several reasons why a lender may deny your mortgage application after preapproval:

·       Change in financial circumstances: If your financial situation significantly changes, such as a job loss or a substantial increase in debt, it may impact your eligibility for the loan.

·       Inaccurate or incomplete information: If the lender discovers discrepancies or inaccuracies during the underwriting process, it can lead to denial.

·       Property-related issues: If the property you intend to purchase does not meet the lender’s criteria, such as appraisal issues or title problems, it could result in a denial.

How far in advance should you get preapproved for a mortgage?

The timing for getting preapproved for a mortgage depends on your specific circumstances and preferences. It’s usually a good idea to obtain preapproval before actively searching for a home. This way, you clearly understand your budget and can make more informed decisions. It also gives you a competitive advantage when making an offer, as sellers are more likely to take it seriously if you are preapproved.

It’s important to note that pre-approval letters typically have an expiration date, so keep in mind the validity period of your pre-approval and plan accordingly to ensure it remains active while you search for a home. If your financial circumstances change significantly, you may need to update your pre-approval with the lender.

How long does a preapproval take?

The timeframe for obtaining a mortgage pre-approval can vary depending on several factors, including the lender’s processes, the complexity of your financial situation, and your responsiveness in providing the necessary documentation. Generally, the pre-approval process can take anywhere from a few days to a few weeks.

It’s worth noting that you may expedite the pre-approval timeline if you promptly provide all the required documentation and respond to any requests or inquiries from the lender in a timely manner. Additionally, some lenders may offer expedited pre-approval services or digital platforms that streamline the process, potentially reducing the overall timeframe.

There is a lot of work that goes into preparing your home for sale. You want your property in its finest suit and tie attire to attract as many prospective buyers as possible. If you want your home to sell above the average price, it must ‘show’ as the best unit in the neighbourhood. 

Should You Sell Your House Now Or Wait Till 2024?

How Long Do Most Houses Take To Sell In The GTA?

When’s The Best Time To Sell A House In The GTA?

Selling Your House In The Spring Market

Selling Your House In The Fall Market

What’s The Best Day Of The Week To List A House In The GTA?

Final Words 
Selling your property in the GTA can feel daunting – especially if you don’t have enough time to do your own due diligence. If you can afford to, work with a real estate agent that you trust as they can really help you maximize the value of your home. Your real estate agent will think about who your house is going to appeal to and how you can draw those people to the property based on the way you design it, and position things.  
I repeat – the best time of year to sell your home is when you are ready to sell. If you’re looking for some guidance, you can always book a call with us.  Our goal is to make sure you have an amazing experience that is hassle and stress-free – while getting you the best value for your home that’s possible in existing market conditions. 

Home sales are up.

Home prices are coming down.

Should you jump into the real estate market now?

Surprise, surprise, the Bank of Canada announced another interest rate hike at their latest policy meeting on October 26. We were expecting it. It was like ripping off a band-aid, but you know what? It wasn’t as bad as people thought! 

Many traders were betting on a 75-basis point increase but all we ended up getting was a 50-basis point increase! Still big? Yes. But not as big as we thought it would be! 

The policy rate is now at 3.75%, which yes, is the highest it has been in a while, but in my opinion, this latest increase won’t have the disastrous impact that the news will likely have you thinking when they start publishing their think-pieces. 
Here’s why. 
 

Why the Interest Rate Increase Won’t Make the Market Crash

3 Reasons Why Interest Rate Hikes Won’t Result in a Massive Price Correction 

1.     Lack of Inventory 
We’ve been saying it for a while now, but Toronto is a super low inventory market. There are simply not enough homes to satisfy the needs of buyers in the market. Even now as we enter a more balanced, or even, buyer’s market, there is still little-to-no inventory. In fact, TRREB’s latest numbers for September showed the lowest number of new listings coming to the market since 2002. 

3.    People Don’t Have to Sell if They Don’t Want To
Canada is not in a dire situation of subprime mortgage meltdowns. We’ve learned from the mistakes of others and implemented super strict lending criteria. Canada has some of the most intense regulations for obtaining a mortgage in the world! The chances that a homeowner could default on their mortgage are actually quite low, and even anyone who purchased a home last year when interest rates were low, would have passed the stress test and would be locked into that low rate for at least 3-5 years, before selling. And if you’ve read some of our other blogs, you’d know that 3-5 years is actually the best amount of time to pass before selling. 

The Current Decreases are Just a Mirage 

The pricing softening we are currently experiencing is not a true decline in price. It’s just coming down off the peak of the market. You know, that crazy housing market we were in for the past 2 years? What we’re seeing right now is normal, and although I can’t make any late-night-TV-tarot-card-reader predictions, I can almost guarantee that the way things are going now will not result in a market crash.
 

A Return to ‘Normal’? The State of Real Estate in 2022 

Last year was one for the real estate history books. The pandemic helped usher in a buying frenzy that led to a record number of home sales and a historically-high rate of appreciation, as prices soared by a national average of 19.9% year over year, according to the Canadian Real Estate Association.
 
There were signs in the second quarter that the red-hot housing market was beginning to simmer down. In June, the pace of sales slowed while the average sales price dipped 5.5% below the springtime peak.
 
But just when the market seemed to be cooling, home prices and sales volume ticked up again in the fall, leading the Royal Bank of Canada to speculate: “Canada’s housing market run has more in the tank.”
 
So what’s ahead for the Canadian real estate market in 2022? Here’s where industry experts predict the market is headed in the coming year.
 
 
MORTGAGE RATES WILL CREEP UP

The Bank of Canada has signaled that it plans to begin raising interest rates in the “middle quarters” of this year. What does that mean for mortgage rates?
 
Expect higher variable mortgage rates to come. In fact, according to industry trade blog Canadian Mortgage Trends, some lenders have already begun raising their variable rates in preparation. And according to the site, “Current market forecasts show the Bank of Canada on track for seven quarter-point (25 bps) rate hikes by the end of 2023, with Scotiabank expecting eight rate hikes.”
 
Since September, fixed mortgage rates—which follow the 5-year Bank of Canada bond yield—have also been climbing. Fortunately, economists believe the housing sector is well-positioned to absorb these higher interest rates.
 
The large increase in cash balances that occurred over the pandemic combined with the record-high amount of home equity on Canadian balance sheets, to me, paints a picture of a household sector that can manage the rate shock we’re likely to get.
 
What does it mean for you? Low mortgage rates can reduce your monthly payment, make it easier to qualify for a mortgage, and make homeownership more affordable. Fortunately, there’s still time to take advantage of historically-low rates. We’d be happy to connect you with a trusted lending professional in our network.
 
 
VOLUME OF SALES WILL DECREASE

A record number of homes were sold in Canada last year. The Canadian Real Estate Association estimates that 656,300 home purchases took place, which is an 18.8% increase over 2020. So it’s no surprise that the pace of sales would eventually slow.
 
The association predicts that, nationally, the number of home sales will fall by 12.1% in 2022, which would still make 2022 the second-best year on record.
 
It attributes this relative slowdown to affordability challenges and a lack of inventory but expects sales volume to remain high by historical standards. Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021, although increased churn in resale markets resulting from the COVID-related shake-up to so many people’s lives may continue to boost activity above what was normal before COVID-19.
 
What does it mean for you? The frenzied market we experienced last year required a drop-everything commitment from many of our clients, so a slower pace of sales should be a welcome relief. However, buyers should still be prepared to compete for the best properties. We can help you craft a compelling offer without compromising your best interests.
 
 
THE MARKET WILL BECOME MORE BALANCED 

In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus, a shift to remote work, and economic stimulus triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labour shortages hindered new construction.
 
This led to an extreme market imbalance that benefitted sellers and frustrated buyers. Almost all indicators of housing market activity shot through the roof, but the housing market is now showing signs of returning to earth.
 
The Royal Bank of Canada expects to see demand soften gradually as rising prices and interest rates push the cost of homeownership out of reach for many would-be buyers. And while the supply of available homes continues to remain low, the pace of building in Canada remains elevated compared with historical averages thanks to low interest rates.
 
What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with less competition and a slower pace of sales, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals.
 
 
HOME PRICES LIKELY TO KEEP CLIMBING
 
Nationwide, home prices rose an average of 19.9% in 2021. But the rate of appreciation is expected to slow down in 2022. The Canadian Real Estate Association forecasts that the national average home price will increase by 5.6% to $718,000 in 2022.
 
Price growth will slow this year and could reach a near standstill in late 2022 but avoid any significant contractions.
 
However, some experts caution against a “wait and see” mentality for buyers. “Affordability is unlikely to improve [this] year as prices should march higher, even as interest rates creep upwards as well. The rate hikes will weigh on, but not upend, demand, as the macro backdrop should remain supportive for sales.
 
What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. We can help you get the most for your money in today’s market.
 
 
WE’RE HERE TO GUIDE YOU
 
While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighbourhood.
 
If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.