Don't think you can afford the neighbourhood you're renting in? Well think again, Co-buying is here

Dreaming of a home in an upscale neighbourhood where renting - not buying - seems the only affordable option? Then co-buying is the perfect solution for you!

Popular in urban hotspots like London and New York, co-buying is buying a property (usually with 2+ suites) with someone else: a friend, relative, co-worker…or even a stranger. It lets you share costs, such as the mortgage, down payment and maintenance fees with your property co-buyer.

Sounds far-fetched and out of your league? It’s not! Think of it: you find a stunning home in Little Italy with two suites, but the steep $585,000 price tag ($2,000 mortgage payment) makes it less attainable. However, with co-buying, the price and your mortgage payment drops to just 50% to a much more manageable $292,500 ($1,000 mortgage payment) and your new home is now more affordable and with carry costs that are a bargain. 

Interest rates a hotter topic than the weather?

 Based on a strong first quarter, The Bank of Canada raised the key overnight rate in July which bumped up adjustable (variable) rate mortgage payments.  For homebuyers and those folks renewing mortgages soon, the market is still flush with low interest rates and attractive mortgage products.  For instance, if you wish to hedge your bets against prime rates rising but like the idea of an adjustable rate (they do historically outperform the fixed rates), consider a 50/50 wise mortgage - this will mitigate the risk associated with changes to the prime lending rate by allowing half of your mortgage to be fixed while the other part floats with prime.  Adjustable rate mortgages are currently just above 2% with discounts as deep as 0.70% below prime!  This discount is moving towards the deep discounts that we saw before the credit crisis of 2007.  In time, we hope to see the 0.85%-0.90% below prime levels of 2006 again.  with this possibility in mind, the shorter term variables such as a 3 year term, appear to be a sensible and attractive product for the moment.  

The slowing of the housing market and lower bond yields have increased lender competition for mortgage customers and impacted fixed lending rates. Dr. Ian Lee of Carlton University summarized the fixed rate scenario that we have been seeing in August by saying 'there is an excess of mortgage funds and lenders chasing a decreasing number of mortgage borrowers.'  Classic supply vs demand situation which is ultimately very good news for mortgage shoppers, resulting in price cutting and lower fixed mortgage rates.

The economy and it's impact on interest rates:

Recent economic news may give pause to The Bank of Canada's planned interest rate hikes.  The BOC raised the overnight rate in June by 0.25% and replicated the move again in July.  As a result, the prime lending rate increased to 2.75%.  Many experts expect a further increase in September as the economy rights itself.  However, Imports into major markets like China slowed in June and July and a negative StatsCan employment report, have some experts speculating that the BOC will rethink its monetary strategy.  The employment report showed that job creation in Canada halted suddenly in July, with a loss of over 100,000 full-time jobs and the creation of only part-time positions.  Added to this news is the continuing economic saga in the United States and the world at large.  America talks of further economic stimuli needed to jumpstart their economy, mounting debt pressures plague Europe and a slowing down of the housing market here at home, will be taken into consideration before the Bank of Canada makes its interest rate announcement on September eighth.

Market More Balanced in June

Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009. Sales for the second quarter of 2010 amounted to 28,810 – up one per cent annually. Year-to-date sales through June were up 23 per cent to 50,455 compared to the first six months of 2009. “We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.” The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009. “With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”

Buyingblock offers 6 - Steps to cover your home buying needs from start to finish.

We make buying a home easy, hassle-free and you save at least $500.00+ guaranteed. The Buyingblock concierge is always ready to help you in anyway from connecting you with a contractor to making sure that you are always informed. The concierge service is completely free and you are under no obligation to purchase all of the services but the more services you use, the more you save.

New Mortgage Rules and what it means to you.

New Mortgage Rules High Lights:

Finance Minister Jim Flaherty made the following 3 changes to insured mortgages in April:

- Adjustable Rate Mortgages & Fixed Rate Mortgages with less than 5 year terms, now qualify using 5 year posted rate, previously the 3 yr.  was used.

-Refinances are now limited to 90% of the home value, previously it was 95%

-Increasing the amount of your current mortgage at a new interest rate. The term of the new mortgage must be equal to or greater than the term remaining on your current mortgage.
limited to 90% of the home value, previously it was 95%

- Non owner occupied properties require a minimum down payment 20% & only 50% of rental income can be included for qualification purposes.  Heat and property tax expenses can now be removed.

- Wish to buy a new home and rent out your current property?  If your new mortgage is going to be insured by the Canada Mortgage and Housing Corporation ( that is less than 20% down payment), you will not be able to use future rental income to qualify on the home that you are moving out of.  New rules state that you must have a 2 year average for rental income and it must be reported as income on tax return.

-For more details, email us at mortgages@buyingblock.com or click on the chat button.

Good News! Increased Incentives for First Time Homebuyers

Incentives for First Time Homebuyers
Access up to $25,000 from RRSPs for down payment
Receive max $2K rebate on Ontario land transfer tax
Receive max $3,725 rebate on Toronto land transfer tax
Home renovation tax credit for work completed by Feb 1st 2010: remember to claim  max $1,350 when filing 2009 tax return
Home Buyers Tax Credit non-refundable HBTC based on $5K for buyers that acquire a home after Jan 27, 2009
HBTC calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5K- resulting in a $750 tax credit for 2009

Which GTA neighbourhood is the Best Bang for your buck?

1.  Lorne Park (W13) 
 
2.  Markham (N01)    


3.  Armour Heights, Bathurst Manor (C06)


4.  Creditview, Erindale (W16)


5.  York Mills, Hogg's Hollow, Bridle Path (C12)
*Source: Re/Max, Toronto Real Estate Board*