Homebuying intention is at its highest in eight years as the growth in the Canadian economy fuels consumers’ confidence.

Despite the mortgage stress tests introduced at the start of 2018, a third of Canadians polled by RBC say they are very or somewhat likely to buy a home in the next two years.

Among millennials, the homebuying intention is even higher with 50% likely to buy.

Although more than half of potential buyers say that the OSFI mortgage regulations are affecting their buying decision, it does not mean they won’t buy at all.

A quarter of respondents said they will buy with a larger down payment and 18% will seek a smaller home or one in a less expensive area. Just 19% said the mortgage rules will delay their purchase and 39% were not aware of the stress tests.

Getting financial assistance from family is the plan of 36% with the same share having a dedicated savings account of their own which will fund the down payment.

Finding the right home is the top challenge cited by the RBC Home Ownership Poll, followed by deciding how much they can afford.

Interest rates are an important factor in the homebuying decision with 61% of respondents saying they are concerned about rates and a combined two thirds citing current low rates, or the potential of rate rises, for wanting to buy a home sooner.

Prepayment, Portability and Assumability

Prepayments

One of the most common questions we get is about mortgage prepayments. The conditions vary from lender to lender but the nice thing about prepayments is that you can pay a little more every year if you want to pay off your mortage faster. A great way to do this is through prepayments.

They’re always something to ask your broker about because each lender is very different. You can always do an increase on your payments and that means that you pay a little bit more each week or each month when you make your mortgage payment. You can also make a lump sum payment. Perhaps you get a bonus every year or you get a lot of Christmas money. You can just throw that on your mortgage. It goes right on the principle so you’re not paying interest on those extra funds. Paying a big chunk at once also means that a higher percentage of future payments will also go towards the principle.

Portability

Portability means that if you sell your house and you want to take your current mortgage and move it to your new house you can. The one thing about portability that we always have to keep in mind is that we can’t decrease the mortgage amount but we can do a little bit of an increase often through a second mortgage or an increase we call a blend and extend. It just gives you the flexibility of moving the mortgage from one property to the next property. It also gives you the flexibility of being in control of where you mortgage is going and not having to break your mortgage every time you decide to move.

Moving a mortgage to a new property avoids things like discharge fees, the legal cost of registering a new mortgage and the possibly of a higher interest rate. It’s great to be able to keep that rate for the full term rather than having to break and pay those penalties half way through.

Assumability

Assuming a mortgage comes into play more often where there are family ties. Say your parents have a mortgage and you move into that house. Rather than you going out and getting a new mortgage and your parents having to pay those discharge fees, you have the ability to assume their existing mortgage at that current rate. All you have to do is apply and make sure you can actually afford the mortgage at what they’re paying. You have to be able to be approved on the remaining balance on the mortgage just like you would on any other mortgage. Just because your parents have an eight hundred thousand dollar mortgage doesn’t mean you’ll be able to take that over.

If you have any questions, contact a Dominion Lending Centres mortgage specialist for help.

The tax changes announced by British Columbia will have a major impact on the province’s housing market according to brokers.

A survey of 535 real estate professionals in BC and Alberta carried out by Royal Le Page found that most expect the measures designed to target foreign investors will also hit those who own second homes.

Although the government says the number of local homeowners who will pay the speculation tax will be less than 1%, the poll found that 85% of advisors say confidence in the BC housing market has been dented.

More than three-quarters say there will be a decrease in sales in the three months following announcement of the tax change, and 57% say prices will decrease.

“The expected impact of the proposed housing taxes announced in British Columbia should not be taken lightly,” said Phil Soper, President and CEO, Royal LePage. “Homeowners across the province will feel the effects as major policy changes like this are also amplified by a drop in consumer confidence. We saw this happen in 2016 when the previous government launched a tax on foreign investors. A small number of international purchasers withdrew from the market – along with a huge cohort of domestic homebuyers.

He added that buyers across Canada were already impacted by the tighter mortgage regulations and rising costs.

Around 77% of respondents said that international buyers will be deterred by the additional tax, 45% said that BC residents will be most affected.

“We expect that the new taxes will materially impact communities that rely on recreational property markets for the health of their local economy,” said Soper. “There will be some Canadians in British Columbia and across the country that will choose to sell their properties in the province as the new taxes add to the cost of homeownership.

In Alberta, 80% of advisors said that interest in BC property would be damaged by the new tax.