Whether you’re buying a home, condo or cottage, Desjardins advisor Patrick Champagne has some exercises for you to make sure your dream doesn’t turn into a disappointment or hassle. “There’s some prep work to do before you start visiting homes and talking loans, rates and mortgage terms.”

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What can you afford?

The first order of business is to figure out how much you can afford to spend on a home, which you can determine by using our calculator on desjardins.com. Be as financially realistic as possible.

This calculator considers your household’s gross income and overall financial commitments1,  the amount you plan to use as a down payment and the approximate fixed costs of your future home (e.g., municipal and school taxes, condo fees).

Remember that the higher your down payment, the less you’ll have to borrow and the less interest you’ll have to pay. The minimum required down payment is generally 20% of the property’s cost.

However, if your down payment is between 5% and 20%, you’ll have to take out mortgage insurance from Canada Mortgage and Housing Corporation (CMHC) or Genworth Canada. The premium will be between 0.6 % to 4.5% of the mortgage loan depending on the percentage of your down payment. To pay your premium, you can either add them to your mortgage loan or pay them with a lump sum up front.[……]

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Once you’ve settled the question of open or closed term, you will inevitably have to decide between a fixed and variable rate. Which is best for your situation?

When the time comes to choose your mortgage term, there are a number of elements to take into account, including your financial means, your risk tolerance and the economic situation. To demystify it all and equip you to make the best possible decision, here’s some information that will help you make an informed choice about your mortgage type.

Fixed- versus variable-rate: which is lower?

As a general rule, variable-rate mortgages tend to be lower than fixed-rates. To understand the difference, you need to look at how these rates are calculated. Essentially, a financial institution’s variable interest rate corresponds to its preferential rate. This is established based on the Bank of Canada’s overnight rate. Add a certain percentage to this, and you have the variable rate.

As with fixed-rate mortgages, the monthly payment amount usually stays the same, but the ratio of interest to principal is subject to market fluctuations. There are also certain types of variable-rate mortgages where the monthly payment varies based on the fluctuation of market interest rates. With a fixed-rate mortgage on the other hand, you are guaranteed to always have the same amount dedicated to repaying your principal, regardless of what the market does.[……]

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On January 1, 2018, the revised Guideline B-20 came into effect, governed by the Office of the Superintendent of Financial Institutions (OSFI). The changes to Guideline B-20 reinforce OSFI’s expectation that federally regulated mortgage lenders (FRML) remain vigilant in their mortgage underwriting practices. The full outline of the revised Guideline can be found on their website.

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How do these new changes affect you?

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If you’re ready to purchase your first home but you need a bit more money for the down payment, the Home Buyers’ Plan (HBP) allows you to withdraw money from your RRSP to finance the purchase of your first home.

Here’s what you need to know to take advantage of the HBP.[……]

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At some point, we all find ourselves with a shortage of storage space, even when our homes aren’t crammed with furniture and decor. Before taking on huge renovations, why not first recreate your living space?

  1. Create illusion

There’s nothing like a strategically placed mirror to make a room look bigger. Don’t go too heavy on the decor; remove something you already have and replace it with the mirror. If you don’t have a mirror, visit flea markets or garage sales to snag a bargain.

Choosing a light colour for the walls and ceiling will help make the room feel larger while increasing light. Opening up the windows and letting light in also helps.[……]

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In Canada, winter is synonymous with snowy landscapes, cold-weather sports… And soaring electricity bills. What if you could make changes to your house, or plan the construction of your next home to reduce the amount of energy you consume? From little fixes to major work, here’s how you can make your house more eco-friendly, increase your comfort level and save on heating and lighting.

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Adopt eco-friendly habits

“If you want to reduce your energy bill, your priorities should be ensuring that the house is well insulated and replacing energy-sucking appliances,” explains Martin Lambert, Founding President of Ecosolaris. “It always costs less to invest in conserving energy rather than producing it.” Guilty parties include incandescent light bulbs, which could be replaced by LED lighting, and old appliances that you’d be better to replace with Energy Star-certified appliances. Products that carry this certification are required to meet strict technical specifications related to energy efficiency and are tested extensively before being certified.

“Control systems can also be a good way to save,” adds Brian Wilkinson, President of Energie Matrix Inc. “A smart thermostat that can be controlled remotely could save you up to 20% of your electricity bill.”[……]

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Everyone wants to get the best mortgage financing offer. Does that mean getting the lowest rate, the longest term or the smallest payment? The best strategy for one person isn’t necessarily right for another.

Mortgage renewal is the perfect time to reorganize your finances based on your life goals. Your plan will be different, depending on whether you want to pay the lowest interest possible, reduce your monthly payment, save for a special project or optimize your debt repayment.

Here are 3 things to consider before settling on a mortgage agreement that’s right for you.

  1. Your financial commitments 

To find out how much flexibility you have with your budget, calculate the monthly payments for your:

  • Vehicle
  • Credit cards and lines of credit (monthly minimums)
  • Personal loans (e.g., student loan)
  • Other payments, like child support

Note: no more than 40% of your gross household income should go to all of your financial commitments, including your mortgage payment and other home-related expenses (e.g., property taxes, school taxes, energy costs).

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