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Rewards & Risks – Pertaining to New Construction Purchases

REWARDS

Brand New 

Being the first to live in your new home comes with many perks!  Nothing is nicer than moving into a clean, odour free home with no wear and tear! 

Less Maintenance & Repairs 

With new homes comes a reduced chance of experiencing hidden surprises which can require expensive renovations. With new appliances come warranties and a piece of mind knowing maintenance and repairs will be covered for several years. 

Customizations

Tailor your home to meet your preferences from colour schemes to flooring! 

Save On Utility Bills

Newer homes are often built more energy efficient. With better insulation and new appliances one can heat and cool there home with less effort, reducing monthly energy costs. 

Incentives & Discounts 

Developers will often offer “pre-sale” incentives to entice buyers to purchase while still in the construction phase. Such incentives could include bonuses, gift cards, services or furniture. 

Buy with Less 

New construction purchases often require a deposit of only 5-10% of the purchase price. Since your mortgage will not begin until your home is completed you may have a year or two to invest your money and save for the remainder of your down payment. This allows you to capitalizing on that steal of the deal even though you may not have all the funds just quite yet. 

Build Equity 

When buying a new home you are investing into a project that has the potential of increasing in value over the course of the construction period before you even move in! 

Warranty Protection 

New homes come with 2-5-10 year warranty. This provides buyers with security knowing they will encounter minimal costs in the several years upon moving in. The new home warranties insure homeowners coverage for 2 years on labour and materials, 5 years on the building envelope and 10 years on the structure.

 

RISKS 

 

Delays 

A builder can delay completion of a project due to various reasons. This can cause much hardship for buyers if they are needing to move in within a certain time frame. The uncertainty of new developments can result in buyers forced to find alternative, short term means of living to cope with postponed possession dates. 

Financing Approval 

Since a mortgage can’t be granted until completion, the initial pre-approval process given at the time in which the contract is signed is only a rough estimate of how much you may qualify for. Lenders will only provide borrowers a mortgage based on the appraised value of the home. If at time of completion the property is appraised at a lower value than the purchase price, the purchaser will be required to come up with the difference. If one is unable to make up the remainder of the funds needed to close they face losing their deposit. 

GST 

Brand new comes at a cost. When purchasing a new home you are required to pay a Goods and Service Tax on top of the purchase price displayed by the developer. The 5% tax will be payable at time of completion. 

Limited Customization Options 

Although you will be given the luxury of choosing among various details unfortunately you can’t add upgrades which are out of the scope of what is being offered. If you are wanting to add a “special” feature to your home this must be done on your own time and dime once you are settled in. 

Less Room for Negotiation 

The price listed for pre-sale homes is often set in stone. The builder won’t alter prices for certain units as doing so would change the comparables within the complex/condominium. This would in turn put the developer in direct competition with themselves so prices are unison among similar floor plans. 

Why you should swap the haunted house for house hunting this weekend!

With autumn comes a ton of festive activities but have you ever thought of house hunting as one of them? What is more festive than sippin’ on a pumpkin spiced latte while wearing your hunters as you walk in the crisp air through the fallen leaves from open house to open house?

7 Reasons why fall is the best season to buy a home!

Less Competition
Most buyers have already found a home in the spring and summer months. This means fall buyers often encounter less competition in regards to the homes available during this time.

Lower Prices
You may have seen a listing go up over the summer and have noticed it is STILL on the market! There can certainly be a wide range of reasons to such a circumstance, but regardless of the situation, the longer a house has been on the market the more likely the seller will be willing to negotiate on a lower price.

Motivated Sellers
Not all fall listings are summers’ leftovers. Since spring and summer are often the peak seasons when it comes to real estate activity, when sellers list in fall it is usually a sign of motivation. Whether it is for job relocation, family or another scenario, those who choose to list in fall often need to move fast. With this being said, buyers gain the upper hand in negotiating price, terms and dates.

Worn Out Sellers
Often homes which were listed during summer and have still not sold are due to unrealistic pricing in regards to a seller’s viewpoint on the value of their home. These sellers often become more realistic over time as their home stays on the market as summer rolls into fall. Eager to sell, these old inventory homes give buyers great bargaining power.

Holidays are Around the Corner
The holidays can be stressful enough and most don’t want to deal with a move during all the hustle and bustle. Most people are eager to sell before hosting those holiday dinners and putting up the decorations. The faster the seller wants to sell, the more power the buyer has in terms of negotiating.

Seasonal Home Improvement Sales
Everyone loves a good deal right! With the end of a year, come seasonal and post-holiday sales. No new home is complete without new furniture and décor to make it your very own. According to Consumer Reports, fall months are known for big discounts on those big appliances. With October known for mattresses and interior paint deals; November for TVs, coffee makers and refrigerators and December for cookware and dishwashers; there is a ton of money to be saved!

True Colors Revealed
The vibrant landscape that comes with the beautiful summer months can often be deceiving. Once the leaves fall and the bright flowers die a home’s faults can be revealed more easily. Although things may look gloomy in fall it allows buyers to assess the home clearly.

So what are you waiting for? Start your search today and FALL in love with your dream home this autumn!

Bank of Canada Raises Interest Rates Again

For the second time since July, the Bank of Canada has increased the overnight rate by 25 basis points, now standing at 1%, the federal bank announced September 6.

The rate hike follows news that Canada’s economy is performing better than expected, which has also resulted in the strengthening of the Canadian dollar, now trading at US$0.82.

Sherry Cooper, Dominion Lending Centres chief economist, said, “The Canadian economy is on a tear, dramatically outperforming the US, and the battering by both Hurricanes Harvey and Irma will only widen the disparity.” She pointed out that economic growth in Canada is becoming “more broadly based and self-sustaining,” according to the Bank’s press release, and added that the second-quarter GDP stats released last week showed that consumer demand is robust, supported by “solid employment and income growth”.

In response to the overnight rate hike, Canada’s big banks are extremely likely to increase their prime rates, which will increase the cost of variable-rate mortgages and other loans.

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To rent or to buy? That is the question

With house prices rising and competition for rental units increasing it has become harder than ever to find a place to call home in the Fraser Valley. Many have found themselves caught in a dilemma whether the time is right to buy or rent. The BC economy is growing and interest rates are on the rise. With so many factors to consider the thought of entering the market can be overwhelming. Although no one has a magic ball that can predict the future, weighing out the pros and cons of each scenario with consideration of your goals and financial means can certainly help the decision making process easier.

Renting

Renting means fewer responsibilities to worry about. Having a landlord to rely on for repairs and deal with utility bills can take off some of the stress that comes with being a home owner. You have the freedom to leave without having to sell first and can establish a good credit history by paying your rent on time. With low upfront costs, many are able to secure a place to call home with little money down. Often first and last month’s rent and a damage deposit is all that is required. As well, the application process is usually fairly simple and the credit requirements are often less strict in regards to applying for a mortgage loan.

Although renting can mean less worry it also means less freedom. With living under the terms of another you must abide to their requirements. This often means customization in regards to paint or major renovations cannot be done without their approval. The risk of an increase in monthly rental payments or termination of the rental agreement at the end of the lease can also occur. Renting means that you will not be building any equity either. Yes the upfront costs, utilities and monthly payment may be lower than buying but this all comes at the cost of funding someone else’s mortgage payments rather than your own.

Buying

With buying one doesn’t only gain a place to call their very own but also the freedom to customize as they please! Investing in home renovations can increase the value of one’s home while reducing maintenance and energy costs. Security is also a huge benefit of buying a home as you do not have to worry about lease terminations as you do with rentals. The risk of an increase in monthly payments is also taken away as payments stay the same throughout the duration of the loan if one chooses a fixed rate mortgage. Potential for rental income also comes with purchasing a home. You may have the opportunity to rent out a suite in which the extra income could help you pay off your mortgage, tax and insurance payments. Amongst everything, the investment of buying a new home provides you with the opportunity to build equity!

Although buying is often the goal for most, it is not always finically feasible for everyone. With buying comes larger upfront and annual costs and more responsibility. The requirement for down payments varies but falls between 5-20% of the purchase price. There is also the cost of a home appraisal in which lenders require in order for one to approve for loan. If you put down less than 20% of the purchase price, you are faced with insurance premiums. In the event that one can no longer afford their mortgage payments, insurance premium payments are put in place to protect the lender from financial loss. That being said, mortgage lenders often have higher credit standards in order for one to qualify for a loan. Annual costs of replacements and repairs solely fall on you as the owner as well. These costs vary from year to year but defiantly can put a great dent in one’s wallet. In addition to maintenance costs one must also put aside money for other homeowner costs such as property taxes, insurance fees and utility bills. Lastly, with buying a home comes the risk of losing profit in the event that your home’s value decreases.

With everything being said, one can see there are both pros and cons to both options. We all face individual daily challenges and have different goals but it is important to clearly evaluate your own situation when making such a big decision. Buying a home can be very rewarding but putting yourself in a position where you are living outside your means can quickly backfire. Saving and waiting to buy might be your best bet or maybe you want to buy now as prices in the townhouse and condo market is on the upward trend. Unfortunately there is no right or wrong answer to the question but weighing out your options will definitely help you establish the steps needed to achieve your goal whether that be buying now or renting and buying in the future.

Are you ready? The Pre-House Hunting Checklist

Most people think that home buying process begins when you start looking at homes but there are a few things that need to be addressed before you start spending your weekends house shopping. The idea of a new home is both exciting and overwhelming. With so many different things to consider such as location, age, square footage, number of bedrooms, finishing, etc. it is often easy to get caught up in the hype of it all, forgetting the importance of budgeting, financing and securing a mortgage. So before you start picking out wallpaper and trading in lazy Sundays for house hunting be sure to follow these critical steps before you start your search!

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Do you want to have your avocado toast and eat it too?

Lives is too short not too enjoy the little things! Eat your avocado toast and continue living life guilt- free with my 6 simple saving tips! Controversy arose earlier this year when property mogul stated on 60 Minutes that the reason why millennials are unable to buy property is due to their fixation on “luxury” items such as, fancy breakfast delicacies and speciality coffees. Believe it or not, it is actually possible to save up for a down payment while not scrapping all those daily joys you love to indulge in!

With the rise in housing prices in the Fraser Valley, many have found themselves feeling hopeless in their dreams of ever attaining a place to call their own. I am here to remind you nothing is impossible! Although prices have increased there are so many options to make home buying affordable for those looking to get into the market! With different government incentive programs and a ton of clever strategies there are many tools one can implement to help grow their down payment fund. If you are a “millennial consumer” who loves avocado toast, taking trips to local hipster cafes, treating yo self and are hoping to one day own your own home, this article is for you!
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