LIVING

DREAM HOME?

With new mortgage rules and a rising market in many parts of Canada, is it a good time to become a fi rst-time homebuyer?

By Nic Enright-Morin

People move to Canada for a multitude of reasons: new career opportunities, a safe place to raise a family and, simply speaking, dreams of a better life. For many newcomers, a big part of the Canadian dream is becoming a homeowner.

But for many immigrants, the prospect of owning a home can seem overwhelming and with property prices on the rise in many parts of the country, it may feel like an impossible dream.

To fi nd out if home ownership is a good idea, Canadian Immigrant talked to real estate experts across the country to get the scoop on what it really takes.

Getting into the market

Philippines-born Narima Dela Cruz, who has been a realtor in Surrey, B.C., since 2006, says helping newcomers become homeowners is a vocation that she holds dear to her heart. “It makes me happy when I’m able to help a newcomer make their biggest investment in Canada. It also makes me nostalgic, as it reminds me of my own journey when I went through the process myself.”

Dela Cruz says that in order to get your foot on the property ladder, one of the most important steps is to establish a good credit history with the bank, so that when the time comes to apply for a mortgage, you already have that proof that you pay your bills and loans on time.

“New immigrants to Canada have to make sure their credit rating is built up, that is fi rst and foremost, because hardly anyone is able to buy in cash. So you need a good credit rating to get a mortgage,” she explains.

“I tell new immigrants to build their own credit rating independently. This is especially important for women, to be independent from their spouse. This means getting a credit card, and putting some utilities in your name. Then you have to use the credit card and keep up to date with the payments, as this will help build your line of credit and you start from there.”

Dela Cruz adds that saving as much money as you can for a down payment is another important thing to do, especially with new mortgage rules announced in February 2016.

The federal government modifi ed the rules on minimum down payments for new mortgages in Canada — and these changes could affect a lot of fi rst-time homebuyers, especially in cities like Vancouver and Toronto where the housing market is at a premium. While previously homebuyers could put down as little as a fi ve per cent down payment, now that only applies toward the fi rst $500,000 spent. For homes that cost more (which isn’t that hard to fi nd!), there will now be a blended higher rate: fi ve per cent down on the fi rst $500,000 of the purchase price and 10 per cent down on any amount above that.

Let’s crunch those numbers into perspective: before the new rules, if you were buying a house for $700,000, you would have only needed a down payment of $35,000. Under the new regulations, the minimum down payment for the same property would be $45,000 — a jump of $10,000.

Since the move is aimed at homes in the higher price brackets, it is hoped that the rest of Canada’s real estate market won’t be greatly affected. However, recent immigrants trying to buy a home in Vancouver or Toronto, where the average price for a single-family home is well over $500,000, will feel the sting of this new rule.

Dela Cruz says that she tells new immigrants who come to her for advice that, “You have to really set your mind to purchasing one day. Don’t become complacent if owning your own home is your dream. You have to budget. Don’t overspend, just spend money on the basics so that you can start saving, because eventually you will need a down payment.”

Dela Cruz adds that in B.C., where the property prices are the highest in Canada, you shouldn’t lose hope.

“The B.C. real estate industry is known for being at the highend, as far as Canada is concerned, so it is defi nitely more diffi cult to acquire a property here, especially with the competition from outside investors,” Dela Cruz says. “But it is important to remember that British Columbia is not just Vancouver, you can start from the suburbs, or smaller cities and go from there.”

Many immigrants may also consider the option of intergenerational homebuying, i.e., you purchase a home along with your parents or in-laws. You could all live together, or split the home into two independent suites. Dela Cruz says that splitting a home and its costs like this has lots of pros and cons for everyone involved, so if you are considering this option, make sure it’s something that you are all comfortable with.

In addition to looking at Vancouver’s suburbs or other parts of the province, you can also start with a small property, like a condominium, and use that as your fi rst step into the market. Eventually, you can sell it and use the equity you’ve built up as a down payment for a larger home.

More than about money

Elton Hubner is a young Brazilian who moved to Canada fi ve years ago, and bought his fi rst home — a condominium in the heart of Chinatown, Vancouver — last spring, four years after immigrating.

“I had a goal that within four years I wanted to buy my own place,” he says. “I was renting an apartment in Yaletown and I realized I was paying the same in rent as I would pay for a mortgage, so I saved as much as I could for the down payment.” >>

What kind of home can you get for about $500,000 across the country?

VANCOUVER

1-BEDROOM CONDO IN GASTOWN

SASKATOON

4-BEDROOM SINGLE-FAMILY HOME

KELOWNA

3-BEDROOM SINGLE-FAMILY HOME

SURREY

3-BEDROOM NEW TOWNHOME

CALGARY

3-BEDROOM SINGLE-FAMILY HOME

WINNIPEG

4-BEDROOM SINGLE-FAMILY HOME

MONTREAL

3-BEDROOM DUPLEX

HALIFAX

4-BEDROOM SINGLE-FAMILY HOME

LONDON TORONTO

1-BEDROOM CONDO DOWNTOWN

3-BEDROOM SINGLE-FAMILY HOME

HIDDEN COSTS OF HOMEBUYING

Buying a home costs more than just the purchase price. ere are many hidden costs in the real estate process. “Not only do you have a down payment, but there are di erent costs associated with buying a property: land transfer taxes, home inspections, lawyer fees,” says London, Ontario-based realtor Ken Small. “Also there may be some unforeseen costs on closing. People should de nitely take that into consideration when planning their budget.” Of course, most condominiums and townhomes have monthly strata maintenance fees, too. ere are always moving expenses (hiring movers can be expensive!) and new items you need to purchase for your new home. “Maybe you might need a new washer and dryer, or you might need a lawn mower for your garden,” he says. “It’s little things like that people might not think of as they are going through the process of buying a property.”

FREEADMISSION

above Realtor Narima Dela Cruz advises newcomers to not fear, but prepare for, the real estate market. Photo by Sandra Minarik << He says that when he fi rst decided to buy a property, budget wasn’t his only concern; he took other factors into consideration. “I did not want to waste time commuting,” says the photographer and videographer. “For me, it was key to be close to my clients, who are all in the downtown area. I also wanted a place where I did not need a car. And, of course, I wanted to fi nd a place that was a good investment for the future.” London, Ontario-based realtor Ken Small agrees that one of the most important things people need to consider is how a property meets their needs long term because, unlike renting, purchasing a home is a much bigger commitment. “It’s really important that people fi gure out exactly what they’re looking for in a house,” >>

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<< he says. “The location is important. Potential buyers need to consider what kind of neighbourhood best suits their needs. Does it need to be close to a school, parks, places of worship, public transport? They also have to ask themselves what do they need from the property? Will it need two bedrooms? Three bedrooms? Then they need to ask themselves how long they plan to stay in the property, things like that.”

Small adds that, in Ontario, while big cities like Toronto have high property prices, smaller outlying cities like London can be a much better option for fi rst-time homebuyers.

“Here in London, the property market is still good. I also usually recommend fi rst-time buyers look at townhouse condos, because typically they are a newer property, so you get more space and more features for a lower price compared to a single-family home.”

Look around before you buy

Glen Godlonton, a realtor in Calgary who has helped countless newcomers fi nd their fi rst property, says an error that many fi rsttime homebuyers make is not having a proper look at the kinds of properties available to them, before they decide to jump in and buy.

“The biggest mistake that a lot of fi rst-time homebuyers make is that they buy too quickly and they don’t look around enough. They walk into the fi rst house and say, ‘Oh, this is great! It’s got a roof and walls, let’s buy it!’” he says. “But I tell them let’s take a look around, let’s look at some other potentials. Because if you’ve never owned a property before, you might not have as much knowledge as to what you like or what you will need. You’re better off shopping around more and look at different property types. If you’re looking for a condo, maybe look at some townhouses or duplexes in your price point, too.”

Godlonton says that prices in the housing market Calgary have come down slightly, due to the drop in the oil and gas industry. However, he says the fi rst-time homebuyer market is still reasonably strong, and there is a lot of selection available.

“The other plus is that interest rates are pretty much at an alltime low, so if you take advantage of that and get your mortgaged locked in for fi ve years at a good rate, you have good stability at fairly cheap borrowing costs, so from that perspective, it’s defi nitely a good time to buy.”

Get the right help

According to Small, another mistake fi rst-time homebuyers often make is becoming too emotional when buying their property. He says it’s crucial to approach the task with a level head and to do your due diligence; make sure the property is in good condition.

To do that, choose the right people to help you achieve your goal. “I recommend that fi rst-time buyers put together a team that consists of a fi nancial planner or mortgage broker, a good lawyer, a good real estate agent as well as a good home inspector. When you do that and the team works together, it should mean that nothing gets missed when purchasing a property.”

Ultimately, just like every other milestone you take as a newcomer in Canada, buying your fi rst home is a challenge, but with the right information, strategy and team in place, anything is possible.

As Dela Cruz says, “Focus on the goal if you want to be a homeowner. Build a plan. Believe that you can do it if you work hard. Every newcomer must believe they can do that and I really want them to believe in the dream.”