LENDING A HAND Experts share their strategies on choosing mortgage features when financing a new home, and your new B.C. small-town lifestyle. By Tracey Rayson
While British Columbia eases out of the pandemic, Canadian mortgage rates remain at near-record lows. To date, an elevated sellers’ market, low inventory and bidding wars have some B.C. residents overextending their budgets, eager to get a right-sized home, and the right mortgage, right now. “Don’t base your purchase decision on what you qualify for,” cautions Charmaine White, a certified financial planner at Prospera Credit Union in Vernon. “Think about how much you want to pay and what makes sense for your budget. Budgeting isn’t sexy, but it’s the foundation,” she says. “Make a list of expenses and [calculate] your debt-to-income ratio. If your expenses exceed what you have coming in, it’s not going to work long-term.” New so-called mortgage “stress test” qualification rules in Canada help ensure your payments are sustainable, even in the case of future inflation. If you buy more home than you can afford, you risk being “house poor,” by leaving too little for discretionary spending or
meeting other financial obligations and expenditures, including savings and long-term investments like education. White says, “I advise clients to commit no more than 20 per cent of their income towards mortgage payments. If they choose to slow down—not work so hard and live on less—it gives them that flexibility.”
Hello, HELOC White speaks from experience: she left Coquitlam for Vernon in 2013 with her husband and two young kids. “The lure to right size to a bigger home in the Okanagan for less money was irresistible,” she says. “We got a better lifestyle, we upsized [our home] and paid off our mortgage, and we set up a line of credit secured by our home, to allow for future investment opportunities or for anytime we needed to borrow money.” A home equity line of credit (HELOC) is a financial product, offered by many lenders and institutions, that helps you leverage the value of your home in the same way. Fall 2021
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