Waiting a year to buy could cost you $15,000 in extra interest payments over five years if interest rates continue to rise as expected.
As of the writing of this blog, a 5-year term (for which everyone who applies for a mortgage must qualify, even if they want a shorter term) mortgage rate is around 3.74%. Many experts predict interest rates will rise again this Summer and, if the economy continues it's steady recovery, will continue to rise.
Let's face it, there is nowhere else for rates to go but up!
It is not inconceivable that next Spring (pretty much a year from now) rates could be 1.5% higher....so, from 3.74% to 5.25%.
If you crunch the numbers, that means at the end of your first 5-year term on a $200,000 mortgage, you will have spent $15,000 more in INTEREST if you wait a year to buy.
Think of what you could do with that money.....buy a larger/nicer home with an unfinished basement and finish it later. Maybe put in a pool. Get a good price on a home that needs work and use the money to replace the roof, furnace and install central air....the possibilities are only limited by your particular circumstances.
I'm not saying you should rush out and buy...BUT, if you are secure in your job and home-ownership is your goal (2/3 of Canadians own their home), then now IS the time to buy.
Lenders have lots of different programs to help with a down payment, which is generally the main reason people wait to buy.
Interest rates are the determining factor of affordability - they are still historically low but are rising.
Please contact me if you want to know how much you qualify for and a pre-approval.
If you want to check the numbers I've quoted, go to http://www.fcac-acfc.gc.ca/iTools-iOutils/MortgageCalculator-eng.aspx.
By the way, this is a great link as the site has many financial calculators and financial advice and is unbiased.
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