It’s no secret that the Canadian housing market has been a bit volatile as of late. In certain portions of the country, prices are hot, hot, hot. Price bidding is common in Vancouver, and Toronto and Montreal are both posting record sales numbers. And yet, everywhere you look, experts keep warning of an impending bubble.
So, what’s the deal? Is the housing market rock solid or on the rocks?
Predicting market movement is a lot like predicting the weather – say all you want, but you’ll never know what’s actually going to happen until the time comes. As such, it’s important that investors and home hunters alike keep their cool and stay focused on their personal financial plans. The following are a few simple tips from the experts at FamilyLending.ca to help you keep your peace of mind amid the uncertainty of market fluctuations.
1. Plan For the Future
The current housing forecast fluctuates between two extremes: a soft landing and a hard decline. What both of these estimations have in common is the time period. Most experts believe that a change is coming sometime in the short- to medium-term. As such, home hunters need to plan for the long-term. When calculating your mortgage pre-approval and thinking about your future, try and plan with a minimum 10 year window. By giving yourself a 10 year span, you have a much better chance of seeing the market recover from any forthcoming declines, plus you’ll have given yourself a reasonable amount of time to build equity into your new home.
This 10 year tip also applies to your mortgage planning. This is because a 10 year mortgage will help protect you from future market fluctuations. If the market continues to surge, you’ll be protected from rising rates. If things decline and lenders get antsy about their mortgage portfolios, you’re still protected.
2. Tackle That Mortgage
While you can’t control the market, you can control your mortgage. If you have the means, consider making some lump sum prepayments. Lump sum payments go directly towards the outstanding balance on your mortgage principle. This increases your equity at the same time it lowers your interest costs. And adding to your home’s equity is always a good idea, especially when the market value of your home could drop.
3. Be Smart and Save
Saving isn’t easy, especially when times are tight. But the more you can save for a 20 percent down payment, the easier your first steps to homeownership will be. This is because buyers who can plop down a 20 percent down payment avoid the costs of mortgage default insurance coverage. You’ll also have a great deal more equity under your belt right from the get-go, which will ultimately make it easier for you to pay your mortgage off faster.
Stop driving yourself crazy trying to guess where the market is going. Instead, take a calm and calculated look at your future. Proper preparation will help you handle any and all outcomes, be it a sharp decline or a soft landing.
For more assistance with mortgage planning, contact the experts at FamilyLending.ca for a quick and complimentary mortgage pre-approval.