Young Couple Mortgage Advice
Penticton may be best known as a vibrant retirement resort community but it’s also a big draw for young couples with career, business, and familial aspirations on the mind (not necessarily in that order). In fact, recent data shows that the male-female age group between 20-39 makes up nearly 20% of Peach City’s population. That number is expected to grow significantly in the immediate future as over the last year Penticton (in addition to Summerland, Peachland, etc.) has seen a rental boom from younger people migrating from the B.C. Lower Mainland. This rental boom is paving the way for an equal or greater rise in first home purchases, as young couples look to capitalize on dramatically lower home values when compared to major urban centers in the province. But of course, the prospect of a large investment for young couples can feel fairly daunting. Fret not, because with some proper guidance you could be making the smartest decision of your lives. Let’s review.
4 Helpful Tips for Young Couples Considering a First Time Mortgage in the BC Southern Interior
Consider a Home for Today, and Tomorrow
We know it’s tempting to look at a new home as a place where you’ll be entertaining friends and other young couples, with visions of summer BBQs, dinner parties, and Super Bowl shindigs. You’re may also look at condos that are located in the heart of the action, perhaps in mixed residential-commercial districts where work and play are just steps away. By all means these are reasonable considerations at this juncture in your life, but given the weight of the investment we encourage you to also consider what life as a couple will be like in five or 10-years from now. Will there be a bundle of joy or two (or three) joining the team? It may seem like a far-off prospect but when it comes to buying a home it’s much closer than you think.
When evaluating what you want to pay for a home (your desired mortgage qualifying amount) and where you want to live, consider the future you too. Look at criteria such as school catchments and the demographic makeup of desirable neighborhoods. You may be the ones hosting social gatherings until midnight right now, but one day you’ll be the ones asking neighbors to turn the tunes down as your kids are sleeping.
Again, consider quality of life today and your goals for the near (5-year) and long (10-year+) term alike when pricing homes. This will directly factor into what you need to gather for a downpayment and what you’re looking at for monthly mortgage payments.
Don’t Be Afraid to Ask Mom & Dad for an Assist
As a young couple you embrace your independence. But you may find that even when combining your double-income and savings that you may not have enough to get a mortgage on a home that considers what you want today and in the future (as per above). Or (or in addition) you may not have established enough of a credit history to get approved for favorable terms from local lending institutions. Should you wait until you have enough savings and credit history to start your life together as homeowners? Not necessarily.
Between the two of you there are parties who likely have the coffers and credit history to assist with your first home purchase – your folks, in-laws included. While you may not want to ask for their help, they actually want to help. Their empty nest feels vacant without you and being able to lend a hand as you move forward on your lives together helps keep them connected to you both. We see parents beam with pride in watching their sons, daughters, and respective spouses buy their first home. Plus, as they see it – this puts them one step closer to becoming grandparents!
Carloni Mortgage Brokers recently helped a young home buyer secure their first mortgage with a big helping hand from mom and dad:
“A young client was moving to Vancouver for a new promotion. The client had good credit and solid income with his new job. He was however missing a down payment to get into his first home. He asked his parents for help with the down-payment but they too did not have any available funds on hand. After we reviewed the parents financial position, we realized they did however have a lot of equity in their home they had owned for 12 years. We did a refinance of their mortgage to take out 35,000 in equity to gift to their son to use as a down-payment. While doing this mortgage increase, we were also able to keep their payments the same as they previously were so they were not increasing their monthly mortgage payment. Both the client and Mom and Dad were ecstatic to get the Vancouver condo purchase completed.” (Carloni Mortgages, May 2020)
Leveraging the financials, equity and/or credit history that your parent/s have built over the decades is a right of passage and in many cultures it’s even expected. If it can help you build a better future starting today and help create generational wealth for the family name it just makes good sense. Plus, putting off a home purchase any longer may result in an unprecedented opportunity cost. Keep reading.
Don’t Put it Off Any Longer
The forced economic shutdown of 2020-21 had one positive side effect for new buyers – mortgage rates have plummeted to all-time lows. Both 5-year fixed and variable rates are favorable, but as the economy (and confidence in the economy) steadily bounces back the Bank of Canada has no where to go but up in both the overnight rate and bond yield after a full year in a holding pattern. So when it comes to capitalizing on what may be the lowest mortgage rates of your generation, the time to act is now.
But you must also consider the opportunity cost of waiting when it comes to home values in Penticton. Right now, the resort community is very affordable. Early 2021 data shows that with the average price of a single detached home in Penticton is listed at just over $520,000 with an average 1-year price growth of nearly 22%. In other words, home values are rising fast and are not expected to slow down as the same study finds that Penticton has just been ranked the 9th most desirable place to live in Canada. In the entire country! That’s huge. But don’t look at the prospect of rising values as a negative thing, as it means that your purchase today will result in a significant growth in near future equity as a couple.
So there you have it. There may never be a more perfect storm that considers mortgage rates, home values, and future expected property value growth that will pay dividends to young couples for decades to come.
Get a Helping Hand from a Mortgage Broker
You may be on the verge of becoming Penticton’s newest power couple, but it takes a partner to help you and your own partner get there. That partner in a first home purchase is a mortgage broker. A reputable broker puts all of the pieces of the puzzle together. We assist with the entire process, from mortgage pre-approval and vetting of lenders to getting you the best (and unadvertised) rates and terms all the way through to the closing on your new home purchase. We also assist in many other capacities, including mortgage insurance acquisition and connecting you to some of the top Realtors and agents in town. And we will also be there down the road should you desire to tap into your home equity for renovations or when the time comes to look at buying a second home or vacation property.
Let’s begin with a friendly noncommittal conversation. Call Rene at 250.493.9111 today to get started on the rest of your exciting life together.