Many new uncertainties have come from the COVID-19 pandemic, and becoming a homeowner is one of them. When buying a home, you want to be sure that you’re aware of potential challenges and have a good idea of your future. Unfortunately, buyers during a pandemic are left with unexpected considerations and challenges.
There were concerns a few months ago about how housing prices would be affected by the pandemic. Despite this, The Toronto Regional Real Estate Board reported rising housing prices in June. This shows that despite uncertainties, the market is responding.
Should You Buy During A Pandemic?
As some Canadians continue to work from home, and restrictions lift on travel, vacation properties have seen increased interest. Getting out of the city and relaxing on a more spacious and remote property sounds nicer than spending your summer working in a downtown apartment.
If you’re looking to buy a home for the first time or looking for a new vacation property, a big question to ask yourself right now is: do you qualify? Many people have experienced financial setbacks due to COVID-19. Is buying a home right now the best option for you? Can you afford the mortgage payments?
In normal circumstances, lenders use your financial information to calculate your costs and debt. This helps them to determine an amount that you can afford. This amount will determine which properties you are qualified to buy.
Although more people are getting back to work now, having an uncertain employment future due to the pandemic puts homebuyers in a tricky spot. It’s hard to be certain about what your income will look like down the road, which could affect how much your lender can qualify you for.
Your mortgage broker can help you figure out what you need to show lenders and help you navigate any new requests or concerns your lender may have.
Benefits Of Buying Now
In areas where there are many properties on the market and less interest, homebuyers may get a better deal. Fewer people may be looking to buy and qualified to do so right now. This means fewer potential buyers to compete with.
People staying close to home and travelling less may work to your benefit. There could be opportunities to snatch up short-term rental properties. Investors may not be able to afford these anymore due to dwindling bookings.
The pandemic has made going to look at properties more difficult. If you want to look at a property, check with your realtor about availabilities and health procedures. This could include using hand sanitizer before entering the home, maintaining a physical distance between you and your realtor when on tour, and wearing a mask. In some cases, digital home tours may be a good fit.
With the uncertainties in the market, people may be hesitant to list their homes and decide to put it off. This means there could be fewer options on the market for you to choose from.
With current financial pressures, some homeowners have been deferring their mortgage payments. The CMHC is considering new options to help existing homeowners avoid delinquent mortgages. You don’t want to put yourself in a position where you need to defer payments on your new mortgage. However, if you qualify for a mortgage and pass stress testing, you should be okay to handle mortgage rate fluctuations. Mortgage rates are one of the many unpredictable circumstances of COVID-19. Your mortgage broker will offer professional guidance and advice for any concerns you may have about future rate uncertainties.
Should I Go Variable Or Fixed?
Should you be considering a variable or fixed mortgage? Mike Boyle, mortgage broker and president of The Mortgage Group Calgary, has some advice.
Fixed-rate mortgages will protect you from rate fluctuations, but lenders may charge punitive pay-out penalties to get out of them. If you know you can commit to living in a house for the entire term of a fixed mortgage, do it.
If you think you might move or sell in a couple of years, take a variable rate mortgage. Variable-rate mortgages have less severe pay-out penalties.
Boyle also recommends potential buyers do the things that lenders are looking for right now. This includes keeping your credit clean, keeping a job, paying off your debt, and saving your money for a down payment.
If you are considering buying a home during COVID-19 and wondering what options are available to you, talking with a local mortgage broker is an excellent place to start. If you need a mortgage broker in Calgary to assist you with mortgage options and advice, reach out to our team at the Mortgage Group Inc. We are always happy to help you find the best solution.