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Owning a home remains a priority for many Canadians – yet changes in the interest rate environment and high housing prices in certain markets may prompt a number of questions. How can prospective homebuyers be prepared for changes down the road? How can people in high-rent markets, such as Vancouver, for example, make sure they choose a mortgage they can afford?
Mortgage professional Angela Calla, host of “The Mortgage Show” on CKNW Radio, believes it is important to get “the right advice,” she says. “A mortgage decision has to be reflective of a person’s situation in life as well as the market – and working with a mortgage broker who has access to a range of products and understands the process can help to be prepared for potential challenges.”
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Although housing has always been one of the biggest expenses for Canadians, mortgage regulations ensure that people don’t overspend when they purchase a home. And stress-testing helps to ascertain that people can afford their mortgages in different interest rate scenarios, says Ms. Calla, who works with the Dominion Lending Centres - Angela Calla Mortgage Team. “With our clients, we take a very proactive approach – we alert them to changes in the market and recommend steps for being better prepared, for example, by increasing their payments slowly over time or, where possible, making additional payments without incurring penalties.”
Yet at a time when six out of 10 Canadians live from paycheque to paycheque, any increase in expenditure can be challenging. “Life happens,” Ms. Calla says. “There can be rising living costs and unforeseen expenses, such as a leak in the roof. Since not a lot of people have access to a significant amount of savings, they may accumulate outside debt – which can have a big impact on their cash flow.”
With so many variables, it is important to stay ahead of changes that affect the mortgage, and Ms. Calla recommends consistently making minor modifications that can contribute to the equity in the home. “Borrowers have the opportunity to access unbiased advice when they work with a mortgage broker – optimizing a mortgage should be a collaborative continuous process,” she says.
“With something as serious as a mortgage, we can’t click online and think it’s as easy as ordering food from Skip the Dishes,” cautions Ms. Calla, who believes online pre-approval should only be seen as a starting point. “From a financial perspective, when people click and get pre-approved in 60 seconds, that doesn’t allow for an analysis of the data or a verification of the credit. It doesn’t help you understand what is going to be required for the mortgage and how to avoid future payment shock,” she says. “If you don’t do your homework and get advice, this can later cost you a lot of money and cause unnecessary stress.”
A mortgage professional for 14 years, Ms. Calla recently published The Mortgage Code with the aim to help homebuyers make the right mortgage decisions.
This content was produced by Randall Anthony Communications. The Globe’s editorial department was not involved in its creation.