Who’s taking care of your biggest asset’s value – your home? 

With grumblings in the Toronto and Vancouver housing market about a real estate bubble, how will those markets affect home values in this area? Since a person’s home is often their largest asset, ensuring that that equity is protected is vital. But who’s in charge of protecting that value? Do we in fact have any control? A depreciation in your home’s value has a negative effect on your net worth but will it affect your monthly bills or your short terms financial situation?  

Working with a mortgage broker who is always easy to reach and provides advice based on their relationship with you and not the bank is important. This is where our clients benefit from being with us during times of change! 

Let’s understand the housing market and what’s really at stake 

If you’ve recently applied for a mortgage, you’ve experienced the tightening of government regulations. Most of my job now has been related to managing customer expectations around what documents will be required versus helping the client focus on paying off their mortgage or consolidating their debts. Although it’s frustrating for most individuals, the silver lining is that it will help protect the housing market and the equity that we’ve all built in our homes in the last five years.  

Given that mortgages are more difficult to obtain, what can you do as a client to ensure you get the best possible mortgage and ensure that your mortgage is approved in a timely way? 

The most important thing is to get organized. Most people are not financially organized and that’s just the nature of people. So when it comes to renewing your mortgage, consolidating your debt, or buying a house this is a great opportunity to get your finances in order. 

How to Get Your Finances in Order 

Getting your financial house in order is easier than you think. It involves collecting some basic income documentation. Remember you’re asking for a loan of several hundreds of dollars, demonstrating fiscal responsibility is key. Here’s a list of some basic income documents you will need up front: 

  • T4’s from the last two years 
  • Notices of Assessment from Revenue Canada for two years 
  • Two recent pay stubs 
  • Employment letters 

If you are self-employed the lenders will also require two years of personal T1 Generals or corporate financial statements from the last two years. 

Improving your Financial Health  

Part of your financial health also involves paying bills on time such as lines of credit or credit cards. Even if you’re struggling to pay them off in full each month, making the minimum payment on or before the due date is critical. Another key factor in maintaining a high credit score is to keep the balances on your credit history at least half of the value if you are not paying them off monthly. 

So what in fact will happen to home values in Guelph and the surrounding area? Because people who demonstrate fiscal responsibility are the only ones qualifying for a mortgage, there will ultimately be fewer mortgage defaults within time. We’ll continue to see good appreciation growth in the value of our homes…it just won’t be 20% year-over-year as some areas of Guelph have been experiencing. That being said we can expect sustainable growth in a consistent matter, as we still need more homes for the population that is expected to continue growing in Southwestern Ontario which is good for everyone.  

Let’s keep in mind what’s driving home values…it’s the demand from people between the ages of 30-40 years. Remember you’re a large population cohort and although the market has taken a pause if you’ve got a good down payment and income stability now’s your chance to get into the market; whereas others who are not in a secure financial position will take a pause and either save more or pay off debts! 

Remember – we’re here to help!  

Please contact me and I’d love to chat about what’s happening in the mortgage and housing market and give you some good, personalized advice!