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Is Now the time to buy?

October 30, 2012

Is now the time to buy?

These are questions that we commonly hear at The Mortgage Centre Comox Valley.  Is now the time to buy?  Will property values drop?  Will interest rates rise?  What happens if one or the other occurs?  The blog post below shows the difference between purchasing today and purchasing one year from now, as if prices were to drop 10% AND interest rates were to rise 1%, using actual calculations.

 

So the question posed is “what if I wait for a year to purchase my new house. Prices are falling aren’t they? Won’t it be cheaper if I wait?”

Well actually, probably, no.

If we are dealing with a non-cash buyer they are going to have to finance their purchase with a mortgage, hence the reason they are talking to us. So if you do a quick comparison of what the monthly payments would be for a purchase today and a proposed purchase a year from now if the anticipated 1% increase in fixed term mortgage rates actually occurs. They are:

Purchase today:

Purchase price                            $300,000

5% down payment                      (15,000)

Net amount due                          $285,000

CMHC Fee                                      7,838

Total Mortgage Amount              $292,838

 

Payments based upon a 5 year rate of 3.29%, and a 25 year amortization are $1,430   

Now if they consumer decided to wait for a year in anticipation of a price drop of 10% in real estate values this is what the purchase would look like:

Purchase price                          $270,000

5% down payment                    (13,500)

Net amount due                        $256,500

CMHC Fee                                    7,054

Total Mortgage Amount           $263,554

 

Payments based upon a 5 year rate of 4.29%, and a 25 year amortization are $1,428

 2 Dollars !! That is the difference in what most people are worried about – what their payment is going to be!! Less than the cost of a Tim Hortons coffee!

Now is a great time to buy. Lots of inventory to pick from, some of the lowest interest rates in history, and the ability to get into a home at a reasonable monthly cost that is as cheap as paying rent.

If you have to live somewhere it is always better to be in your home, building equity in your property, not in your landlord’s property.....

 

If you would like more information, or calculations performed that are specific to your needs, contact our office today!  250-898-8821 or 1-866-898-8821

 

- Author Unknown, printed with permission from Island Savings Credit Union





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