First Time Homebuyers

Pre-construction real estate risk and rewards

Recently I sat down with Daniel Char, a mortgage broker who helps real estate buyers get mortgage financing. We talked about a lot of things that home buyers should be aware of, including some risks and rewards of buying pre-construction homes.

The Reward: When buying a pre-construction home, you’re typically required to put down a deposit of around 20% of the purchase price, and the builder is contractually required to provide occupancy of the home within a few years. If the housing market keeps on rising, by the time the home is completed the fair market of the home may be more than the purchase price.

The Risk: Of course, the housing market does not always go up. There is a risk that the fair market of the home is less than the purchase price when the builder finishes construction and requires you to complete the closing of the property. That’s when having a mortgage broker like Daniel can help you get the mortgage financing that you need to complete the purchase.

Check out our full conversation here:

Pre-construction real estate risk and rewards

New first time home buyer incentive

Earlier this year, Trudeau’s federal budget for 2019 outlined a new incentive to help first time homebuyers buy their first home that he called a “shared equity mortgage”. It’s effectively an interest free loan from the federal government for eligible homebuyers.

More details have since been released, and it’s looking like it’ll be an exciting end of the year for first time homebuyers.

The program will be ready to receive applications on September 2, 2019, with the first closing taking place on or after November 1, 2019.

The definition of “first time homebuyer” is quite broad, and in fact includes buyers who have actually owned a home before:

  • you have never purchased a home before;
  • you have gone through a breakdown of a marriage or common-law partnership; or
  • in the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned.

If you’re looking to buy a new home soon, remember to ask your mortgage lender or broker about this incentive!