Are you getting ready to buy your first home in Victoria? Finally, escaping from the endless cycle of renting and enjoying the freedom of owning a property is an exciting time—but there are also plenty of things to consider. 

The first is how to get a mortgage. If you’re new to the mortgage application process, it can seem daunting. However, we’ve put together a helpful guide that turns a potentially stressful journey into a fun-filled one. 

Discover 10 helpful tips for first-time homebuyer’s mortgages in Victoria right here. 

Best Tips For Your First-Time Mortgage

Applying for a mortgage means you’re often jumping through a lot of hoops and navigating a maze of paperwork. These tips will help you understand your responsibilities and simplify the application process. 

1: Consider Your Down Payment

Saving money in advance and building a healthy down payment gives you access to a broader selection of mortgage companies. Here’s a quick guide on how to maximize your savings as a first-time homebuyer. 

2: Get A Mortgage Pre-approval

You might think you know what you can afford, but mortgage providers base the amount you can borrow on multiple factors. Securing a pre-approval mortgage lets you understand what type of rates you’ll get and which properties to look at. 

A mortgage calculator can be beneficial if you’re looking for a ballpark figure. However, it’s best to speak to a professional mortgage broker, as they’ll assess your circumstances and connect you with suitable lenders. 

Obtaining a pre-approval lets sellers know you can afford the property, making your offer more attractive. 

3: Know Your Credit Score and History

Credit scores form a significant component of a mortgage company’s decision. Why? Because they provide an accurate look at your financial history and enable lenders to assess whether you’re a responsible borrower. 

If you’re unsure of your credit score, reference agencies like Equifax and Experian let you perform a free check. According to Equifax, your score should be over 660 to be considered “good,” but aiming to achieve a higher score could diversify your mortgage options.  

4: Homeowner Grants and Assistance Programs

The 2024 Federal Budget introduced incentives for first-time buyers. Canada’s Home Buyers Plan is making ownership more affordable for everyone and removing some previous obstacles.

Buyers can now withdraw up to $60,000 from their RRSP (Registered Retirement Savings Plan), an increase of $25,000 from before. Additionally, a 30-year amortization available on NEWLY built homes will help reduce monthly mortgage payment obligations.

5: Determine How Much Of A Mortgage You Can Afford

Mortgage affordability depends on multiple factors, not just your down payment. The first thing they’ll look at is your monthly income to decide whether you can make the repayments.

Any outstanding debts, including loans and credit cards, are also a factor in the decision. Mortgage companies also examine your overall debt, income and overall ability to pay the contracted mortgage payments.

The lender must also qualify all borrowers inside the federal mortgage stress test, which may also limit your property choices.

6: Gather All Of Your Loan Paperwork

Applying for a mortgage means filling out a lot of paperwork and ensuring the company has everything it asks for. Gathering important information in advance can make the process much easier. 

Mortgage companies often ask for the following: 

• Identification: Your passport and driver’s license are government-issued forms of identification, and most lenders will expect either. 
• Proof of Address: Most lenders also want to see your proof of address, which can be rental agreements or utility bills. 
• Employment and Income: Tax returns, pay slips and income verification are all essential when proving your eligibility to lenders. Some mortgage companies might request proof of employment from your workplace. 
• Bank Statements: You’ll also need to show recent bank statements to let lenders see how you manage your money. It also verifies whether you can afford monthly mortgage payments. 
• Proof of Debt: Collect credit card statements and loan agreements for the lender to review. This will allow them to process your application. 

Collect your mortgage application documents early and make digital copies of them. This makes it easier for lenders to access your information and can speed up the mortgage application process. 

7: Pay Down Your Credit Cards

Now for the most important part; paying down your credit cards. No mortgage company wants to offer money to someone with a high credit utilization rate, but reducing your bills positively affects your application. 

Dealing with huge amounts of credit card debt can be challenging, but there are two methods that can help: 

Snowball Method 

The snowball method can be beneficial, as you’ll focus on paying the smallest credit card balance off first and work your way up. However, this method can also slow you down, as it doesn’t factor in high credit card bills. 

Avalanche method

The avalanche method is the most effective way to reduce credit card debt. First, pay off the card with the highest interest rate. Then, work your way down. Using the avalanche method will also result in lower monthly credit card repayments. 

8: Reduce Your Available Credit

Reducing your available credit isn’t essential, but it can help with your mortgage application. For example, if you have a higher amount of available credit, lenders might view you as a higher-risk applicant because you could get into debt. 

Potential debt can increase your Debt to Income ratio, limiting your mortgage options. You don’t need to eliminate your available credit, which could also impact your score. 

9: Understand The Closing Costs

Mortgage closing costs can trip a lot of people up as they focus on the down payment, but there are certain fees to be aware of, including: 

• Legal Fees: Real estate lawyers handle your transaction, and you’ll need to pay them for their services. The rates often cost between $500 and $1000, depending on your lawyer. 
• Land Transfer Tax: LTT rates in BC are calculated based on the property’s value. You can calculate how much you’ll pay on the British Columbia website. 
• Inspection Fees: Appraisals enable the lender to assess whether the property is a wise investment. Depending on the mortgage company, they usually cost around $300. Building inspections vary in cost but are integral to the purchasing process. 

Moving costs, insurance rates and other fees vary depending on your personal circumstances. 

10: Set A Firm Budget

It’s easy to get carried away when buying your first home. Mortgage companies might offer you a considerable amount, but that doesn’t necessarily mean you should use all the money. 

Think about your monthly repayments and decide what you can realistically afford. It’s essential to factor in potential changes in employment, relationships and children. 

Once you have this information, setting a budget and feeling confident that you’ll enjoy your new home will be easier. 

Book A Free Consultation For Your Victoria Mortgage

Once you secure a mortgage, you can look forward to moving into your property and enjoying a new lifestyle. Being in control of your home, not dealing with rental agencies and making changes to the decor is worth the initial application process. 

If you’re a first-time buyer and want to secure the best mortgage rates, our professionals are here to help. Prime Mortgage Works has access to a vast network of lenders outside of traditional banks, who can help secure your best Victoria mortgage rate. 

We’ll support you throughout the process, ensuring you have everything you need to transform from renter to owner. 

Begin Your Application

Housing in British Columbia is an ongoing issue, with many prospective buyers and tenants struggling to find a place they can call home. However, recent initiatives that aim to stabilize the property market are paving the way for a brighter future. 

From the promise to build new homes to making ownership more affordable for first-time buyers, there are plenty of ways to get onto the property ladder. 

The government has also introduced an innovative Secondary Suite Initiative, which can benefit homeowners and renters equally. 

In this guide, we’ll explore how the initiative works and reveal how you can secure a $40,000 grant for your property. 

How Does The Secondary Suite Incentive Work?

The SSIP is an initiative designed to support homeowners while also creating more rental options in local communities. Homeowners can receive a grant to build a secondary suite and rent it out below market value. 

The grant covers up to 50% of your renovations (up to $40,000), and you won’t need to repay it—as long as you meet the stipulations. 

Once you build the secondary unit, you’ll rent it at the agreed-upon rates, depending on the suite’s size and number of bedrooms. 

You won’t need to repay the grant if you rent the suite for at least five years below the market price. Funding is in place to support homeowners who meet the eligibility criteria, but grants will be awarded on a first-come, first-served basis until the funding runs out. 

Eligibility For A Secondary Suite Grant 

Homeowners can use the Secondary Suite Incentive Program Portal to apply for a grant, but eligibility criteria are in place. Understanding whether you can secure an SSIP grant before applying can save time and money. 

Let’s look at the terms you’ll need to fulfil. 

1: Homeowners 

All applicants must be listed as registered owners of the property receiving the grant. The criteria also state that applicants should be citizens of Canada or have permanent residency status, ruling out international owners who use the property as a holiday home. 

The property should also be your primary residence, and the applicable household members must have a combined income below $209,420. 

2: Property 

The property should fall under the approved British Columbia regional districts and municipalities, which include Victoria, Vancouver, and West Vancouver. The full list of eligible locations is available here. 

BC Housing has also established a grant threshold, which means that homes over $2.15 million will not be able to secure funding. 

3: Secondary Suite Restrictions 

You’ll need to apply for permission as some zoning areas won’t permit secondary suites. The secondary unit must also fulfil legal guidelines, including a bathroom and kitchen. It should be a new suite, as improvements to existing suites aren’t eligible for grants. 

Garden suites and laneway homes are eligible as long as you receive building permits after April 2023. 

What Costs are Eligible For the $40,000 Secondary Suite Grant?

When applying for the Secondary Suite Grant, it’s important to remember that not all expenses will be covered. While you can receive up to $40,000—or half the construction costs—it’s best to plan ahead and understand your obligations. 

Here are the costs that are eligible for the grant. 

Architectural and Design Fees

To ensure the safety of your suite, you’ll need construction professionals and architects. Any fees accumulated during the design and planning process, including drawing up blueprints and assessing the building, can be included in your grant. 

Existing Structural Modification to A Home

Most properties must undergo minor structural alterations to accommodate a suite, including reinforcing the current structure, altering the layout and adding new walls or doors. 

However, the modifications must be necessary for accommodating the suite, so it’s essential to check with the construction company before beginning the work. 

Appliance Costs

Under the SSIP, all accommodations must be livable, which means you’ll need to ensure security and comfort. In some cases, you might be able to include appliances such as refrigerators, washing machines and stoves in the grant. 

Building and Permit Fees

When building a secondary suite, applicants must obtain applicable building permits from local authorities. These permits ensure you comply with any restrictions in place, but you can include the administrative costs in your grant. 

Fixtures

All fixtures that are essential for functionality can be included in your grant. For example, you’ll need to install sinks, light fixtures, toilets and other permanent installations. As long as they ensure functionality, you can receive the money. 

Electrical Work and Upgrades

Installing outlets, wiring, and other electrical work is integral to your unit’s safety. All of these expenses fall under the grant. You can also upgrade your current electrical system if it supports the unit. 

GST/PST

You can also use the grant to cover Goods and Service Tax, which is levied on services and goods for domestic consumption. Provincial Sales Tax is also eligible, making it easier to fulfil all criteria without the additional costs. 

How To Apply For The $40,000 Secondary Suite Grant

As mentioned, you can use the SSIP Portal to make your application. The grant officially opened for applications on April 17th, 2024, and BC Housing will issue funding on a first-come, first-served basis. 

Following these steps ensures you have all the necessary information needed for the grant, speeding up the process: 

1. Check the criteria to ensure eligibility. This includes assessing your annual income and the property’s value. 
2. Check with your local authority to determine whether your property qualifies for a suite—some areas have stricter rules than others. 
3. Collect your documents for the application form, including a building permit, details about your property, and proof of your income. 
4. Send your application and wait for approval. Then, you can construct the suite and find a suitable tenant. 
5. Stay within the program requirements, including renting the suite at below-market prices. BC Housing will forgive 20% of the loan yearly if you stick to the terms. So, in five years, you won’t have to repay any money. 

Book A Consultation With A Victoria BC Mortgage Broker

The Secondary Suite Incentive Program isn’t just about creating more rental properties in BC; it also makes homeownership more accessible. If the costs associated with owning a property put you off in the past, adding a secondary suite could boost your income. 

Knowing you can receive money each month from the suite and potentially pay none of the grant back offers peace of mind. If you’d like to discuss your options and find a suitable property, speaking to a professional mortgage broker is the first step. 

Prime Mortgage Works works with individuals from all backgrounds, including first-time homebuyers. Please feel free to contact us for more information or begin your mortgage application today.

The Canadian government’s 2024 Federal Budget announced more accessibility for people who want to purchase a property by building more properties, extending mortgage amortization periods and increasing RRSP withdrawal limits—welcome changes for many. 

However, other announcements, including the increase in capital gains tax and the new home flipping tax, were met with less enthusiasm. 

In this guide, we’ll explore the home flipping tax, whether it will impact you, and analyze whether it’s a good or bad thing for residents. 

Let’s dive straight in. 

What is the Home Flipping Tax?

The home flipping tax is a new measure that requires homeowners to pay tax if they sell a property within two years of purchasing it. If the property is sold in year one of ownership, the tax rate will be 20%, while 18 months of ownership decreases to 10%. 

Selling the home after two years of ownership has no tax implications. The new legislation will take effect in January 2025, and the government believes it will generate around $40 million in revenue. 

How does it work?

When you sell your home, you’ll pay tax based on your profits. For example, if you purchase a property for $600,000 and sell it for $700,000, you’ll pay $20,000, but selling the property 18 months after you buy it reduces the tax charges to $10,000. 

Who is Subject to the Home Flipping Tax?

Property flippers often purchase a property and sell it shortly after completing renovations or noticing changes in the market, allowing them to make a profit. 

The new flipping tax law now means that anyone who sells a property within two years of purchasing it will be subject to taxation. 

Property developers, those who bought the home for a personal project, and residents who used the home as a second or temporary residence are all subject to home flipping taxes. 

It’s important to remember that the new laws apply to anyone who owns and sells property in the province, not just BC residents. This means international buyers will also pay home flipping tax if they sell a home within two years of purchasing it. 

Who is Exempt From the Tax?

While the new tax laws will impact many BC residents, there are exemptions that can protect you. If you fall into any of the following categories, you might not need to pay any tax—even if you sell the home soon after buying it. 

Individuals who have owned their property for more than two years

The legislation was enacted to prevent home flippers from profiting from the housing market while first-time and low-budget buyers struggle to climb the property ladder. 

Many people buy a home and have to move shortly after due to expanding families or other reasons. If you’ve owned your property for over two years, you can sell it and avoid the home flippers tax. 

You have a relevant presale contract that takes effect prior to 2027

Presale contracts are agreements between buyers and developers where the buyer agrees to purchase a property, even if it’s still in the planning or construction stages. 

These contracts can last for years, but you might be exempt if you entered into the agreement before the tax laws came into effect. 

You’re eligible for the primary residence deduction

If the home you’re selling is your primary residence, you can apply for a reduction, allowing you to deduct the capital gains. If you bought a property and lived in it the entire time, you might not have to pay any house flipping tax—but there are restrictions. 

Residents need to own the property for at least one year, so even if someone lived in a property continuously for eight months, they’d still need to pay tax on the sale profit. 

You’ve had a change of circumstances

There are also exemptions for individuals who sell a property due to changing circumstances. If you change jobs, relocate for other valid reasons, or your marriage breaks down, you might be able to sell the property and avoid paying taxes. 

However, there are restrictions. For example, if you relocate to another area, your current property must be at least 40 kilometres away from your place of work or study. 

You fall under another exemption category

Other exemptions include buying properties in protected locations, inheriting a home and working in specific sectors. The Government of British Columbia website has helpful information on all possible exemptions. 

Understanding how much you might pay can help you decide whether it’s best to sell the property or wait until two years pass.

Benefits of The Home Flipping Tax

While the home flipping tax might be unpopular with some, others will regard it as a positive move that will make housing more available and level the playing field for first-time buyers. 

Let’s take a look at the benefits that might result from the home flipping tax. 

Decreases Home Flipping As A Practice

Home flipping benefits property developers but also creates problems for first-time buyers, making it harder for them to purchase a home. 

According to CTV News, many renters feel like purchasing a property isn’t possible in this lifetime, highlighting an ongoing problem with affordability and accessibility. 

Many buyers rely on properties that require renovations, as they’re easier to purchase—but flippers provide more competition, which often increases property prices. 

The new laws mean many flippers will avoid selling their homes too early, stabilizing the housing market and making ownership a possibility for prospective buyers. 

Discourages Speculation and Investment Properties

Many investors purchase properties as short-term investments, aiming to sell them quickly and make a profit. Unfortunately, this leads to shortages in rental homes and causes supply issues. 

Families looking for properties to buy and rent are often pushed out of the market if they’re on a budget, but the new laws discourage speculation and investment properties. 

Potential long-term effects include stable property prices and accessibility for renters. 

Generates Additional Revenue From Taxes

The 2024 Federal Budget also promised millions of newly built properties by 2031, and the revenue from BC’s home flipping tax will raise funds to facilitate construction across the province.

The government could use the funds to make properties more affordable, provide rental assistance to low-income households, and support first-time buyers. 

Downsides of The Home Flipping Tax

While the home flippers tax has numerous benefits, it will also result in some disadvantages. The government will naturally try to strike the right balance between offering first-time buyers support and ensuring the market remains attractive. 

Impedes Regretful Home Purchases

Buyers in BC can purchase and sell a home with no implications right now, but this will change when the new laws come into effect. Some people might approach the situation warily and be less likely to purchase a new home unless they know they’ll keep it for two years. 

However, investors or buyers with high incomes might not be put off by the home flippers tax, which could still maintain high levels of activity within the market. 

Doesn’t Stimulate Additional Housing Builds

While the tax will make purchasing a property more attractive for first-time buyers, it won’t stimulate additional housing construction. The tax only targets existing homes that people sell quickly, so it won’t encourage developers to build new homes. 

Many could focus on renovating existing properties instead of building new homes – meaning there’s less supply.

May Affect Development Presales

Investors often buy presale apartments and condos to sell quickly, and the new tax laws might reduce the number of investors interested in them. It could also lead to people seeking out other opportunities that don’t carry the same tax risks. 

The number of development properties might drop due to investors delaying projects, meaning there’s a lower supply of affordable housing. 

Learn About The Home Flipping Tax With Your Victoria Mortgage Broker

The home flipping tax will change the BC housing market in many ways, but only time will tell if it has the desired impact. If you’re considering buying a new home, the laws don’t come into place until January 2025, giving you plenty of time to find a property that grows with your family. 

At Prime Mortgage Works, we help clients find the right mortgage deal for their needs. Whether you’re a first-time homebuyer, investor, or want to upsize, our dedicated mortgage brokers can help. 

Please contact us today and discover our vast network of specialist lenders. 

Buying a home is an exciting process as it symbolizes a new beginning. From viewing different properties to waiting in nervous anticipation for your offer to be accepted, the process can also be draining. 

Many people forget the importance of appraisals and assessments—two integral factors when moving home and securing a mortgage. While property assessments define the taxes you’ll pay, appraisals ensure you’re getting a fair deal and can simplify the mortgage application process. 

In our homebuyers guide to assessments and appraisals, we’ll cover everything you need to know about the two, including: 

1. The key differences between property assessments and appraisals. 
2. How house appraisals work and the different types available. 
3. How home assessments work and key home assessment dates.
4. The benefits of home assessments. 

What’s The Difference Between an Assessment and Appraisal?

Property appraisals and assessments are essential for prospective homebuyers, ensuring you know how much you’ll spend. Let’s explore the key characteristics of both: 

Home Assessments 

The Provincial government performs property assessments to assess how much tax homeowners need to pay. These taxes fund vital services, including public schools, police, maintenance of public roads, and other expenses that local authorities have to pay. 

A professional will assess your property’s size, condition, location and how it compares to other properties in the area. Homeowners with large properties in affluent areas often pay higher taxes than those in low-income areas. 

Home Appraisals 

Appraisals also examine a property’s value, but they are not for tax purposes. Prospective buyers might hire a professional appraiser to determine the real market value of a property, ensuring complete clarity. 

If you’re applying for a mortgage, the provider might also want you to get an appraisal to determine whether the property is worth the price. The professional appraiser will evaluate the property’s condition and location and compare their findings against those of other properties in the area. 

How Does A House Appraisal Work?

According to Canada Newswire, over 30% of property owners in Canada regret agreeing to their mortgages due to high rates and financial difficulties. House appraisals can ensure you get a better mortgage deal and don’t overpay for a property, making them a wise investment. Remember – mortgage brokers have access to a wide variety of lending products, and can get you the best mortgage rates available.

Here’s what you can expect during the house appraisal. 

1: The appraiser first visits the property

When you book an appraisal, the professional will visit the property and assess it. They’ll examine the exterior and interior, looking at the location, curb appeal, whether it has a parking space and other vital factors outside, then look at the interior. 

Your appraiser will consider the number of rooms, decor, and unique features. Structural integrity and the property’s condition are also important, as even minor issues can decrease its value. 

2: The appraiser will research the competition

After assessing the property, the appraiser will look at comparable properties (comps) to get an idea of how much they sold for. They’ll also consider the condition of each property, its advertised market value, and other information to form a basis for your valuation. 

However, the value generated from these appraisals is an estimate only, as your property’s condition is a defining factor. 

3: The appraiser provides a full appraisal report of the house and property

Once the appraiser has all the information they need, they’ll create a report that details the property’s market value based on the above factors. The information from these reports can help prospective buyers secure better mortgage rates or make a lower offer. 

Appraisals can also help sellers and real estate agencies price the property, increasing enquiries and offers. 

Different Types of Home Appraisals

With a full appraisal, the professional personally visits the property and performs a full inspection. However, if the seller doesn’t agree to a visit or you’d prefer a more affordable option, alternatives are available, including drive-by, hybrid and desktop appraisals. 

Each has its benefits, and the best solution for your needs depends on your reasons for the appraisal. 

Drive-By Appraisal

Drive-by appraisals are visual assessments of a property without the professional going inside the home. They’re beneficial when your lender knows the home is  in a low-crime area and is confident about its value. 

For example, newly constructed homes are less likely to have structural issues or other damage that might impact their value. Ordering a drive-by appraisal is often more cost-effective but less thorough than a full appraisal. 

Desktop Appraisal

Technology makes it easier to source details on a property, including its previous value, past selling prices, and other important information. You can often ask for a desktop appraisal, which uses available information to generate a valuation. 

The specialist will look at other properties in the area and compare them with the home you’re buying, ensuring a realistic market value. 

Hybrid Appraisal

Hybrid appraisals typically combine elements of desktop and drive-by appraisals, giving you and the mortgage lender more clarity about the property’s value. 

For example, they might drive to the property for a visual inspection but also perform research to understand how comps are selling in the area. These appraisals are ideal if you want to save money but would prefer a thorough inspection that offers a realistic valuation. 

What is a Home Assessment in BC?

Unlike home appraisals, assessments are primarily used by local authorities to determine the tax you’ll pay. As confirmed by BC Assessment, properties within the British Columbia province are assessed based on their market value and the likely price they’d sell for. 

The assessment calculates a tax amount based on the age of your home, its condition, and its location. 

Information is collected

An accurate home assessment relies on in-depth information about the property, area and other key factors. People with properties in more affluent areas often pay higher taxes – as do those living in period homes. 

The assessor will collect information on the home, enabling them to assess what it could be worth. 

Information is analyzed

The BCAA then performs an in-depth analysis of the information they gather, evaluating the property market for changes and looking at trends. The process ensures they’ll provide an accurate valuation, which makes it easier to manage taxes. 

Assessment notices are delivered

Once the valuation is complete, homeowners receive an assessment notice detailing how much tax they’ll pay over the year. If you’re unhappy with the decision or feel the tax amounts are too high, you can appeal and ask the BCAA to reconsider its position. 

Home Assessment Key Dates

If you’re new to home assessments in British Columbia, getting to grips with the key dates can be challenging. Whether you want to ask for a review or stay up to date with the assessment process, these are the dates you should be aware of. 

January 31: Property Assessment Review Panel Deadline

Property owners can submit a review request to the BC Assessment panel if they believe their assessment is inaccurate. Failing to submit your request by January 31 will likely result in the case not being heard. 

July 1 – Valuation Date

July 1 is BC’s tax-roll date and is the reference point for assessing properties each year. If your property’s value decreases or other significant changes occur after this date, they won’t be factored in until the following year. 

October 31 – Physical Condition and Permitted Use

The BCAA also requests that property owners update them on any changes to the property’s condition or usage by October 31. If the condition deteriorates or the property is not in use, its value can decrease. 

December 31 – Assessment Notices

The BCAA sends assessment notices to homeowners and realtors, letting them know the tax breakdown for the next year. Once you receive your notice, you’ll have one month to request a review. 

How a Home Appraisal Helps With Buying Your Home

Home appraisals are an investment, but they also offer clarity and can help you decide whether to buy a home. Here’s how a home appraisal can support you during the decision-making process: 

• Fair Market Value: Nobody wants to overpay for a home, and appraisals tell you what the property is worth. 
• Negotiations: Appraisals prove a home’s value, making it easier for prospective buyers to negotiate the right price. 
• Mortgage Opportunities: Lenders want security and peace of mind that the property is a wise investment. Providing an appraisal could help you access better rates.
• Warning Signs: An in-depth appraisal can also flag issues related to the property, including whether it has any structural damage and if other homes in the area sell well.  
• Confidence: Buying a home is a huge decision; jumping into it could mean spending more money. The appraisal will give you peace of mind that you’re making the right choice. 

The Benefits of Home Assessments For Homebuyers: 

• Clarity: Knowing how much a property is worth can help you decide whether to buy it or look for something with a higher market value. 
• Understanding: Home assessments will also look at the surrounding properties in a neighbourhood, enabling prospective buyers to see if the area suits their needs. 
• Budgeting: All homeowners must pay taxes to their local authorities, and understanding how much you’ll spend will help you budget for ongoing expenses. 
• Decision-Making: Many people buy properties as investments, and an assessment can help you decide whether the property you’re looking at is a good investment. 

Book A Consultation With A Top Victoria BC Mortgage Broker

Going into the home buying process with complete clarity means you’ll know what you’ll spend and whether your property has the potential to increase in value. 

However, before considering assessments and appraisals, it’s important to know whether you’re eligible for a mortgage. 

If you’d like to discover your eligibility and get access to the best mortgage deals, working with a top Victoria, BC, mortgage broker is a wise decision. Prime Mortgage Works has access to a network of specialist lenders, and we help people from all backgrounds diversify their mortgage options. 

Please feel free to get started with your application today or contact us with any questions. 

Bank of Canada April Interest Rate Announcement

Homeowners and property hunters across Canada waited to see whether the Bank of Canada would shake up its interest rates. However, the April 10, 2024 announcement confirmed what most experts already knew—the overnight lending rate will stay at 5%. 

Our recent 2024 interest rate predictions post highlighted the likelihood of this happening despite many hoping the rates would fall. 

What does this mean for people in Canada? More importantly, how will the rate announcement impact your mortgage options? 

Find out here as we dive into the implications of a 5% interest rate hold. 

April 10, 2024 – Bank of Canada Announces Steady Hold at 5%

The Bank of Canada announced its interest rate hold in a statement, emphasizing its policy of quantitative tightening. Many hoped things would be different due to the February inflation report, which revealed a Consumer Price Index of 2.8%. 

The Bank of Canada’s target is 2%, signalling an apparent reduction in inflation rates. However, mortgage interest costs and shelter are the most significant contributors to CPI rates, and the bank wants to see more improvements before officially cutting interest rates. 

Will the Interest Rates Fall?

Despite this being the sixth consecutive hold in interest rates, there’s still hope they’ll decrease in June. Some positive changes show that the Canadian economy is stabilizing, but unemployment rates remain high (Bloomberg). 

Tim Macklem, the BOC’s governor, stated that the inflation rates are promising, but lowering the bank’s rates is a significant decision that could impact the economy. If these rates continue to fall, there’s a good chance the Bank of Canada will reduce its interest rates by June 2024. 

Macklem previously stated that 2024 would be a transitional year for interest rates – but for now, the rate hold will inevitably frustrate some people (CBC). 

Benefits of An Increase in Interest Rates

While many people want to see interest rates decrease, others focus on the benefits higher rates offer. They include: 

1. Growing Savings Accounts: People with access to low-interest loans and credit cards are less likely to save money, as it’s easy to borrow. However, high interest rates require a more conservative approach to saving money, resulting in a better return on tax-free and high-interest savings accounts. 
2. More Real Estate: Canada is one of the most competitive places to buy a home, with many people trying to secure a property. When the interest rates are higher, fewer people will search for property, making it easier to move into densely populated cities. 
3. Tamed Inflation: Inflation rates are a balance of supply and demand. When the rates are higher, consumers are more likely to cut back on non-essentials, decreasing the rates and possibly returning to their previous levels. 

Benefits of a Decrease in Interest Rates

A decrease in the Bank of Canada’s interest rates would offer many benefits for consumers and homeowners. They include: 

1. More Spending: Low interest rates enhance loan, mortgage and credit card accessibility. When people can afford a home, construction and other industries are strengthened as they receive more investment. 
2. Less Debt: Homeowners with variable interest rates can save money by paying off other debts and focusing on their savings accounts. Over time, this will result in less spending and boost investments. 
3. Stronger Economy: When people can access loans and other financial products to enhance their futures, the economy strengthens. 

Bank of Canada Interest Rate Implications on Victoria Mortgages

Our 2024 mortgage interest rate predictions explore what might happen over the course of this year—but how will the 5% interest rate hold impact Victoria mortgages? 

It depends on whether you have a fixed or variable-rate mortgage, as the latter is fully dependent on the Bank of Canada’s interest rates. However, people on fixed rates are protected for the duration of their initial mortgage agreement. 

Whether you’re a first-time buyer, preparing to renew your mortgage, or selling your home, the rates might impact your options.

For First Time Homebuyers

There are many things for first-time homebuyers to consider, including whether the 5% interest rate hold will benefit them. Lower rates make the housing market more accessible for first-time buyers and mean they’ll often make lower monthly payments, which is a huge benefit. 

In contrast, lower interest rates also mean there’s more competition, which might impact first-time buyers. With fewer options for a suitable mortgage, some people will have to turn to rental properties, compromising the freedom homeownership offers. 

However, a hold in interest rates means many people might delay looking for a property, and first-time buyers could have a competitive edge. 

For Mortgage Renewals and Transfers

People on fixed-rate mortgages might also experience issues associated with the 5% interest rate hold. If you’re at the renewal stage or want to transfer your mortgage, it could impact your options. 

• Renewals: The hold in interest rates means homeowners might not find a great deal when they need to renew the mortgage.
• Transfers: If you want to transfer your mortgage to a new property, you might find the interest rates limit the terms.

The best way to avoid issues is to research your options in advance and negotiate with different lenders. Your current mortgage will have portability terms, which can help you make the best decision for your needs. 

For Those Selling Their Homes

While higher interest rates limit housing market activity and low rates create a surge, the 5% hold will likely mean there are few changes in housing demand. If you plan on selling your home, the hold could result in less buyer interest. 

However, some buyers want to take advantage of less competition, and selling a property is still possible. A dynamic pricing strategy can help you attract prospective buyers and generate offers. 

Book A Consultation With A Top Victoria BC Mortgage Broker

We hope to see the economy stabilize and Bank of Canada interest rates decrease in the future. However, the rate hold doesn’t mean you need to put your plans on hold; a top Victoria, BC, mortgage broker can help you find a mortgage deal that aligns with your needs. 

Prime Mortgage Works has access to a range of specialist lenders. Working with us gives you access to better interest rates and terms. Please get started today and discover our extensive network of lenders.