Are you ready to invest in a rental property? Victoria is one of British Columbia’s most popular places to live, combining mild weather with stunning nature and plenty of fun-filled activities. 

Whether you want to rent a property or plan to invest in a commercial business, the process can be daunting.

Luckily, we’re here to clear everything up for you with our complete guide to purchasing an investment property. Let’s jump straight in. 

Why Invest in a Victoria Property?

Victoria BC, might be unable to match Vancouver and Toronto in size, but it certainly has plenty of character.

Factor in the thriving economy, it’s easy to see why Victoria is a prime location for real estate investment. Here’s why so many people choose to invest in the city:

• Strong Rental Market: Victoria has a growing population with plenty of students. The city’s low availability of rental properties also means investors can generate high levels of interest (CTV News).
• Seasonal Rentals: With its beautiful gardens, historical attractions and outdoor activities, Victoria is the perfect place for seasonal rentals. Investors can offer tourists AirBnB properties and make a profit.
• Economic Stability: Victoria has a stable economy driven by government services, education, technology, and tourism. The stability sustains rental income and property values.
• Appealing Lifestyle: The city’s temperate climate, nature, and laid-back vibes make it attractive to students, professionals and retirees—there will always be a housing demand.
• Growth Potential: With ongoing infrastructure developments and a focus on sustainability, Victoria is expected to continue growing, making property appreciation likely over time.

Financial Benefits of Purchasing an Investment Property

Purchasing an investment property requires a lot of consideration, and the initial expenses can put some people off. However, multiple financial benefits are associated with investment properties, and they usually pay off in the long term. 

1: Securing your financial future

Purchasing an investment property can be a great way to generate passive income. We’re all looking for that elusive side hustle, but real estate investments provide a steady income through rental payments or business opportunities. 

The extra revenue can be used to build a savings account, make other investments, and enjoy long-term financial security. 

Remember, your investment property’s value can increase over time, which means you might make a significant profit in the future. 

2: Building equity and credit

Every mortgage payment you make on an investment property builds equity. As that equity increases, you’ll own more of the property, which gradually increases your wealth. 

It’s important to remember that paying off the outstanding mortgage is just one benefit, as you can use your equity to make other investments. 

Many investment property owners build equity in one property and then use that money to purchase another. 

3: Having assets to pass down to children

Owning an investment property allows you to build a valuable asset to pass down to future generations. 

We all know that owning a property is harder for younger generations today, but your investment could give your children a financial head start. 

First Steps to Securing Your Investment Property Mortgage

If you’ve weighed up the pros and cons of buying an investment property and would like to go ahead, there are some vital steps to follow. 

From finding an affordable mortgage rate to investing in a property that will offer long-term financial security, the following steps ensure a stress-free process. 

Consult With a Victoria Mortgage Broker

Looking for a mortgage through mainstream channels means you might not secure the best deals. 

Mortgage brokers can help you access the right terms for your needs and will support you throughout the application process.

Working with a professional mortgage broker means you can find lenders that suit your financial circumstances. 

Choose Your Down Payment Option

Next, it’s time to decide on your down payment. In most cases, you’ll need a larger deposit for an investment property than residential homes, with the standard amount between 20-30%. 

Again, this depends on your unique circumstances, and the government’s commitment to creating more housing options might mean you can access mortgages with lower down payments. 

Work With A Realtor

Working with a realtor specializing in investment properties is always a good idea. These professionals will understand what you’re looking for and can discuss each property’s rental income. 

Most importantly, they’ll help you find properties that align with your investment goals without trying to oversell.

Have the Property Assessed

Before finalizing any deal, get a thorough property appraisal to ensure the price is appropriate and you make a wise investment. The last thing you want is to jump into a decision and then face extensive costs. 

Spending more on a property that doesn’t require much maintenance means you can maximize your investment. 

Realize All Potential Closing Costs

You’ll also need to factor in additional costs when you purchase an investment property. It’s easy to forget about closing costs, taxes, insurance, and legal fees, but focusing solely on the down payment could lead to excess debt. 

These additional fees can mount up over time, underscoring the need for a comprehensive financial plan. When purchasing an investment property, make sure you have enough money to cover all your legal fees and other expenses. 

Secure Trustworthy Tenants

Last but not least, remember to find trustworthy tenants. You’ve spent all that time looking for a property, securing a mortgage and planning your financial future, so make sure your tenants are reliable and will treat the property with respect. 

Working with a reputable letting agency can give you peace of mind, as agencies perform extensive checks on prospective tenants. 

Book A Meeting With a Victoria, BC Mortgage Broker

Victoria offers a range of investment properties, including condos, apartments, houses, and commercial buildings. If you’re ready to find a mortgage, working with an experienced broker can help you find the best deals. 

Prime Mortgage Works can help you assess your affordability and choose a mortgage that aligns with your financial goals. Please get in touch if you have any questions or begin your application today. 

Most homeowners in Victoria will face the same challenge at some point: renewing their mortgages. 

While it might seem like extra work, mortgage renewals are an opportunity to evaluate your current financial situation and find better interest rates. 

Understanding how to find the best deals can save thousands of dollars and improve your financial circumstances in the future. 

In this post, we’ll reveal five top tips for mortgage renewals in BC so you can feel confident about the process. 

Let’s get straight to it. 

What Should You Consider When Renewing Your Mortgage?

1. Long-Term Impact: It’s easy to focus on convenience and stay with your current mortgage lender, but are you getting the best deal? Doing your research and shopping around could mean you save lots of money in the future. 
2. Financial Stability: Are your finances stable? Is your job likely to change in the future? Knowing this can help you decide whether you need to find lower interest rates. 
3. Base Interest Rates: The Bank of Canada recently decreased its base interest rate to 4.5%, and if the economy keeps improving, we might see these rates decrease further. Opting for a variable-rate mortgage could help you save money, but fixed-rate mortgages are more stable. 

Top 5 Tips For Mortgage Renewal

Are you ready to take the stress away from the mortgage renewal process? The following tips will make the search easier and ensure you have confidence in your new provider.

Start Shopping For Mortgage Renewal Quotes Early

One of the most common mistakes homeowners make is waiting until the last minute to start the mortgage renewal process. 

Most mortgage companies send a renewal notice within six months of your term expiring, giving you enough time to begin the research process. When you look for quotes early, it gives you an advantage. 

You can explore various mortgage lenders and review their rates. Here’s why early research is vital:

• Avoid Pressure: Getting close to a renewal date can increase pressure, and you may need to accept an offer quickly. You’ll have plenty of time to review your options by starting early. The  
• Secure Better Rates: Interest rates can fluctuate, but beginning your search immediately means you can secure better rates and lock the deal in before interest potentially rises again.
• More Time to Switch Lenders: You might find that other lenders offer better terms or lower interest rates. You’ll have more time to compare lenders and feel confident in your financial decisions. 

Consider Your Current and Future Income

Has your financial situation changed since you last applied for a mortgage? Perhaps your living costs are higher, or you lost your job.

On the positive side, you might earn more money and could afford to make larger monthly contributions.

When assessing your financial situation, remember to consider the following factors:

• Affordability: Which mortgage repayments can you afford? Would extending the amortization term offer more financial benefits?
• Risk Management: Nobody knows what the future holds, and you’ll need to think about whether your income is likely to change.

By assessing your current and future income, you can tailor your mortgage renewal to meet your needs today and in the future.

Consider Your Immediate and Ongoing Financial Goals

Your long—and short-term financial goals should also factor into your mortgage renewal decision. 

For example, short-term goals are easier to consider, but long-term objectives mean you’ll need to consider the type of mortgage that suits your needs.

Some financial goals to consider include:

• Reducing Debt: Who doesn’t want to be debt-free? If you can afford it, making higher repayments or choosing a shorter amortization period might help you pay off the mortgage.
• Future Investments: If you’re considering making other investments, opting for lower mortgage payments could free up some cash.
• Home Renovations: Property renovations are a wise long-term investment, as they increase your home’s value. If you’re renewing your mortgage, it might be worth increasing the amount to fund home improvements. 

Get A Rate Hold

Mortgage rates can be unpredictable and often fluctuate. Finding a rate that suits your needs means you’ll want to secure it.

That’s where a rate hold comes in. Depending on your lender, they enable you to lock interest rates for up to 120 days.

Here’s why you should explore interest rate holds:

• Protection: If interest rates rise when you’re in the locked period, you’ll still get the lower interest rates. 
• Flexibility: If rates drop, you can often still secure the new lower rate, creating a win-win situation.

Even if your mortgage isn’t set to renew for a few months, having a rate hold in place means you won’t sacrifice more competitive rates when your mortgage fluctuates. 

Give Time to Switch Lenders

Sure, sticking with your current mortgage company is easier, but you could be missing out on some fantastic deals. Another lender might offer more competitive rates that align with your financial objectives.

Remember that you’ll need to compare deals and sign any paperwork, so it’s essential to give yourself enough time.

When you take time to compare lenders, you’ll:

• Understand each mortgage company’s rates and terms instead of rushing through the process.
• Review multiple offers and negotiate with lenders to secure the best possible deals.  
• Have enough time to notify your current lender and complete paperwork without worrying about deadlines. 

Book A Consultation To Renew Your Mortgage in Victoria

Renewing your mortgage doesn’t have to be a stressful process—especially when you have an expert team of brokers on your side. 

Working with professional mortgage brokers gives you access to a vast network of lenders that align with all financial circumstances.

Whether you have a poor credit rating or want to access an extended amortization rate, Prime Mortgage Works can help. 

Our brokers will assess your financial situation, compare the best lenders for your needs and support you throughout the mortgage renewal application process.

Please feel free to begin your mortgage application today or contact us if you have any questions. 

If you’ve been following the Bank of Canada’s interest rate changes, you’ll know that the key rates have been reduced to 4.5%, another significant decrease since the rates went to 4.75% in June. 

The reductions are welcome signs that inflation is finally beginning to cool down, with the new interest rate being a positive step forward. 

In this post, we’ll explore what the interest rate reduction means for consumers and mortgage rates. 

Bank of Canada Decreases Interest Rate to 4.5%

On July 24th, 2024, the Bank of Canada announced a 25 basis point reduction, making the new interest rate 4.5%. 

While inflation is still above the BoC’s target of 2%, many people see the reduction as a positive sign that the economy continues to stabilize. 

However, officials were quick to underscore the potential hurdles, such as reductions in household spending and ongoing global geopolitical tensions, which could complicate the situation.

The bank warned that a continued decrease in inflation might not be smooth, and rates could increase if the country experiences economic difficulties. 

Benefits of Interest Rate Decreases for Mortgages in Canada

Finding a mortgage in Canada can be challenging, with high amounts of buyers and limited properties. The BC government is mitigating these issues by building new properties and making homeownership more affordable for first-time homebuyers, including prioritizing incentives like the $40,000 secondary suite initiative to increase home values, and provide revenue streams for homeowners.

Lower interest rates mostly have positive implications for people in Canada, with the benefits including: 

1. Lower Monthly Payments: People on variable-rate mortgages can look forward to lower monthly payments, simplifying financial management. 
2. Accelerated Payoffs: All mortgage types benefit from interest rate reductions, and many homeowners can clear their debts. Each mortgage payment contributes more to the principal than interest, resulting in faster payoffs. 
3. Affordability: Lower interest rates enhance affordability for prospective buyers, increasing housing demands. The changes could also boost the Canadian economy. 
4. Refining Opportunities: Many homeowners explore mortgage refinancing options when interest rates fall, as there are better deals that can reduce monthly repayments. 

How Lower Interest Rates Affect Mortgage Renewals

Lower interest rates can be beneficial for both prospective and current homeowners. Mortgage renewals are often a major source of stress in Canada, but a 4.5% interest rate can open up a range of opportunities. 

Increasing Payments Towards Your Principal Balance

When interest rates decrease, you can direct a larger portion of your repayments towards the principal balance. 

High rates mean many people are stuck with interest payments, limiting their ability to build equity and reduce the total amount of interest paid over the life of the loan.

Locking In A Term With Better Rates

Renewing your mortgage when the interest rates are low means you can lock in better terms. Opting for a fixed mortgage gives you stability, as the rates will remain the same throughout the duration. 

Not only does this mean lower monthly repayments, but it also frees up your finances for other investments or expenses. 

Relief For Variable Rate Mortgages

Reduced interest rates will directly benefit homeowners with variable-rate mortgages because the Bank of Canada’s base interest rate defines how much people pay. 

Lower payments can enhance your cash flow, making it easier to juggle other financial commitments. If you’re planning to renew your mortgage, shopping around now could give you access to excellent deals. 

2024 Interest Rate Predictions for Canada

Earlier this year, we predicted that interest rates in Canada would decrease by June—and we were right.

As of July 2024, experts predict a continued decrease in interest rates, a trend expected to significantly impact the Canadian economy.

This year’s two rate cuts highlight a distinctive shift in the Bank of Canada’s monetary policies, and experts believe the inflation rates will fall below the 2% target.

However, we need to understand the factors that might impact future interest rates, including:

• Inflation: If inflation continues to fall, interest rates will decrease. As with the rest of the world, Canada is recovering from the effects of COVID-19, and the economy is stabilizing.
• Economic Growth: The Canadian economy’s overall health affects interest rate changes. Downturns will inevitably cause significant increases.
• Global Economic Conditions: International factors, including recessions, ongoing geopolitical tensions and other global influences, can impact domestic interest rates.

Despite the positive changes, it’s vital to understand that no prediction is set in stone. Experts anticipate further rate cuts, but there’s no set time for this.

Understanding the potential implications of interest rate increases means you can cautiously approach mortgage applications and renewals.

Book A Consultation To Learn About Renewing Your Mortgage In Victoria

If you’d like to renew your mortgage and access the best rates, our mortgage brokers can help. We have a vast network of experienced lenders who work with people from all backgrounds. 

Whether you want lower payments or fixed interest rates, starting your mortgage renewal application with us opens up a world of opportunities. 

Please don’t hesitate to contact us if you have any questions. 

As a homeowner in Victoria, you’ll usually have to renew your mortgage every few years. While it might seem like an extra headache you don’t really need; mortgage renewal also lets you shop around and find the best deals. 

Whether you’re new to mortgage renewals or a seasoned pro, this helpful guide will help you enjoy a stress-free process. 

When Should I Start Thinking About Renewing My Mortgage? 

Mortgages allow first-time buyers to climb the property ladder and help current homeowners upgrade to larger spaces. However, after signing up for a mortgage, there will come a time when you need to think about refinancing or renewing your current deal. 

In Canada, mortgages have two components: 

• Amortization: The amortization period is the time it will take to clear your mortgage. Most mortgages have periods of at least 25 years. 
• Term: Your mortgage’s term is the amount of time you have during your current agreement, which is an average of five years. 

When you enter into an agreement with your lender and the term ends, you can ask the lender for a new mortgage or find another provider. 

If your mortgage term ends, the lender will usually ask if you’d like to renew. This puts you in a great position because you can agree to new terms or search for a different provider. 

Best Tips For Renewing Your Mortgage

Before renewing your mortgage, it’s best to think about the terms you’re likely to be offered. Lenders have strict criteria to assess your financial situation, with your credit score and borrowing history being strong indicators of which rates you’ll receive. 

Here are some top tips for renewing your mortgage and securing the best possible deals. 

1: Decrease any outstanding debt and credit card balances

Proving your financial situation is stable is the most effective way to get the best rates from lenders. Outstanding debts and large credit card bills can impact your offers, but clearing those debts increases your credit score. 

If you have time to pay some – or all – of your debts, mortgage companies will give you better rates, which could mean you save money in the long term. 

2: Try to save up to make a lump sum payment

Some mortgage companies let their borrowers make lump sum payments, reducing the outstanding amount. For example, the new rates will decrease if you inherit some money and put some of that towards your mortgage. 

While some people find lump sum payments beneficial, it’s important to evaluate your financial situation and whether you have emergency savings available. 

Your rates might not decrease much with a lump sum, and the money could go towards other purchases. 

3: Start shopping at least up to 4 months before your term ends

There’s nothing worse than wondering what could have been and leaving your mortgage renewal to the last minute, which limits your options. Stay on track with the repayments, and begin shopping for new deals in advance. 

Giving yourself four months or more allows you to approach different lenders or work with a mortgage broker who has access to the best rates. 

Where Should You Renew Your Mortgage? 

Now for the most important part: where to renew your mortgage. The renewal itself is simple enough, but there are certain things to consider before making a decision, including: 

• Interest Rates: Your mortgage interest rates could decrease or increase when your term ends. Moving to a new provider could save money, but your current lender might assure lower rates. 
• Mortgage Type: You can also choose between fixed or variable rates. Fixed rates offer more stability, but variable-interest mortgages could save you money if the Bank of Canada’s base interest rate decreases. 
• Frequency: Some mortgage providers offer flexible repayment terms, such as monthly or weekly. Finding a company that lets you change these payments can be a lifeline in times of financial stress. 

Renewing With Your Current Lender 

Sticking with your current lender makes sense if you don’t want to go through a new application process and pay any of the associated charges. 

However, mortgage providers know people will choose the convenient solution, so they don’t offer competitive renewal rates. The key thing to remember here is that the advertised rate in your renewal letter isn’t the final offer. 

Let your lender know you’re shopping around, and review their most competitive offer before making a decision. 

Shopping Around For The Best Lender Rates

Switching to a different lender could give you access to more competitive rates and better terms. However, it’s not a decision you should enter into lightly, as there’s still an application process and some associated charges. 

A new mortgage provider will review your financial situation, check whether there’s a history of debt and ask about your employment. If there’s a possibility for lower rates, going through the process could be beneficial. 

Opting for a mortgage broker makes your renewal easier. Brokers have access to a network of lenders and support you throughout the application. 

Mortgage Renewal FAQs

What factors can affect my mortgage renewal rates and approvals?

There are numerous factors that can affect your mortgage renewal options, including: 

• Credit Score: Individuals with low credit scores won’t have as many choices, as lenders might view them as irresponsible borrowers. 
• DTI: Your debt-to-income ratio also factors into the decision. Low DTI ratios show that your income outweighs your debt levels. 
• Employment: Providing you’re employed or have a stable income gives you access to better interest rates. 
• Equity: Lenders will view candidates with higher levels of equity favourably. 
• Market Conditions: If you opt for a variable-rate mortgage, the economy and central interest rates can impact your options. 

Can a mortgage renewal be denied?

Yes, a mortgage renewal can be denied, with the above reasons playing significant roles in the decision-making process. However, it depends on your unique circumstances and whether the lender feels you’re a risk. 

Addressing your credit score and clearing outstanding debts is the best way to safe-proof your application. 

How often do I have to renew my mortgage?

The average mortgage renewal timeline is five years, but some people opt for shorter terms, while others might prefer stability with extended terms. Ask your current provider or new lenders about which agreements they offer and decide based on what suits your needs. 

Should I renew my mortgage for 3 years or 5 years?

There’s no set answer to whether you should opt for a three-year or five-year renewal. Let’s explore the pros and cons of each. 

3 year renewal pros: 

• Can offer lower interest rates 
• Best for people who might want to pay their mortgage off quickly 
• You can look for different deals after the three-year mark. 

3 year renewal cons: 

• You’ll have to go through the renewal process quicker.
• Opting for a different provider means you’ll pay more fees.

5 year renewal pros: 

• More stability with your payments. 
• You might get lower interest rates. 
• There’s no need to worry about renewals for at least four and a half years. 

5 year renewal cons: 

• There might be fees associated with early repayments. 
• Opting for fixed rates means you’re locked into a deal for five years. 

What’s the difference between mortgage renewals and mortgage refinancing?

Mortgage renewals mean you’re still within the amortization period but can stay with your current lender or find a new one. Refinancing means opting out of your standing contract and entering a new one. 

Mortgage refinancing is more complicated, but you can borrow more money, release some of the equity you’ve built, and change the amortization period. 

What’s happening with Canadian interest rates for mortgage renewals?

The Bank of Canada recently announced a .25% decrease in the overnight interest rate. 

While these rates can impact your renewal options, there’s every reason to believe that further economic stabilization will continue to result in better renewal options in the near future. 

How can I reduce my mortgage amount?

You can reduce your mortgage amount by making larger payments, contributing a lump sum or extending the term. The latter will only reduce your monthly contributions, but it can be beneficial if your financial situation is uncertain. 

Remember to weigh up your options before making a decision. While overpaying might seem beneficial, consider whether your financial situation will remain stable. 

Book A Consultation With a Victoria Mortgage Broker

Renewing your mortgage for the first time can be daunting, but knowing how to secure the best rates and approaching different lenders could reduce your monthly payments. 

If you’d like to explore your options, consulting with a mortgage broker gives you access to specialist lenders. We have an extensive network of lenders who work with people from all backgrounds. 

Whether your credit score is low or you have unique needs, our brokers go out of their way to find you the best deal. 

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

How To Leverage Your Savings Accounts As A First-Time Homebuyer

First-time homebuyers often encounter issues when purchasing a property, battling against high prices and plenty of competition. However, Canada’s 2024 Federal Budget announced numerous changes and incentives to simplify the journey. 

If you’re dreaming of ending the constant cycle of renting and purchasing a property, know it is possible. But, to make it happen, you’ll need to leverage your savings account and utilize the incentives for first-time buyers. 

In this guide, we’ll reveal how you can make your savings count and finally get onto the property ladder. 

How The Key Interest Rate Affects Canadians Savings Accounts

The Bank of Canada determines key interest rates, which have a direct impact on savings accounts. As we revealed in our 2024 Federal Budget Update, the BoC decided to hold rates at 5%, although this could change in June. 

When interest rates increase, they can raise mortgage costs, but it also means your savings will generate more interest. However, if these rates decrease, you might need to search for accounts that offer better rates. 

Many people take advantage of higher rates by saving more money and avoiding borrowing it instead. So, a 5% hold is still beneficial for first-time homebuyers because you can generate consistent interest on your savings and save for a downpayment. 

How To Determine and Maximize Savings

Buying a property requires a downpayment, and many people turn to their savings accounts when it’s time to leave the stresses of renting behind. So, the first thing to do is assess your current financial situation and determine where to save money. 

1: Define a clear budget of earnings and expenses

Saving for a downpayment is great, but it’s important to assess your earnings and average expenses. Remember, you’ll probably need a mortgage, and many people jump into purchasing a property without realizing how much it will cost them. 

Creating a clear list of your earnings and factoring in potential mortgage expenses can help you determine whether you’re in an excellent position to buy a home. 

2: Avoid carrying a balance on high-interest lending products such as credit cards

According to Fairstone, the average Canadian has $4,265 in credit card debt and 31 million people in Canada own credit cards. While they can be lifelines in emergencies, spending carelessly could impact your financial situation. 

Avoiding high-interest credit cards can help you leverage your income and save more money over time—the same goes for loads and other financial products. Additionally, having access to too much open credit can hinder your chances of mortgage approval. When it comes to closing lines of credit, we recommend never severing your oldest products. 

Always consider the long-term implications of any financial decision instead of focusing on the immediate benefits. 

3: Explore high-interest savings products and account promotions

Canadians have access to plenty of savings accounts – but are you getting the best deals? Shopping around means you could find high-interest accounts that let you earn more money on what you save and build a larger down payment. 

Many companies also offer incentives for new customers, including higher introductory interest rates and money for switching to them. Remember to research different accounts and find the best promotions for your needs. 

4: Look into employer-matching benefits

Many employers in Canada offer matching benefits, which serve as incentives to save for retirement. If you put some of your salary into accounts such as the RRSP, your employer will match a percentage of your contributions. 

The most popular structure matches 50% of your contributions and up to 4% of your salary. While this might not seem like a lot, it’s free money. 

Different Savings Accounts Explained

So, now you know more about how first-time homebuyers can leverage their savings, it’s time to explore the different accounts available. 

Each of the following has unique benefits; the one you choose ultimately depends on your savings goals and which incentives are most beneficial.

RRSP

The Registered Retirement Savings Plan (RRSP) is one of Canada’s most popular accounts, as it enables you to plan for retirement while also accessing a range of benefits. These plans are tax-free unless you receive a payment from them – which is possible. 

Canada’s new Home Buyer’s Plan lets RRSP holders withdraw money from their accounts to purchase a home. You can withdraw between $35,000 and $60,000 to buy an existing property or build a new one, significantly boosting your down payment. 

Pros: 

• RRSPs are flexible regarding investment opportunities, including bonds, stocks and GICs. 
• You can withdraw money under the Home Buyer’s Plan and avoid paying taxes for a set timeframe. 
• In most cases, RRSP funds are protected from creditors. 

Cons: 

• There are limits to the yearly contributions you’ll make. 
• People on lower salaries often prefer tax-free savings accounts as they offer more benefits. 

TFSA

Many first-time buyers leverage tax-free savings accounts as they offer a range of benefits and are easy to manage. These registered accounts are highly flexible and enable you to save for anything without worrying about taxation. 

Whether you want to use them to fulfill short-term goals or save up for a down payment, TFSAs are available for anyone over 18 with a Canadian social security number. 

Pros: 

• Withdrawals are tax-free, making TFSAs ideal for first-time buyers. 
• These accounts are highly accessible, and you don’t need to be in employment to open one. 
• Withdraw and re-contribute money as and when you need it, ensuring you meet your savings goals. 

Cons: 

• TFSAs have limited contribution amounts, so you might need to explore other options when building a down payment. 
• The accounts aren’t income-based and won’t reduce your yearly tax. 

FHSA

The First Home Savings Account is ideal for people who want to climb the property ladder. As the savings plan is intended for first-time buyers, you can take advantage of various incentives, including tax-deductible contributions and higher contribution limits. 

Anyone over 18 can open an account, begin making contributions immediately, and take advantage of investment options that diversify their savings. 

Pros: 

• With an annual contribution limit of $8,000 and a lifetime limit of $40,000, saving for a home is easier. 
• Many people combine their FHSA and RRSP to generate a higher down payment. 
• All contributions are tax-deductible, as is the withdrawal you make for the down payment. 

Cons: 

• BC is notoriously expensive, and using just an FHSA gives you a maximum down payment of $40,000 – which probably isn’t enough. 
• There aren’t as many investment options, as the plans are newer than RRSPs and TFSAs. 

HISA

Many Canadians opt for a High-Interest Savings Account, which allows them to earn more money on contributions and save for the future. One reason these accounts are so popular is their flexibility. 

You can make regular withdrawals or contributions while also taking advantage of security through the CDIC. While interest rates might vary, most accounts offer better terms than traditional savings and can help you reach your down payment goals quickly. 

Pros: 

• Interest rates on these accounts are higher than traditional accounts, with some options offering 4%. 
• Due to CDIC protection, the risks associated with HISAs are low. Even if the rates fluctuate, most people still make a return on their investments. 
• These accounts allow you to save for the future but make emergency withdrawals as and when needed. 

Cons: 

• While high-interest accounts are beneficial, many companies charge maintenance fees. 
• You’ll also have to maintain a minimum balance in most cases, but as it’s a savings account, you’ll probably have enough money there anyway. 

GIC

Guaranteed Investment Certificates are popular solutions for people who want a clear roadmap to generating a down payment. With a GIC, you’ll enter into an agreement with a bank or credit union, contributing a set amount of money for the set term. 

Some people choose a short-term savings account, while others opt for longer-term investments, which allow them to save for a down payment. 

The company agrees to pay a set interest rate throughout your GIC agreement, making it easier to afford your first home. 

Pros: 

• Regardless of what happens to the economy, your pre-agreed GIC rate will remain the same. 
• These accounts are highly secure as the CDIC insures them. 
• Some longer-term accounts offer higher interest rates. 

Cons: 

• GICs don’t offer the same returns as bonds or stocks but are less risky. 
• While your rate will remain stable, economic downturns mean you might miss out on high rates initially. 
• When you agree to a GIC, it’s in place for a set term, so you can’t withdraw any money. 

Book A Consultation With A Victoria Mortgage Broker

Saving for your first home can be daunting, but choosing the right accounts and focusing on reaching your goals means you can begin to prepare for a new property. Once you have savings in place, it’s time to look for the best mortgage deals and turn your dreams into a reality. 

Prime Mortgage Works has years of experience working with first-time buyers, and our dedicated brokers can help you find mortgages that meet your needs. Please feel free to contact us with any questions or apply for a mortgage today.