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. 

So, you’re ready to buy your first home. Congratulations! There’s nothing quite like homeownership, which gives you more flexibility and provides an escape from the volatile rental market. 

Unfortunately, Canada recently decided to end its Incentive Program for first-time buyers, leaving many unsure of their home-buying eligibility. While the incentive was a great way to leave the rental market, options are still available – if you know where to look. The first step is working with a trusted Victoria mortgage broker.

We’ll explore them in this guide and reveal everything you need to know about buying your first home in Victoria. Let’s dive straight in. 

Can I Buy a Home in Victoria?

It’s no secret that getting on the property ladder is challenging in Canada. With lots of buyers competing with each other and a limited supply of properties, purchasing your first home can seem like an uphill struggle. 

According to Houseful, the average cost of a property in Victoria was just over $700,000 in February 2024, a significant decrease from $755,000 in September 2023. This is great news for those looking to enter Victoria’s competitive real estate market.

The Times Colonist also reports that property prices and mortgage rates have stabilized, making ownership more accessible. Between January 2023 and January 2024, real estate sales increased by 22%, highlighting growth within the market. 

So, while purchasing your first home still requires a lot of planning and saving, 2024 is a great year to get on the ladder. 

Next, we’ll reveal the steps you should take when buying a home. 

Determine Your First-Time Homebuyer Budget

In an ideal world, you’d be able to buy a property outright, but that’s unlikely. Instead, you’ll have to evaluate your income and save money to afford a new home. Joint buyers usually have more wiggle room with their budgets because they’re contributing two incomes. 

In Canada, properties under $500,000 require a minimum downpayment of 5%, while anything over $500,000 requires the initial 5% downpayment and a further 10% for the rest of the property price. 

Self-employed borrowers and individuals with poor credit histories may need to contribute a larger downpayment. 

How Much Can I Borrow?

When determining whether you’re eligible for a mortgage and how much you can borrow, lenders will assess numerous factors, including: 

• Your income 
• Monthly commitments 
• Your employment status 
• Whether there’s a history of responsible borrowing 

Before looking at properties and applying for a mortgage, it’s a good idea to check your eligibility and use a mortgage calculator to get an idea of how much you can borrow. 

Upfront Costs

Mortgage costs are typically split into upfront expenses and ongoing first-time homebuyer costs. The upfront costs ensure you can purchase a home and secure a mortgage. Many people save for years to secure enough money, but it’s also possible to use inheritance money. 

Down Payment 

As mentioned, most first-time buyers must contribute at least 5% of the property’s purchase price—unless it’s over $500,000. However, some mortgage providers are stricter than others and might ask for a higher down payment. 

The more you can offer upfront, the lower your mortgage will be. A higher down payment also secures better interest rates and gives you a broader selection of lenders. 

It’s a good idea to save early and put a percentage of your monthly income in a separate account. 

Opening a FHSA (First Home Savings Account) or a TFSA (Tax-Free Savings Account) can help you save money quicker and avoid paying tax on any of your savings. 

Closing Costs 

Many new buyers forget that closing costs are necessary to purchase their first home. These expenses include legal fees, appraisals, valuations, and land transfer tax. The amount each buyer pays varies, but it typically falls between 3% and 5% of the property’s value. 

Putting money aside to cover closing costs can help you stay on track and ensure there are no barriers to buying the property. 

Unsure of what your closing costs as a FTHB are? Our free closing costs calculator lets you plan for the future.

Realtor Fees

Generally, the property seller pays a commission to realtors in British Columbia, cutting your potential expenses down a lot. Once the property sells, the current owner will give their – and your – realtor commission. 

However, the realtor might have administrative fees covering the paperwork they handle during the process. 

Ongoing FTHB Costs

Many new homeowners forget the ongoing costs of paying for and maintaining a property. While you might be able to afford the outright costs, what about mortgage payments, maintenance, and applicable taxes? 

Let’s look at the ongoing expenses for first-time buyers. 

Mortgage 

Most mortgages in Canada last up to five years, after which you’ll either find a new deal with your current provider (also known as mortgage renewal) or move to a different one. The amount you’ll pay each month depends on the lender’s interest rates, so shopping around and finding the best deal for your needs is essential. 

While heading to your bank might seem like a good idea, there are many benefits to using a mortgage broker, including saving money. 

Brokers often work with first-time buyers who might not have great credit scores or a history of defaulting on loans. Many also partner with specialist lenders who are unavailable through mainstream mortgage applications. 

Most importantly, a mortgage broker can find a deal that aligns with your current financial circumstances and future goals, making them a valuable tool for first-time buyers. 

Renovations and Home Improvement

If the initial appraisal shows minor issues with the property, you might be able to secure it for a lower price. However, it will also become your responsibility to address any faults and ensure the property is safe. 

Home improvements, whether knocking through walls or redecorating, can be expensive—even if you choose the DIY route. If you seek professional help, you’ll need to pay for materials and labour. 

Renovating and improving your property is beneficial because it increases its value and allows you to personalize the interior.

Property Taxes 

Canada has different property taxes for each province. British Columbia defines the amount you’ll pay based on the home’s value and your status. Municipal tax is calculated by location, and you can find out your rates on the BC Assessment website. 

Buyers in the following categories might have to pay additional taxes: 

Foreign Buyers

Individuals purchasing properties with a foreign trust or corporation will need to pay the municipal tax rate and a further 20%. However, there are some exemptions for BC Provincial Nominees or emigrants who become Canadian residents. 

GST Properties 

New constructions are subject to the British Columbia Goods and Services Tax, which means you’ll pay 5% of the property’s sale price. However, rebates are available for people who build their own homes (valued under $450,000) or buy shares in a cooperative complex. 

Insurance 

Many mortgage providers in BC also require buyers to secure home insurance. The provider can repossess the property should the buyer default on the mortgage payments, and insurance protects it against severe damage. 

Your home insurance payments differ depending on the provider and your amount of coverage. Choosing the cheapest plan might seem like a good idea, but these policies often have strict clauses. 

Learn More About First-Time Homebuyer Benefits in Victoria

From never having to worry about jumping through hoops when applying for a rental property to having control over your property, homeownership is a mark of freedom. Buying today means more financial freedom in the future. 

If you’d like to learn more about FTHB benefits, our extensive guide has everything you need to know. 

To summarize: 

• FTHB can take advantage of tax relief initiatives to make ownership more affordable.
• Tax-free savings accounts help you build a downpayment quickly. 
• When you own a property, you can do what you want with it. 
• Performing improvements and renovations can increase the value of your home. 
• Once you prove you’re a responsible borrower, you can access better mortgage rates. 

Need Help With Your First-Time Homebuyers Mortgage in Victoria?

Navigating the property market as a first-time buyer can be overwhelming, but understanding where to save money will make the process much easier. Prime Mortgage Works is a specialist broker working with clients in Victoria, BC. 

Our professional team of brokers have access to a diverse network of lenders and go out of their way to find each client the best deal for their needs. Whether you’re on a limited income, have a low credit score or don’t know where to start, we’d love to hear from you. 

APPLY NOW 

Securing Your Mortgage As A Self-Employed Borrower

If you’re an entrepreneur looking to buy a home, you may need to meet additional requirements to qualify for a self employment mortgage. However, here at Prime Mortgage works we specialize in mortgage lending for self-employed borrowers. We’re going to discuss everything you need to know for a self employment mortgage and the benefits of working with your Victoria mortgage broker.

Here’s what you need to know to improve your chances of a successful self-employed mortgage application. 

Is it Difficult To Get A Mortgage When Self-Employed?

Getting a mortgage when you are self-employed can be challenging but it certainly isn’t impossible. It can be more challenging to get a mortgage because you need to prove you have reliable income. There isn’t a specific product called a self employed mortgage, you will be applying for the same mortgage as everyone else. The difference is that you’ll have to provide more evidence of your income when you are self-employed. This can include a T2125 as well as the TD1 General Sample. 

Self-Employed Borrower Definitions

Mortgage lenders have different rules to determine if a borrower is employed or self-employed.  When determining the appropriate qualifying income for a self employed borrower,  it is important to note that the structure of a business depends on the type of business. Lenders will view you as self-employed if you have an ownership interest of more than 25% of a business from which you earn your income as an Individual, partnership (general or limited) and/or a corporation.  Let’s take a look at the borrower definitions below in more detail.  

• Running a business as a sole proprietorship, with a partner, or corporation.

A sole proprietorship is a business that is run by one person and is not registered or incorporated. For tax purposes, the owner and the business are the same, so the owner reports their business earnings on their personal tax return.  

Partnerships are formed when two or more individuals or corporations come together to run a business. 

Corporations require more than just fulfilling the day to day of business responsibilities. Corporations must also hold shareholder and director meetings, keep records, minutes, and document major decisions. 

• Receiving 25% or more income from your business.

Most lenders require applicants to have less than 25% ownership in a company to use their basic income and be treated as employed. When a borrower has ownership interest equal or greater to 25% in their company they are treated as self-employed. 

• Your income is commission-based.

You can get a mortgage if your income is commission based. However, lenders may have different ways of looking at your commission based income. Some lenders may use all of your commission income for affordability, while others may only use 50%.  Some lenders may also cap the acceptable income if it is higher than your basic salary.  

• You work short contracts for multiple employers.

If your business or employment is based on fixed-term work contracts, this will not prevent you from getting a mortgage. A fixed term contract work mortgage is a type of loan designed to accommodate individuals whose work is derived from employment contracts vs traditional permanent business employment.  

Documents You’ll Need As A Self-Employed Borrower

Self-employed people often worry about applying for a mortgage because they’re unsure what documents mortgage lenders will accept. What exactly do you need to prove your business is viable and your income will cover your mortgage repayments?  

Self-employed applicants need to verify and document their income to apply for a mortgage. You will need to provide documents such as tax returns, bank statements, proof of income, balance sheets and more depending on the lender. Let’s go over some of those in more detail:  

Monthly Bank Statements

Each lender will have their own requirements but, typically a lender will ask for the last 3-6 months bank statements to evaluate your financial habits, average salary, and any major expenses you may have.  Mortgage lenders will want to see the bank statements of both the business and your personal accounts. 

Tax Returns and TD1 Forms

We all know what a tax return is but what is a TD1 form? Simply put a TD1, personal tax credits return, is a form that is necessary for calculating how much tax should be withheld from payments, giving the best estimate of your personal tax situation. 

Business Balance Sheet

To get a self-employed mortgage, you must be able to prove both your business profits and your individual income. Most lenders want to see 2 years worth of accounts, though some may work with only 1 years documentation for new businesses. 

Business Credit Card Statements

If there’s evidence of heavy credit card usage, the lender may also want to check your credit card statements, it is always a good idea to reduce or clear your credit card balances before applying for a mortgage if you can. 

Reference Letters from Financial Institutions

Basically this is a financial letter of reference. It’s a document from your bank, or other financial institution, that explains your financial history.  Lenders may ask for a mortgage reference letter to prove your income.  Additionally a credit reference letter can help you get approved for services based on your history with other service providers. The reference provider basically is vouching for you, which makes other lenders more comfortable extending credit to you.  

Not sure how much you’re eligible to borrow? Use our easy online mortgage calculator as a general guide. 

Benefits of a Self-Employed Mortgage

If you’re self-employed, the journey to home ownership may seem daunting due to your unique financial circumstance. The good news though is that self employed mortgages provide tailored solutions to accommodate entrepreneurs. Unlike traditional mortgages that focus on steady employment income, self-employed mortgages take into account your unique income streams, offering more flexible criteria to suit your financial reality.

There are lending institutions and incentives designed just for the self-employed. Lenders understand that self employment comes with its challenges and rewards. As a result, self-employed mortgages feature more flexible underwriting criteria that align with your entrepreneurial journey. Let’s discuss a few of the benefits further. 

Your net worth holds a great value to a lender

Net worth can actually matter more than an income statement. Self-employed people can often face difficulties obtaining a conventional mortgage. Instead of relying on traditional income, borrowers can demonstrate that they possess adequate assets to support the mortgage. 

Assets that commonly meet mortgage requirements include checking and savings accounts, stock and bonds, mutual and money market funds, income from investments and vested retirement funds. Annuities can qualify as well as some pensions. For borrowers who possess substantial qualifying assets, asset utilization can be an excellent financing option for self-employed mortgages. 

There’s more flexibility in how your income is calculated and reported

The advantages of self-employed mortgages go beyond flexibility: self-employed mortgages acknowledge the fluctuating nature of your income, allowing for a broader range of income sources to be considered. If you’re a newcomer to the world of self-employment, don’t worry, self-employed mortgage solutions consider projected earnings, business potential, and industry expertise to make home ownership achievable for newer ventures.  With lenders considering various income sources, self-employed mortgages can potentially allow you to borrow more than a traditional mortgage would, giving you more flexibility in your property choices.  

Secure Your Victoria Mortgage As A Self-Employed Borrower

Each mortgage provider has their own lending criteria when it comes to assessing self-employed borrowers. Partnering with a mortgage broker in Victoria who specializes in self-employed mortgages can help you find not only the best deal on the market and minimize the complexities and hassle involved in the process. A mortgage broker helps you manage the expectations from the start, helps to determine what you will be able to borrow, and helps you prepare your application so that you have the best chance of being accepted. Mortgage brokers also have connections to far more lenders than you can on your own as well as have access to better rates with their bulk mortgages with lenders. 

Contact Prime Mortgage Works today to learn about securing your self-employed mortgage in Victoria. Book a free consultation online today.

Bank of Canada Announces Interest Rate Hold

A press release from the Bank of Canada’s Media Relation Team on January 24th announced it will maintain policy rate, and is continuing its policy of quantitative tightening. The current bank rate is holding at 5.25% and the deposit rate at 5%.

As global economic growth continues to slow, with inflation easing gradually across most economies. With weakened consumer spending and business investment, the economy looks to be in mild contraction. In Canada, the economy has been stalled since the middle of 2023 and growth likely remains close to zero through the first quarter of 2024. The Bank of Canada is turning its attention to when it may be able to start cutting interest rates.  

When Can We Expect to See Interest Rates Decrease In Canada?

“With overall demand and the economy no longer running ahead of supply, governing council’s discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability, to how long it needs to stay at the current level,” Governor Tiff Macklem announced in a press conference about the central banks decision to hold interest rates. Interest rate cuts are coming, but the Bank of Canada won’t say when. “It is important that we don’t give Canadians a false sense of precision,” Maklem told reporters.   

Reading the bank’s projections, the bank expects inflation to decelerate to 2.5% by the end of the year. Most economists expect the central bank will start lowering interest rates by the summer.  

Impact of Rate Cuts for Canadians

A rate cut is a decision by a central bank to reduce the main interest rate. The Bank of Canada’s decisions over the next few months could influence whether the economy has a soft landing or falls into a recession. Rate cuts can impact people and businesses in a number of ways lets go over a few of them here: 

•  Normalization of spending

A change in bank rate affects how much people can spend and how much people spend influences how much things cost. Overall, we know that if we lower interest rates, this tends to lead to increased spending. When we are spending too little, that reduces businesses and leads to people losing their jobs. On the other hand lower rates also tend to increase the value of wealth, such as peoples pensions and housing.  

•  Increased borrowing and increased lending

With Increased borrowing, lower interest rates make it cheaper for people and businesses to borrow money. This encourages households to borrow more which can increase the demand for assets such as housing. Hand in hand is increased lending, lower lending rates can increase investment spending by businesses like on new equipment or buildings. Businesses are generally better off when they can borrow money cheaply and when consumers can spend more freely 

• Lower interest paid overall to mortgage terms

Expected cuts to federal rates result in a corresponding decline in mortgage interest rates.  A rate cut can help consumers save money by reducing interest payments on certain types of financing that are linked to prime or other rates. Typically, a rate cut lowers the cost of financing a home. However, the extent of the savings from lower mortgage rates will depend on the type of mortgage loan .  

How Do Lower Interest Rates Affect Mortgage Rates?

For fixed rate mortgages, a rate cut will have a low impact on the monthly payment amount. Low rates will be good for homeowners and potential home buyers. Generally speaking, when federal rate cuts are issued, adjustable rate mortgage payments will decrease. The amount by which mortgage payments change depend on the rate the mortgage uses when it resets.   

Mortgage Renewals in 2024

When a mortgage is renewed, the interest rate is updated and the payment is recalculated. If the interest rate has gone down since the mortgage loan agreement was made, the payments upon renewal will be lower. Renewing a mortgage early can save money if the rate is lower than your current rate, or the anticipated future rate. Renewing early can lock in a lower rate potentially saving money over the course of the mortgage. According to Investopedia, refinancing is a good idea if the interest rate can be reduced by at least 2%. However many l;enders say even 1% savings is enough of an incentive to refinance your mortgage.

Overall Mortgage Rates Decrease

The decisions Canadians make on their mortgages in 2024 will largely depend on the rate forecasts. It’s a decision that will affect homeowners for several years and could lead to thousands of dollars in mortgage interest savings. Historical context implies that mortgage rates will likely gravitate lower over the long term, to a historical trend in the mid-high 3% range. To help determine mortgage rate forecasts, one of the best perspectives we have available are historical ones. Both the great recession of 2008 and during the covid pandemic, the financial systems and economy as a whole required massive economic bailouts to rebound the economy. Thankfully, the stimulus did its job and interest rates remained low accordingly. What does this mean for mortgage rates? What goes up to slow the economy will eventually come down to stimulate the economy.  

While variable rate mortgages are directly affected by the central banks decisions, we will likely see fixed rates generally trend lower in 2024. Because fixed rates are tied to the Government of Canada Bond Yields and Bond Yields trade in anticipation of central bank rate decisions, we will likely see rates flow lower. 

Fixed vs. Variable Mortgage Rates

Mortgage loans come in two primary forms – fixed rate and adjustable, or variable rate.  

The interest on a fixed rate mortgage is fixed for a chosen duration of 6 months, 1, 2, 3, 4, 5, 6, 7, or even 10 years, depending on how long the term is locked in for. The rate will stay the same regardless of fluctuations in the key interest rate.

The interest rate on a variable rate mortgage may change monthly, every six months, annually or less depending on the terms of the mortgage. With this homebuyers indeed to be aware that the monthly costs of their mortgage payments can increase as interest rates increase, and similarly costs may decrease when interest rates decrease. 

Contact Prime Mortgage Works for Your Victoria Mortgage

With a rate hold and impending decreased interest rates coming, it’s important to do a mortgage check and ensure that you are not paying more interest than needed. 

Your Victoria mortgage broker at Prime Mortgage Works knows all the ins and outs of lending services available, each lender and banking institution’s different interest rates and spends a considerable amount of time researching the housing and economic markets so you don’t have to do the leg work. It is more important now than ever before to have the power of a mortgage broker on your side.  

Contact Prime Mortgage Works today to learn about securing your mortgage in Victoria.