21 Nov

Your Buying Power just got a 9% BOOST!

General

Posted by: Adam Sale

Your Buying Power Increased by 9%!

If you are thinking about purchasing or selling your home in the next year, you need to understand the importance of the upcoming CMHC policy changes.

As of December 14, 2024 – First-time homebuyers purchasing with a down-payment less than 20% will see their purchasing power increase by approximately 9.00% due to the government increasing the amortization for these mortgage products from 25-years to 30-years.

Why is this significant?

According to CMHC’s 2023 Survey Pg 8 (SOURCE)

First-Time Home Buyers make up 54% of all purchases in Canada. This is slightly less in BC, at 47.3%

BC Home Sales - First time home buyers 2023

First time home buyers to repeat buyers.

Of these sales, 59% of First-Time Home Buyers used the insured mortgage product. 

First Time Home Buyers Insured Mortgages 2023

Insured Mortgages to Uninsured Mortgages

Meaning, 28% of all Home Buyers in BC will see their buying power increase by 9% after December 14th, 2024.

For example, a first time home buyer qualified to purchase a property for $600,000, will now qualify for a purchase of $654,000.

In response to the upcoming changes, sales activity is increasing in the lower-mainland and a floor on housing prices appears to be setting in.

Home sales in Greater Vancouver increased by +30% in the month of October.

  • September Home Sales: 1,852
  • October Home Sales: 2,632

If this trend continues, we can expect a busier spring market.

Feel free to reach out if you have any questions.

Best,

Adam Sale

778-215-4121

12 Nov

Accelerate Your Net Worth: A How-To Guide

General

Posted by: Adam Sale

Accelerate Your Net Worth!

Now that you own a home, and you’re making regular payments on your mortgage do you have a financial plan to grow your Net Worth efficiently?

In this blog, I’ll highlight 3 competing options to help you Accelerate Your Net Worth!

Keep in mind, each of these options has a different risk level. It is recommended you chat with a financial planner and a reputable mortgage broker to develop a plan matching your risk-tolerance.

1) Pre-Pay Your Mortgage – Risk: Low

Paying off your mortgage as quickly as possible is the simplest way to reduce the amount of interest you pay on your mortgage, and increase your net worth. Every lender offers their unique pre-payment options, allowing you to make extra payments on the balance of your mortgage. Each prepayment reduces the amount of interest charged on the balance of the mortgage, effectively paying off your mortgage faster. I’d argue this is the least risky option and the most stable.

2) Invest in the S&P 500 index fund – Risk: Medium

Instead of sinking your hard-earned money into your mortgage, have you considered your money and investing in the S&P 500 index fund? This option has a greater amount of risk, greater upside potential and keeps your money easily accessible.

Your goal with investing, is to achieve an average growth rate on your investment that is higher than your average mortgage rate. Be prepared by anticipating high growth years and low growth/loss years as you go through several economic cycles. If you can achieve a greater average annual growth over a long period of time, your investments will outperform the Pre-Payment Option. Before investing in a fund, do some research and chat with a financial advisor.

History does not predict the future, but there is some comfort in seeing previous rates of return.

S&P 500 Average Rate of Return (Source)

  • 5-yrs: 14.87%
  • 10-yrs: 12.86%
  • 20-years: 10.47%
  • 30-years: 10.733%
  • 50-years: 11.86%

3) Smith Maneuver / Creating a Tax-Deductible Mortgage – Risk: High

The final option, and the one that carries the greatest amount of risk, is using a technique known as the Smith Maneuver.

This is an advanced technique with better upside potential for those of you in a higher tax bracket. The goal behind this technique is converting your mortgage into a tax-deductible expense over a period of 7-10 years. This is a hands-on technique, and is recommended for those who know there way around their online banking website.

Converting your mortgage into a tax-deductible expense is achieved by borrowing from your Home-Equity Line of Credit and using these funds to invest into dividend paying stocks or index funds. Because the loan is being used to purchase income producing investment, the interest on the loan is tax deductible.

The higher your tax bracket the larger your tax refund will be.

Smith Maneuver strategists apply their annual tax refund as a pre-payment on their mortgage. Then, they’ll reborrow this amount from their Home-Equity Line of Credit and purchase more investments. The cycle continues until the entire mortgage is tax-deductible.

If you are in a higher tax bracket, consider using the tax system to your advantage with the Smith Maneuver.

Summary

I’ve outlined 3-different options to accelerate your net worth, but how will you know which one to choose?

Wouldn’t you like to see the numbers from each option before deciding which path is best for you?

This is why I’ve created the Net Worth Accelerator Blueprint.

Using REAL numbers from your current mortgage, you’ll receive a custom blueprint highlighting your accelerated Net Worth based on 2 financial strategies: Investing or Pre-Paying your mortgage.

My goal with the Net Worth Accelerator is to provide you with better information so you can decide if the risks are worth the rewards.

 

Net Worth Accelerator Blueprint

Net Worth Accelerator Blueprint

Do you want More Out of Your Money?

Click the link to complete a mortgage questionnaire and I’ll provide you with your custom Net Worth Accelerator Blueprint

Get Your Custom Blueprint here: Net Worth Accelerator Blueprint

Adam Sale

778-215-4121

1 Nov

Opportunity to Refinance & Opportunity to Purchase in 2025

General

Posted by: Adam Sale

Massive Switching Opportunity & Is 2025 the Right time to Buy?

The bank’s don’t want you to find out about this..

If you purchased a home, or renewed your mortgage, in 2023 and you have a fixed-rate above +5.70% with at least 2-years left on your mortgage term, you are paying to much.

To see if this opportunity applies to your mortgage, send me a message with the details listed below and I’ll send you a Mortgage Health Check-Up clearly outlining your potential savings.

The worst case scenario is we find out there are no savings and you can rest easy knowing you are in the best mortgage at this time!

To discover your savings, please respond to this email with the following information:

  • The date you signed up for your mortgage (Month/Year)

  • Estimated mortgage balance 

  • Interest rate 

  • Mortgage maturity date (Month/Year)

When is the Best Time to Purchase a home?

Slightly biased opinion – but considering my wife & I purchased our first home in September (yay!), I do put my money where my mouth is. 

When is it a good time to purchase an owner-occupied home in Greater Vancouver?

Is it when mortgage rates are high, or when sales activity is low? Or is it when inventory levels are high?

Well, consider these indicators…

  • Interest rates are above the 15-year average, but decreasing

    • Housing is becoming (slightly) more affordable

  • Inventory is 24% above the 10-year seasonal average

    • Downward pressure on housing prices

  • Sales activity is 25% below the 10-year seasonal average

    • Downward pressure on housing prices

  • BC’s unemployment rate is at 6%, the 15-year average is 6.25%

    • BC’s economy is relatively stable unlike Eastern Canada.

  • Government changes to mortgage policy, making it easier to qualify for a mortgage in 2025

    • Desired effect: Stabilize housing prices, protect the banks’ investment

  • Federal Government Reducing Immigration numbers

    • Decrease in the average rent. Less pressure on housing prices to increase 

  • 48% of BC’s Condo’s & Townhomes being built are specifically designed as rental units. You are unable to purchase these units. The 5-yr average is 31%

    • Upward pressure on future housing prices – 2026 and beyond

Is now a good time to buy a home in Greater Vancouver?

Yes, now is a great time to buy.

Interest rates are decreasing, housing inventory is way above the average, and the government is actively releasing new mortgage policies to stimulate the housing market.

Over 2025, it is expected that starter homes (condo’s & townhomes) will continue transitioning from over-leveraged investors to first-time home buyers as rental rates decrease. I anticipate this will keep condo prices flat and sales activity will increase.

At some point, however, once the inventory levels decrease back to the 10-year average, the effects of 48% of new builds being purpose built rentals will put upward pressure on housing prices.

2023 was a good year for the number of new builds registered, but it was one of the lowest production years of homes built for home-ownership. Only 52% of condos & townhomes were built for re-sale, and this trend is accelerating.

Lower supply of condos & townhomes available for first-time home buyers will continue putting upward pressure on housing prices once inventory levels decrease back to 10-year average.