The biggest impact on first time home buyers happens long before they decide to buy a new house. With the new “stress test rate qualification” I have seen the real impact on potential first time home buyers already. A decision made 2-5 years ago to buy a new car and finance this car is now having an impact on the affordability of these buyers to get into the home they thought they could buy. The initial disappointment and then anger turns to acceptance of what could have been. The government can’t regulate car loans, credit cards or lines of credit but they can regulate mortgages so that is their target.
Here are the hard facts of today’s reality when it comes to qualifying for a mortgage:
- Take on as little debt as possible (any debt payments reduce the amount you qualify for)
- Start the process of discussing with a mortgage professional years in advance of when you plan to buy (a good plan will ensure you get to the desired goal of home ownership)
- If you currently have debts that are preventing you from buying, you will need to make some difficult decisions. You may need to make decisions about the debts you currently carry and selling assets to reduce or eliminate these debts
- You may just need to adjust your home buying budget downward in price
Yes the government has made it more difficult for first time home buyers but this is not affecting everyone. Debt elimination and debt reduction for Canadians looking to buy a home was their target, take note would be home owners. That old jalopy isn’t looking so bad today.