January 4, 2021 • Buying
Buying Your First Home in the Bow Valley
By By Kate Barker with help from Shannon Hendrikse, Accredited Mortgage Professional and Owner of Canmore Broker Inc.
When buying your first home in the Bow Valley, most people think, “Even with property taxes and condo fees, paying a mortgage is just not much higher than your average rent payment.” So why is it so hard to jump from renting to owning in the Bow Valley?
The answer: Qualifying for a mortgage.
“Qualifying for a mortgage is much different than affording month-to-month,” says Shannon Hendrikse, “We have one of the most difficult small-town markets in all of Canada.” This is because of the inflated costs associated with the mountain oasis. Entry level homes start in a very high price range compared to most places.
“It often comes down to two things: income and down payment. Credit history is a big factor too, but most people have that in a decent spot when they’re looking to buy a house.”
“It’s important to prioritize saving a down payment,” says Hendrikse, “A lot of people focus solely on paying off their debts.” Paying down debt is important, but without a decent down payment you’ll struggle to crack into the market. “Lenders accommodate a little bit of outside debt when considering applicants for a mortgage.” Hendrikse says, “It’s all about the guidelines of money in compared to money out every month.” So if you can afford your bill payments, car loan and other outstanding debts alongside your mortgage, you can still qualify if you have a decent down payment.
Hendrikse recommends moving your down payment funds into one account. “When approving a down payment, brokers need to show the history,” she explains. This means you need to hold the money for 3 months and you have to show where you got the funds. One general savings account that becomes the “down payment” account can make this process a lot easier, especially if multiple people are involved.
In terms of generating a savings plan, Hendrikse recommends all parties involved contribute to that one account until there is enough to consider buying a home.
Hendrikse believes it’s worthwhile for people to make a plan to buy a home if they can. “There’s the long-term growth and equity of owning a home,” she says, “And it’s better than throwing money into rent that you’re never going to see!”
For more advice on how to qualify for your first mortgage, talk to a mortgage broker today!