Why You Might Want to Buy a Home During Winter

Winter is the coolest time of year, so house hunting is probably the last thing on your mind. If you’re anything like me, you’d rather be sitting in front of the fireplace, sipping a glass of hot chocolate. You’re probably more concerned with getting your last minute holiday shopping done, but winter can actually be a great time to buy a home. Purchasing real estate during winter offers many benefits. Let’s take a look at some advantages of winter house hunting now.

Less Home Buyers to Compete With

If you’re buying in a popular real estate market like Toronto, you’ve probably come up on the short end of the stick on bidding wars at least once or twice. It can be a frustrating experience to say the least. The best part about winter is that since there are traditionally fewer people looking to buy homes, that means less competition for you when making an offer on a property. Maybe during the springtime a home might see five or six offers, but in the wintertime it may only see one or two offers. This improves your chances of making a successful offer and getting the home of your dreams. You make even be able to make your offer conditional on home inspection to further protect yourself.

Motivated Home Sellers

When negotiating with home sellers, it helps to know their motivation for selling. Let’s be frank, winter isn’t the ideal time to put your home up for sale. Chances are the seller could be a“motivated seller.” They could be selling their home for a slew of reasons –divorce, the death of a family member, job loss or relocating to another city or country. If your real estate agent can find out why the seller is listing their property, you can tailor your offer to suit their needs. For example, maybe they’re looking for a quick close. By doing a 30 day closing instead of a 60 or 90 day closing, you can make your offer that much more attractive without necessarily upping your offer price, keeping more of your hard-earned money in your pockets where it belongs.

Fewer Homes on the Market

At first glance this may seem like a negative. Fewer homes on the real estate market means you’ll have less choice,but hear me out. Too many homes can be a bad thing, too. It can be easy to get overwhelmed by the sheer number of homes for sale. With less homes available, you can focus your search on the homes that meet your needs and not waste time with the ones that don’t. Instead of looking for the perfect home with everything on your wish list, you may be more willing to be lenient and make an offer on a home with most of the important items you’re looking for.

Seeing a Home During the Toughest Season

Another advantage of seeing a home during winter is that you’re seeing it during typically the toughest season of the year. If a home has issues, they’re more likely to show up during wintertime. That being said, there’s a disadvantage to seeing a home during the winter as well. Things may be hidden. For example, if there’s snow all over the roof, you may not be able to see that the shingles are pealing. But there’s nothing stopping you from waiting until a warmer day when the snow melts or going on Google Maps and seeing the condition of the roof a few months ago.

The bottom line is that you want to weigh the pros and cons of buying a home during winter. If you’re financially ready to buy a home, there’s nothing stopping you from getting a head start on your home search. The worst that can happen is that you end up buying in the springtime, but maybe you’ll find a diamond in the rough. You never know, but you don’t find your dream home unless you’re open to looking at properties during wintertime.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

Using the Home Buyers Plan to Help Fund Your Down Payment

Buying a home signals adulthood to many, you feel like you’ve made it… you’re a homeowner. While the excitement of buying a home can feel like you’re on top of the world, it can be difficult to get to that point. Specifically, with the prices of homes increasing at alarming rates, and wages staying stagnant, scraping together enough of a down payment can be incredibly challenging.

Millennials are at the age where they have graduated, started working full-time, and, in many situations, would like to purchase a home to start a family. With the average home price above $400,000 in many of Canada’s major cities to even put 5% down means you need $20,000 available in cash plus all the additional costs that are required such as legal fees, land transfer tax, and title insurance.

Most experts recommend putting down more than 5%, especially since CMHC will apply until you have 20% down. You’ll find if you only put 5% down, by the time you actually pay CMHC you will barely own 2% of your actual home.* This is incredibly risky if the market value of your home were to drop by a couple thousand dollars, you’ll easily find yourself underwater on your home.

It’s important to have a strong down payment when purchasing a home, ideally at least 10%. This is just enough to decrease the amount of CMHC you will pay while still maintaining a large portion of your equity. Of course, if you can put more down and hit that 20%, threshold where CMHC is no longer applicable, that is ideal.

Saving tens of thousands of dollars, maybe even hundreds of thousands can seem like a daunting task for many, but it’s important to break up this savings goal into bite-sized pieces. The first step is determining where your down payment should come from. If you’re contemplating between your RRSP and your TFSA, I’d argue the RRSP is the way to go.

With the RRSP, if you are a first-time home buyer you will have access to the Home Buyers’ Plan (HBP) which allows you to withdraw up to $35,000 from your RRSP1 without any tax implications. You have 15 years to repay this amount back into an RRSP account; it doesn’t have to be the account you withdrew the money from. To utilize the home buyers’ plan you need to fill out the 1036 form, provided by CRA, and send it to your financial institution for processing. With some institutions there will be a nominal fee to withdraw the funds, so it is important to check this prior to making the withdrawal. The RRSP is preferable to the TFSA for withdrawal because the account allows you to defer tax into the future as opposed to earning income tax free as you would in the TFSA. This makes the TFSA very lucrative if you are investing your funds and shielding the growth from the tax man. Since you will ultimately be taxed on the amounts you withdraw from the RRSP in retirement it makes more sense to allow the power of compound interest to accrue in the TFSA versus the RRSP.

Coming up with a down payment is a large task and leveraging some of the money you’ve been able to sock away can help you reduce the amount of CMHC you will pay. The government has set up the HBP to help new home owners get into the market by having access to some of their savings in a tax deferred manner. Utilizing this program allows young people to put more down on their home, minimizing the CMHC they will pay.

1 – These amounts must be in the RRSP for at least 90 days

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About the Author

Janine Rogan is a personal finance educator and CPA based in Calgary Alberta. She is passionate about sharing her financial knowledge with Canadians to help educate them to make money-smart decisions. Through her website, Youtube channel, and community engagement Janine shares solid financial advice that will make a difference in how you manage your money. Check out JanineRogan.com for more details.

The Difference Between Being Pre-Qualified and Pre-Approved for a Mortgage

March 20th marks the first day of spring. It also marks the first day of the spring real estate market.

Spring is a great time to go out and look at properties. It’s the time when there’s traditionally the best selection of properties on the market for sale. But before you start looking at properties, it’s important to make sure you have your mortgage financing in order.

Many of us toss around the terms “pre-qualified” and “pre-approved” like they’re one and the same. While they’re both related to buying a home, they aren’t the same. Let’s take a look at the difference between being pre-qualified and pre-approved for a mortgage.

Being Pre-Qualified

If you’re toying with the idea of buying a home, getting pre-qualified is a good first step. When you get pre-qualified, the lender will ask you for basic information on your income, assets and debts. It will then do its own calculation to determine how much you qualify to borrow by way of a mortgage.

Being qualified doesn’t take very long. It can be done in under 10 minutes. Oftentimes, you won’t even have to visit the bank to do it. You may be able to do it online from the comfort of your home.

While being pre-qualified is helpful, it’s important to recognize that it only goes so far. For instance, it usually doesn’t include a credit check. It’s mainly used to give you a rough idea about how much you’d qualify to borrow for a mortgage.

If you’re serious about buying a property, you might skip the pre-qualification and go straight to being pre-approved, which we’ll talk about next.

Being Pre-Approved

Think of being pre-approved as the next step up from being pre-qualified. When you’re pre-approved for a mortgage, you’ll often get something in writing from the lender.

Being pre-approved is similar to being pre-qualified, except you’ll provide more information. You’ll typically provide a lender with permission to pull your credit, notices of assessment for the last two years, pay stubs, a letter of employment and financial statements as proof of your down payment.

By providing all this information, the lender can provide you with a more accurate mortgage pre-approval amount. This gives you the confidence to go out and look at properties. When you see a property that you like, you can make an offer knowing that your mortgage financing is likely rock solid.

Your lender will often provide you with a rate hold. A rate hold means the lender is securing a specific mortgage rate for you for a period of time (often 3 months). This can protect you if mortgage rates go up while you’re looking at properties. If that happens, the lender should provide you with the lower rate of your pre-approval.

While being pre-approved is helpful, it’s important to understand that you aren’t guaranteed the mortgage. The missing piece of the puzzle is the actual property. The lender needs to see the property that you’re buying before they’ll approve the mortgage. Chances are your mortgage will be approved, but it’s not guaranteed. As such, you might want to make any offers on properties conditional on financing to provide yourself with that much more piece of mind in case any issues arise.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

How to Prepare for your Next Mortgage

With the spring home buying season fast approaching, anyone committed to buying a home in 2020 needs to start preparing. That can be a pretty daunting task, especially if you’ve never taken out a mortgage before. With all the rules, steps and considerations, buying your first home is like taking a crash course in the real estate industry.

But when you break it down, applying for a mortgage isn’t as complicated as it might first appear. Follow these four steps to prepare your finances and the rest will fall into line.

Evaluate your Credit

Having a good credit score is one of the best ways to qualify for a mortgage with favorable terms. Without solid credit, a bank may charge higher interest rates or deny your application outright.

Check your credit report or your credit score through a free service to see where you stand.

Make sure there are no errors on your report that could disqualify you for a mortgage.

See if there are any red flags from your past that may be disputable. Negative marks generally stay on your credit report between six and seven years, so call the credit bureau if you see any older than that.

Save for a Down Payment

If you haven’t started, now is the time to create a savings plan for your down payment. A down payment acts as proof of trustworthiness to the lender, so it’s a great way to establish yourself as a qualified borrower. You need to put down at least 5% for a mortgage, but a 20% down payment will save you from paying private default insurance.

How much you want to contribute depends on your budget and how soon you want to buy. If you want to purchase a home next year, you might not have time to save the full 20%.

Remember to also save money for closing costs, moving expenses and new furniture. Buying a home for the first time can come with a lot of surprise expenses, so it never hurts to save more than you’ll probably need.

Pay Down Debt

Lenders determine how big of a mortgage to offer based on your income and current debt load. The more you owe, the less you’ll qualify for.

Before buying a home, see if you can pay off high-interest debt or refinance to a lower monthly payment. Reducing your total debt burden will free up your finances and make it easier to qualify for the mortgage you want.

Look at your Budget

Borrowers often use their current rent payment to determine the size of the mortgage they want, but owning a home is far more expensive than renting. On top of the mortgage payment, you have to pay for repairs, maintenance and property taxes. When the water heater breaks, there’s no landlord to step in and handle the repairs.

Assess your budget and see how much wiggle room you have for the unexpected costs. If your monthly spending is already tight, consider getting a house with a monthly payment less than your rent. You can use the remainder to save for future repairs and other home costs.

About the Author

Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.

The First-Time Home Buyer Incentive: Everything You Wanted to Know About Shared-Equity Mortgages

With the federal election coming up on October 21st, home affordability is a hot topic for Canadians. Home affordability is such an important issue because it’s the single most costly household expensive for most Canadians. When your shelter costs are high relative to your income, you can find yourself “house rich, cash poor,” with very little left over to save, let alone have fun.


To help address home affordability, the Liberals introduced the First-Time Home Buyer Incentive. The First-Time Home Buyer Incentive is a shared-equity mortgage, a relatively new concept to most Canadians. Let’s take a closer look at the Incentive and how it may help with home affordability.

What’s a Shared-Equity Mortgage?

Shared-equity mortgages may not be something you know very well and that’s understandable. Shared-equity mortgages aren’t very widespread in Canada, but that could soon change if the Incentive proves popular.


A shared-equity mortgage is a mortgage where the lender (or the government for the Incentive) puts money towards your down payment. But instead of it being a loan that you have to pay back right away, the lender or government takes an ownership stake in your home.


The main benefit of a shared-equity mortgage is that it helps make the carrying cost of your home less costly and more affordable. That’s because your mortgage payments will be lower, not to mention you’ll pay less in mortgage default insurance (insurance you’re required to buy when making less than a 20 percent down payment on a property in Canada).


But there is a downside to that. As mentioned, the government owns part of your property. Depending on how much your home goes up in value over the years, a shared-equity mortgage could end up costing you a lot. That’s because not only will you have to pay back the original amount you borrowed, you’ll also have to pay back a portion of how much your home has gone up in value. (Although the silver lining is that in most cases you won’t need to pay back any money while you’re still living in the home. It’s only when you sell the property or you’ve been there 25 years that you have to repay the shared-equity mortgage).

Who is Eligible for the First-Time Home Buyer Incentive?

As mentioned, the First-Time Home Buyer Incentive is a shared-equity mortgage. A “shared-equity mortgage” can be offered by any lender, and for the Incentive, the federal government is using this existing financial tool to provide a top-up to a home buyer’s down payment, if they’re putting down less than 20% on a property.


The Incentive has been accepting applications since September 2nd, 2019 with the first closing taking place November 1st, 2019 – the application info is available here. Using the Incentive, if your household has a combined income up to $120,000 you’re able to receive 5% from the Incentive towards a resale home and 10% towards a new home. (In case you’re wondering, yes, you can withdraw the money from your RRSP under the Home Buyers’ Plan).


As the name suggests, you have to be a first-time homebuyer to participate in the Incentive. That means that you’ve never owned a home before, you haven’t occupied a home that you or your spouse or common-law partner owned, or you’re going through a marriage breakdown or breakdown of a common-law relationship.


Using the Incentive you can spend up to $565,000 on a property. This scenario is assuming you earn $120,000 per year and you’re purchasing a new home. That’s equal to four times your annual income and the Incentive amount. If your income is lower or you’re buying a resale home, your maximum purchase price under the Incentive would be lower.

To address the lack of affordable housing in Toronto, Vancouver and Victoria, the federal government has since introduced a new version of the Incentive. If you’re buying in those markets, you’d qualify to spend almost $800,000 on a property and could have a combined income of up to $150,000.

Does the Incentive Make Sense for Me?

If you’re someone struggling to save up a large enough down payment the Incentive is worth considering. It can help you get into a home sooner rather than later and start building up equity, not to mention it can save you in mortgage default insurance premiums.

Are you looking to rebuild your credit score to qualify for a better mortgage rate? Contact our offices today for tips on achieving a good credit score.

Climb’s Personalized Credit Prescription provides you with customized recommendations to help rebuild your credit score.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.