What to do when rates are rising and you need to buy?


One of the most common questions we get is when should they start talking to you?

As soon as you know you want to buy a home.

It is critical right now with the rising interest rates to get locked in for that 120 days and most lenders are still offering 120 day rate hold.

So welcome everybody.

I'm Tara Lyons of Team Tara Lyons with Royal LePage, and I want to thank you for coming and seeing us online and of course I have a really great guest today.

And Jen, you're going to introduce yourself, giving your full name, your company name, what you do, and then we'll get into what we're going to be talking about.

She's awesome. She's done a great job for many of our clients and of course we thought this would be a perfect timing to have her on because of all the changes in a different way.

I think we've been seeing changes in the market for the last two and a half years, but it is in a different way now.

We're seeing many changes.

So let's start talking about that.

What's one of the biggest changes that just occurred?

We had an increase in interest rates yet again.

What was this, the fifth or 6th time this year?

Maybe this might have been the well, this is the third rate increase, but the last one for the year because the banks of Canada only meets eight times a year.

So we're done that's. Nice to know.

So not until next year.

Next year.


One of the things that we wanted to mention to everybody because, yes, we know the interest rates went up and everything you hear about on the news is all negative, negative, negative.

But you know what, we have seen such a decrease in our pricing over this year, since April in our area that the interest rates haven't affected people the same way as you might have thought.

And quite often it can be cheaper for you to purchase now, even with a higher interest rate than back in April.

And you're right Tara, it's not a lot of doom and gloom that the media is telling us people can still qualify to borrow.

It's just best to be really prepared to know what you're going to take with you to that meeting to talk about your pre qualification.

There are some good mortgage products out there that are helping the first time home buyer we can talk about that the first time home buyer incentive, which is coming from the government, helps bring down the overall cost of borrowing, helps you qualify for a little more.

So one of the things that we.

Can send you and all our information, of course, is here, so you can give Jenn a call or myself is how much is that going to cost you?

We're going to say that if the average house price right now and actually, I can tell you what that is, in Belleville, for October, the average house price in Belleville alone was 492,767.

And even our market changed a little bit.

We went from 51 days down to 44.

So I was in Belleville, keeping in mind because we break down the different areas, so just we can tell you exactly how much that's going to cost you, how much do you need for a down payment and what is your interest rate going to be?

One of the most common questions we get is when should they start talking to you as soon as you know.

You want to buy a home.

It is critical right now with the rising interest rates to get locked in for that 120 days.

And most lenders are still offering 120 day rate hold. in three or four months, you know you're going to get that rate.

Yeah, that's perfect.

Especially because they are talking about going on the rise again in the early part of next year, right.

With the stress test.

So you've got your contract rate, which is the 120 day rate hold, but you're qualifying at 2% above that.

So if rates do go up, you don't want to lose that borrowing power down the road if rates do in fact go up.

And that is the importance of why you want to get a mortgage broker on your side from the beginning.

Because they can make sure that as these things change, an example is and we let all our clients know, before this rate increase.

We made sure they were talking to you and to their mortgage person to ensure that they got locked in before the rate increased.

Because it changed my .5. Which could change what you can afford.


So we always want to make sure that we're prepared to purchase a home and when we're ready to get an offer put in.

But to do that when you're talking with Jenn or your mortgage person, these are the things that you want to make sure you have in place.

So the first thing I'm going to ask for is about your income.

What are your sources of income?

Are you salaried?

Are you an hourly wage employee?

Do you have overtime?

Is it the same overtime every couple of years?

And if it's not, I can use a two year average.

Do you have children?

How old are they?

You can use your child tax benefits.

Are you separated?

Are you receiving alimony?

Is it court ordered?

I'm going to ask you for these documents in order to satisfy that lender condition.

I want to be able to use all the income I can to qualify to you to maximize your borrowing power so that you can then take that to your realtor and to know exactly where you are and where you stand.

And also don't forget, like a lot of people right now are looking at secondary homes where they can either rent them out or a recreational property.

And of course you can use, if you're looking to rent it out, you can use the rental income also to help you qualify.


A lot of lenders will use 50% of the income from a rental property.

They'll typically order a market rent analysis through an appraiser.

So there are some lenders that will allow you to use 80% of the rental income and that is through the broker channel.


Only, most of the banks will only allow you to use 50%.

Okay. Yeah, that's great.

It's always great with a mortgage broker because you have so many different avenues that you can go to and utilize and they also have b lenders too.

So if you have had a little bit of a challenge in the past with your financing, there are lenders out there that are willing to take more of a risk with just a higher interest rate as well.

Yeah, and with the higher interest rate for my clients, I always make sure we have an exit strategy.

I talked to about all of my clients, the rates are quite scary.

The fees can be a little bit higher on those products.

But if we have an exit strategy where you know, in a year you're going to move that mortgage to a Scotia Bank or a TD or a mainstream a lender, I always make sure that's going to happen.

I never want to put somebody in a situation where they're paying that high risk for very long.

And that leads to another question that I actually get asked quite a bit is, well, other extra fees to work with a mortgage broker versus going to a bank?

No, not necessarily.

Some brokers will charge a small fee for their services.

I have never charged a fee for my services.

So no, I don't need to charge a fee.

I get paid directly from the lender.

And is that the same for the private ones too or do you need to then charge fees at that point?

Yes. So on the private side, we deal with private brokers and there are fees associated with that and it really depends on the total cost of borrowing, the purchase price.

There's a few factors in place.

So I want to thank you so much Jen, for joining us on this because you're just a wealth of information and I encourage anybody who has any questions to give us a call or give Jen a call.

And we are more than happy to talk to you through the process.

Thank you so much for having me.