I have recently been coming across a large number of clients in this situation so I thought I’d dedicate a blog entry to it.
Wanting to buy a house and willing to move, but tied to their current job.
Like many of my generation (and others), the large gains to be made from Lower Mainland property inflation has passed us by and is now a net negative.
We have gone to school, entered the workforce, many of use have started families and now we are looking at the housing market in the Lower Mainland. Since we cannot or will not shoehorn ourselves and our families into aggressively small condos or buy in distant suburbs with horrendous commutes we instead look further afield.
There are many smaller communities in BC that are becoming more and more attractive to those tiring of the Lower Mainland and many are making the jump to start fresh somewhere else, rather than tread water in a very expensive city.
What to do Now?
Since one of the biggest issues with moving is accommodation many of my clients choose to buy a home on arrival, as they already might be familiar with the housing market and renting for a short term prior to buying is a hassle and costly.
Often times, the breadwinner will have a solid job in the lower Mainland which will be necessary to qualify the mortgage. They might later decide to enter the job market in their new community, but that will come at a later date.
They may have a family member in the Lower Mainland who can house them while their family relocates and gets settled. Since they have a place to stay (even temporarily), lenders can use a small monthly cost of living expense as a liability and use their income to qualify the purchase of the new property.
If the client has a lot of debt or payment obligations (student loans, car loans, credit card balances) this may not work since these liabilities will be added to the cost of living liability and can potentially impact the client’s ability to pay the mortgage.
Here is a recent example of this scenario:
Case Study – Peter
Peter lives in Coquitlam BC and works as a skilled tradesman for a local construction company. He’s finished trade school and is now earning a solid hourly wage with guaranteed hours. He’s quite confident that with his skillset he can get quality employment in most areas of BC. His wife and two small children live with him in his parents’ in law suite. They have run out of room and now need to move. His parents have been quite generous and charge much less than market rent, which has allowed him to stay out of debt and save for a down payment.
His wife, who is originally from Penticton would like to move back to her hometown and Peter, who loves wine and hot weather is in agreement.
They find my contact information and shoot me an email. We speak on the phone and get started.
Since Peter has low debt and a strong income, I can qualify him for a mortgage up to $450,000 which fits well for the budget he is looking at. As for down payment, Peter does have 25% available, but could put down as little as as 5%. Additionally, as first time homebuyers Peter and his wife would not pay any Property Transfer Tax on a qualifying property.
A few weeks later, with the help of a local Realtor, Peter has found a detached home in Penticton. I then went to work and he then approved for the mortgage. He will be moving in early next year.
If you are interested in this scenario, or have any questions about mortgage please call me at 604 771 5192 or email me at email@example.com