Thursday, March 25, 2010

Does Renting Make Sense In Today's Okanagan Real Estate Market?

The idea of paying someone else's mortgage and helping them build equity in their property really doesn't make a lot of good financial sense!  As a long term renter, you are literally throwing away tens of thousands of dollars of your hard earned money instead of creating a forced savings plan by way of having a mortgage.  I have chatted with many renters over the years and there are two primary reasons they typically give for not being a home owner. 


The first reason is they feel they can't afford a home or don't have a suitable down payment.  Interest rates are at a historical low so the bottom line is borrowing money for a home purchase has never been more affordable.  Many first time home buyers can qualify for a mortgage for as little as 5% down of their pre-approval amount.  Using the federal government's Home Buyers' plan you are able to use $25,000 in RRSP savings (or $50,000 per couple) as your down payment on a home.  You then have 15 years to repay those borrowed monies back into your RRSP. 


The second reason is they don't want the responsibility of having to maintain a home.  They would rather call their landlord up and have them be repair or replace whatever needs to be done.  The benefit of being a home owner is when you sell your primary residence at a profit (known as capital gains) it is tax free!  That's right you keep your profits to use towards another home purchase or whatever else you have in mind.


I recently asked Dave Vrabic of Mortgageopolis  a Kelowna,BC based mortgage broker to provided some current lending rates and monthly payments.  The monthly payments quoted here are based on a per $100,000 basis.  So as an example a $400,000 5 year variable, 35 yr amortized mortgage would be $328.30 x $400k = $1,313.20 per month (plus CMHC fees).


If you want to stop being a renter and start building equity in a home of your own then contact me today at (250) 808-7700 or email me at:




Jason Neumann, REALTOR® 
Century 21 Assurance Realty Ltd.    
Cell: (250) 808-7700
Office: 1-888-301-2121

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Monthly Mortgage Payments for borrowing $100,000.00


Monthly Payment



Interest Rate



5 year fixed

30 years




5 year variable**

30 years




5 year fixed**

35 years




5 year variable

35 years




Subject to lender and CMHC approval.  Rates and Payments are subject to change without notice.  A pre-approval can guarantee your interest rate up to 120 days. 


* APR - Annual Percentage Rate.  A calculation which takes into consideration the interest rate in effect during the term of the mortgage together with costs associated with arranging the loan.


** The variable term is the lenders prime rate minus .30% for the term of the mortgage.  The prime rate can fluctuate from time to time throughout the term affecting the interest rate charged to the borrower.


CMHC Mortgage Insurance - Mandatory insurance premium which is added to the loan and paid by the borrower when less than 20% of the purchase price is used for a down payment.  Mortgage insurance insures the lenders money in case of default by the borrower.  The premiums for 30 and 35 year amortizations are 2.95% and 3.15% respectively calculated on the purchase price and based on fully qualifying applicants.

Posted via email from Jason Neumann Kelowna Realtor®

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