Over the next several weeks, with home prices at such a high level, I will be outlining some possible options for parents to assist their children in stepping into home ownership. Here is the fourth of five columns.
The Greater Toronto Area, like much of the country, is struggling under the weight of an unprecedented housing crisis wherein the average price of a home in Canada’s largest metropolitan areas was $1,126,604 at the end of 2023.
The Bank of Canada’s decision to hike its overnight lending rate 10 times since March 2022 has also put a spanner in the works for aspiring homeowners who have to contend with higher lending rates, in addition to the B-20 mortgage stress test.
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All these factors are strangling young people’s abilities to buy homes. However, we at Dunpar Homes offer the Dunpar mortgage, allowing purchasers to enter a five-year arrangement on a mortgage we underwrite at only 2.99 per cent. The only criterion to qualify for the Dunpar mortgage is having the full 20 per cent down payment at our Streetsville Centre community in Streetsville.
Not only does this assuage the stress young homebuyers feel, it’s also a great way to get them into the market early so that they can start building wealth, raising families and climbing the housing ladder into bigger homes.
The Dunpar mortgage comes with another major benefit. There are no penalties for breaking it early, unlike conventional mortgages that come with prepayment penalties — typically it’s the higher of either three months’ worth of interest or the interest rate differential — which has resulted in considerable uptick.
While the most cited reason among Dunpar homebuyers is the quality of our homes, the Dunpar mortgage is the second most common reason customers visit our sales centres. In fact, virtually every Dunpar homebuyer who has the full 20 per cent down payment, to say nothing of the first-time purchasers among them, uses the Dunpar mortgage.
The reason we offered this mortgage in the first place is the sudden rise in mortgage rates over the last couple of years, and it will remain in place until rates recede to levels low enough that our 2.99 per cent five-year pact will no longer be necessary.
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Homebuyers who don’t qualify for the best mortgage rates, which are typically available through chartered banks in the so-called A channel, are forced to go to alternative or private lenders whose rates are quite high. These lending institutions are only intended to be stopgaps until the borrower can improve their financial picture and switch their mortgage to an A lender. However, the Dunpar mortgage saves homebuyers the trouble and additional costs of alternative lenders.
Although there are indications that the Bank of Canada is going to cut interest rates up to three times this year, that would most likely bring its overnight lending rate to around 4.25 per cent, ensuring mortgage rates will remain elevated for the foreseeable future.
That means the Dunpar mortgage isn’t going anywhere.
Mirella Sarrapochiello is Vice President, Sales and Marketing, for Dunpar Homes, a company that’s been building homes and communities across the GTA for more than 40 years specializing in luxury townhomes. Contact her with your questions at: info@dunpar.ca. To see all five columns visit dunparhomes.com
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