Fixed mortgage rates keep going down, variable rates keep going up... the gap between the two hasn't been this narrow in a long time. Unless a buyer is buying for the short term it's getting pretty hard to recommend anything but a fixed rate.
When friends, family become partners
When buying a home in Vancouver with friends, think of them as business partners. Make sure to draft a legal contract that addresses unexpected issues.
With home prices moving ahead at a healthy clip, some single residents of Vancouver are choosing to purchase a property with a friend or relative.
"I've had a number of clients over the years enter into this type of agreement," says Nadine de Palma, financial advisor.
"A lot of individuals, particularly younger adults, feel as if they have been priced out of the market so go in with a friend or a sibling to purchase the property. I see that as a trend that is going to gain momentum."
However, whether you are purchasing with a friend or relative, Ms. de Palma says this is essentially a business deal.
"If you're looking at buying a property together, friends are no different from business partners. Consult a lawyer and consider what you are doing," says Ray Leclair, real estate lawyer and vice-president of Title Plus at Law Pro. "The parties could enter into an agreement ... they should consider that they are business partners. The business is owning a house."
Mr. Leclair says the agreement should cover who pays for what in terms of purchasing and maintaining the house, as well as how the property will be divided if the friends decide to go their separate ways.
"With two young people starting out, if one dies or becomes incapacitated, you can be sure that the parents or the brothers or sisters are going to be in there," Mr. Leclair says. "That's where you want to have the agreement in place. If you don't have the agreement, you get a family member or litigation lawyer to settle the issue and that's never a good thing. It is worth talking to a real estate lawyer prior to, and not litigation lawyers after the fact."
Ms. de Palma says planning is key.
"I always start off by saying we cannot predict life so we have to plan for it. I recommend two plans ... your financial plan and your risk management plan," she says.
The financial plan covers how best to finance the purchase as well as examining how one party would continue to live in the home if the other owner wanted out of the agreement, Ms. de Palma explains.
"The other plan that I feel is important is a risk management plan. [There is the] possibility of becoming disabled or suffering a critical illness before aged 55. While most recover, it can be financially devastating," Ms. de Palma says. "I encourage individuals to look at life insurance, disability and critical illness. It allows that individual to maintain their half" of the property.
Mr. Leclair says individuals buying property together should take this as an opportunity to look over all their documentation.
"They should be looking at their domestic contract if they have one, their wills, their powers of attorney to make sure they are consistent," Mr. Leclair says. "If in my will I say everything goes to 'Jane,' yet my interest in my property I want to go to the person I am buying with, they would not be consistent at that point. Make sure all of your legal documents deal with the same assets in the same way." © Copyright (c) National Post