Canadian mortgage rates have dropped for the first time since the Canadian government implemented new stress rules on mortgages, allowing potential homebuyers to qualify for bigger mortgages than before.

The stress test was introduced in January 2018, becoming the financial bar in which any Canadian wanting to obtain a mortgage must pass before getting approval. Irrespective of whatever deal a lender may have offered, before regulators can approve a loan, the borrower’s finances must be tested as though their mortgage was at a high rate.

The whole idea of the stress test is to save borrowers from incurring more debt than they can afford and ensure they have the financial capability to thrive in the instance where the rates increases.

The stress-test level is placed at either two percentage points above the actual mortgage rate or as calculated by the Bank of Canada, whatever the average five-year posted rate is at Canada’s big banks. The highest of either one is then selected as the benchmark.

Since May 2018, the bank rate hasn’t changed after rising to 5.34 per cent. But in July, it decreased for the first time in almost three years to 5.19 per cent.

The effect of slightly lowering of the bar allows people qualify for a bigger mortgage than they could before, even if there are no significant changes in their finances. The move by Bank of Canada to lower the qualification rate, gives prospective homebuyers slightly more purchasing power, allowing them to bid for slightly more expensive homes than the previous rate allowed.

Nonetheless, there are Toronto certified mortgage brokers whose aim is to make it easier for you to make these important decisions by helping you understand the various options available to you—and their respective advantages.

The move isn’t exactly a huge one as according to calculation from rate comparison website Ratehub.ca, the typical borrower can now afford about 1.4 per cent more home than before.Under the previous test level, if a borrower had an initial payment of at least 20 per cent and earned $100,000 annuallywith no other existing debts, they would qualify for a home valued at $589,000. Today, that borrower can now afford a house worth $597,000.

The new reduction doesn’t make mortgages any easier to pay off, it just allows borrowers to theoretically afford a slightly more expensive home than they would have previously been able to.

Although the new five-year benchmark rate spells good news for some prospective homebuyers, in reality, it hasn’t really affected the system, noted Samantha Brookes, CEO of broker Mortgages of Canada.

“It allows someone purchasing to buy a little bit more but it’s not that significant,” she told CBC. “Consumers are in this wait-and-see pattern — it’s still difficult to get into the market because that stress test is there.”

While the little room afforded to homebuyers may make home sales look a little better on paper, but the real impact may just be in our imaginations, says Nick Kyprianou, president of RiverRock Mortgage Investment Corporation, a Toronto-based alternative mortgage lender.

Kyprianou’s business has been made busier by the new stress-test level, as borrows began to ignore traditional lenders and move towards alternative lenders. “But it was a reasonable thing to do,” he says. “As a homeowner and a citizen it wasn’t the wrong decision — things were irrational.”

The stress testing level moving almost unnoticeably lower is likely to help instil more confidence in the market, as not only is testing level lower but actual mortgage rates are dropping too.

Fixed mortgage rates are priced based on happenings in the bond market, which has been suggesting for months that lower mortgage rates are expected.

With the U.S. central bank planning to cut its benchmark interest rate soon, the Bank of Canada would not be immune to the global forces that may drop the rates down even further.

“This is a psychological game. If people feel confident, they’ll get back in the market,” said Kyprianou, who noted that a reduction in rates in the real world would have a much bigger impact than the little reduction in the stress test.

Collecting your keys soon? It’s time to start planning for your renovation! Purchasing and putting together a home calls for wise decisions to be made, especially so you don’t break the bank. Together with BankBazaar, we bring you a list of tips and tricks to help you balance your budget easily.

1. PLAN YOUR BUDGET (AND STICK TO IT)

Decide exactly what you need for your new home and list out the cost of each purchase. With this budget in mind, stick to it as closely as possible. However, there may be certain unforeseen circumstances that may cause you to exceed your pre-planned budget due to. With that in mind, be sure to give yourself an allowance of about 20 per cent on top of that pre-planned budget so that you don’t end up with an incomplete bathroom.

2. RESEARCH

Experience is the best teacher – read up on what people have done and learn from their experiences. Read reviews on interior designers and look at their portfolios. It is important to note that some interior designers are more skilled in certain home types than others. Try to get at least 3 quotations for your ideal home. Compare them before deciding on a designer.

3. PLAN YOUR PURCHASES

Home fairs attract a range of merchants selling products you might need, which can be a great place to check out! Warehouse sales are also a place to get furniture at a bargain. Compare prices across different merchants before your eventual purchase.

If the purchases are not urgent, wait for discounts during occasions like the Great Singapore Sale, National Day, Black Friday, Cyber Monday or Christmas. Keep on the lookout for cyber sales throughout the year where retailers will have discounts that can save you some money.

For the true bargain hunters, head over to Johor Bahru to get lights and furniture at a fraction of the cost. Tampoi Lighting Centre is immensely popular among Singaporeans, and JC Bespoke is great for good quality teak furniture.

4. DIFFERENTIATE YOUR NEEDS AND WANTS

Amidst the excitement of preparing for a new home, we tend to fail to consider what we really need. Do you really need that S$800 bright red professional mixer, or does it just look great on the kitchen counter?

Pro tip: Consider if your purchase will make your home a more functional one. If not, you may want to wait till you’ve moved into your home to really know. In that way, it may be wiser to leave some of the nice-to-have purchases till after you’ve moved in.

5. DO-IT-YOURSELF

Try assembling your own furniture instead of paying someone to do it for you. Just imagine that sense of satisfaction after you’re done! Of course, be discerning as to what you can do. As a general rule of thumb, it might be wise to leave the specialised tasks, such as installation of gas pipes, to trained professionals.

Furniture stores such as IKEA are good bets to get the furniture needed at fairly reasonable prices. Check out Youtube’s home renovation videos, Pinterest or ikeahackers.net for nifty DIY tips.

6. DRAW INSPIRATION FROM OTHERS

The Internet is full of inspiration, from renovation saving tips to creative, style tips! Of course, Qanvast has thousands of local home ideas that’ll pique your interest – a real treasure trove of ideas on personalizing your home!!

7. DECIDE ON A COST-SAVING THEME FOR YOUR HOME

The design of your home plays a role in your renovation cost as well. A home with a minimalist theme is likely to be cheaper to renovate than an apartment that is intended to exude a sense of opulence. Having said that, it doesn’t mean you have to compromise on style: after all, simplicity is beauty.

8. DO AWAY WITH UNNECESSARY FRILLS

It is important to focus on what is functional for your home. For example, it might not be very practical to get carpets if you have young children or pets at home. At the same time, wallpaper may not be the best idea in Singapore’s tropical climate as it causes the wallpaper to discolour and replacing wallpaper can be a little pricey as well.

9. REFURBISH OR REUSE WHEN POSSIBLE

If you are moving into a second-hand home, consider what can be kept, such as structural elements or pieces of furniture. Refurbish them if they are still functional and in relatively good condition. If you have current furniture, consider what can be reused and brought to your new home.

For first-time homeowners, it is important to note that while you may want to have custom carpentry throughout the house, you won’t be able to bring these pieces to your next house if you plan on moving again.

Tackling a renovation project can be both rewarding and challenging. Unlike building a home from scratch, you’re never starting with a clean slate. Renovations are often complicated, as you need to correct the mistakes of the previous owners, as well as to deal with unforeseen issues and costs. While being prepared is essential, before you take on your own renovation, make sure you’ve run through the rest of these tips.  

Plan everything carefully

When you’re about to spend some serious dollars, your better make a plan of what goes where before you hit the ground. Failing to do so can result in unnecessary post-reparations which cost even more. Don’t forget to establish a timescale of renovations, to make sure any changes to the structure and finish go before replacing fittings and fixtures, which in their turn go before painting, window upgrades, and lighting.

Document everything

You need a budget sheet that outlines every detail of furniture, finishes, and fittings. This is an essential part of any interior design project, as it includes details such as door hardware, paint, lights, locations, prices, the lead time, and other specific requirements. When you see how your costs are spreading throughout the project, it’ll be easier for you to foresee items that may lean heavily on the budget, and replace them with cost-effective alternatives without compromising the result.

Choose materials wisely

Even the most contemporary minimalistic spaces can be made much cosier with the right choice of materials. While striking a balance between functionality and aesthetic can be challenging, carpets in bedroom and natural stone in common rooms can make a nice combination. While a lot of homeowners avoid natural stone because they think it shows wear quickly, the latest sealants and protective coats can make a stone floor impervious to normal wear and tear, as well as resistant to spills and dirt.

Customise storage to your needs

While seeing storage options on a home improvement TV program is one thing, make the changes to match your style of living is another. Kid’s wardrobes, for example, can fit more shelves per unit, since their clothes are much smaller, while you should design the kitchen storage that matches your appliances and utensils. In both cases, built-in solutions offer the less cluttered look, with great backdrops. You can even hide your cables by wiring the appliances into custom-made cabinets.  

Have someone evaluate your budget

For most people, coming up with a budget is like making a shopping list and adding a proverbial 20% margin. However, if you enlist licensed quantity surveyors from the early start, they can get you more accurate estimates on every aspect of the job, even saving you some money in the process. Have a certified quantity surveyor inspect, assess, and record the value of items you’re planning to dispense with. Things like old window furnishes, floor coverings, and many other items have a residual value that can be written off and claimed as a tax deduction. Such scrapping costs can literally earn you some money, especially if the property isn’t too old.

Design a floorplan with future in mind

While the final floor layout is as much of a personal thing as anything else, keep in mind that every change might affect the ventilation scheme, traffic flow, and lighting fixtures. If you’ve decided to relocate doors or windows, make sure you have enough wall space, as well as floor space to accommodate all your furniture. Feng shui or not, it’s always better to have a clear path through your rooms. If you’re not sure what to do with the floorplan arrangement, take a walk through empty rooms and see what would be the most natural way of moving from one to the next.  

Give bathroom to the experts

While moving plumbing pipes and fixtures is generally not recommended unless absolutely necessary, if you decide to do it, bring along an interior designer to make sure your plumber has the correct inputs. Keep in mind that re-routing even a single fixture costs a lot, and once concrete slabs have been poured, plumbing and wires laid in, going back and undoing mistakes isn’t easy at all. A friendly renovator’s tip: make sure the toilet is away from view and make the centerpiece, which is usually the vanity, the first thing a visitor sees when stepping through the door.  

Small details, big impact

After you’ve gone through heavy-duty renovation phases, details like power points, switches, and fans might seem insignificant. However, in order to prevent them from appearing all of a sudden in the wrong spot, you need to work out their position, as well. Make sure your new home layout isn’t missing on power points, and try to keep as much of wiring hidden in the floors, walls, or ceiling as possible – which is especially tricky in open-plan spaces.

No two home renovations turn out the same, however, you should still follow certain guidelines to avoid unnecessary work and retracing your steps.