Alternatives to

SUSSEX |

REAL

“24 HOUR HOT LINE”

mortgage woes

THE SURGE in mort-
gage rates since March
has made homeowner-
ship less attainable for
many modest income
renters.

For example, the monthly
mortgage payment on a
$100,000 mortgage with a
five-year term in January of
this year was $715. By June,
when mortgage interest rates
increased to 10.75% the
monthly payment increased
by $230 to $945.

But government programs
and innovative financing can
offset increases due to higher
rates and give more people a
chance to enter the market.

Overail, the best way to
reduce higher mortgage costs
is to combine the benefits of
two or more of these options,
taking into account each of
their advantages and disad-
vantages. With such a strate-
gy, a buyer may not only cut
down the higher carrying
cost caused by this year’s
rate hikes, but in some cases
eliminate them altogether.

Reducing Monthly
Payments

Buyers who cannot afford
the monthly payments might
consider a shorter mortgage
term.

In fact, by taking a six-
month term, 68% of the
interest related monthly pay-

ment increase from January
to June can be offset. The
monthly charge with a six
month term in June at 8.38%
on a $100,000 mortgage was
$787 which is $158 lower
than with the five-year term.

However, this strategy
may not be advisable for
buyers who could not afford
higher mortgage payments
should rates go up at renewal
six-months down the road.

Another option is to
increase the amortization
period beyond 25 years. The
National Housing Act allows
purchasers to amortize their
mortgages up to 40 years.

Increasing the amortiza-
tion period from 25 to 40
years on a $100,000 mart-
gage with a five-year term at
10.75%, reduces the monthly
payments to $889, for a sav-
ing of $56. The increase in
mortgage payments between
January and June would have
been $174 instead of $230.

A third option is to com-
bine a longer amortization
and a shorter term mortgage.
In fact, this option totally
offsets the mortgage rate
increases that occurred
between January and June. In
January, before the recent
round of rate hikes, the
monthly payment on a
$100,000 mortgage was
$715. Someone borrowing at
the end of June could attain

virtually the same payment
—- $713 — if the mortgage
were amortized over 40
years with a six-month term
at 8.38%. Longer amortiza-
tion periods and shorter
terms, however, mean an
increase in the interest cost
over the life of the mortgage.
Easing the

Downpayment Burden

People who can afford
monthly mortgage payments,
but don’t have the money for
a 10% downpayment can
turn to CMHC’s First Home
Loan Insurance Program
(FHLI) for assistance. This
program allows buyers to
enter the market with only
half the usual downpayment
— 5% of the value of the
home. However, in the long
run, the total financing cost
will be higher because of the
larger mortgage.

First-time buyers with
RRSPs can take advantage of
a federal government provi-
sion allowing withdrawals of
RRSP funds toward the pur-
chase of a home.

Program participants may
put up to $20,000 of their
RRSP holdings ($40,000 for
a couple) as a source of
funds for the down payment
or to reduce the mortgage
and subsequent monthly pay-
ments. However, the amount
has to be repaid over 1-5
years.

230-0322

REDUCED TO
$410,000

5d

4396 HIGHLAND fag
FOREST HILLS

Upgraded, split level 3 bedroom, 2 bath family home. 70 x 115 lot, 2 car
parking garage. Terrific landscaping. Mountain view.

GEORGE SCHARRING-HAUSEN

Sussex Group — Kerrisdale Realty

263-8800

668,000 |

LANCE PHILLIPS
Bus: 925-2911
4 year M.L.5.
Medallion Ciub Member
11 Years Experience

ew wl

ON TOP OF THE WORLD

Superb 3 bdrm. & den apartment in the heart
of Vancouver. Simply stunning, views. Floor to
| ceiling windows with curved feature living rm.
Includes 40 foot boat slip.
1000 BEACH

ENDEARING EDGEMONT

Three bdrm. rancher on iarge private 80x115' lot. Circular driveway and single carport. This
immaculate 1 owner home is just awaiting your offer & decorating ideas.
2680 EDGEMONT BLVD.

[so1800 40 STRATA UNITS

CENTRAL LONSDALE
BARGAIN

Loaded with features — over 2500 sq.ft.
including sauna, jacuzzi, wine tocker for
storage, huge deck with mountain and city

views.
245 WEST 17TH

VERNON

Great investment — 40 units
plus one caretaker unit located
in great area of Vernon.
Excelfent condition with plenty
of potential.

Call for package.

LANCE PHILLIPS
925-2911

CHANCE OF A LIFESTYLE
Centrally located 3 bdrm. townhome in unique
7 unit complex — very well run with low J
maintenance fees! Other features include tiled
entry, woodburning fireplace & tons of closet

space. Just steps to everything.
#5-1535 ST. GEORGES

|

Santer

pe i

LOCATION, LOCATION

Charming cottage south of Edgemont. 48x130
level lot. Fantastic garden, on quiet street.

1425 WOODS

Sussex Group ~ 5.R.C. Realty Corp. West Vancouver Office 925-2911