28 December 2020
By Roger Jones
Making any kind of forecast or prognosis in a situation of maximum uncertainty such as the current one seems complex. However, the end of the year allows for an analysis of the behaviour of the real estate sector during 2020, and based on this information, mentioning the importance of having clear personal finances regarding the intention of acquiring a property, or renting it, is highly important as a complement to the central aspects of the real estate sector. With all the caution required by the COVID-19, this is what we can expect in 2021 in the housing sector.
Along with an estimated analysis of how property values may behave and the need to have a personal finance strategy, we comment on relevant aspects of the importance of mortgage protection insurance for the buyer with the advice of Iron.
- Mortgaging a home represents one of the most important financial decisions a buyer makes before investing in real estate;
- This action should not be confused with the mortgage loan, although both are nodal in our finances.
- One must acquire mortgage protection, which is a mortgage life insurance that settles the balance of your mortgage if the buyer dies before it is paid off. In other words, mortgage protection settles your mortgage debt with the bank.
- The mortgage is a right which aims to guarantee the fulfilment of an obligation, linking some property to the fulfilment of that obligation. If it is not fulfilled, the creditor will have the right to sell the property to take over the total or partial value of the debt. In short, it is a guarantee for the creditor. On the other hand, we must clarify that there can be loans without a mortgage and mortgages without a loan. The mortgage covers the capital owed and the interest after it has been set up, and the subsequent damages and costs caused by non-compliance. The debtor must understand the term of the credit, the amount thereof, the form of payment and the interest, which must be in line with what has been agreed.
Once we know the main aspects of the mortgage, we can think about what to expect by 2021.
- Transactions: Although demand remains very strong, many purchase decisions have been postponed and will most likely be carried over to next year. During 2021, it is expected that the number of purchase and sale operations will increase, and that pre-pandemic levels will be reached.
- Selling prices: The prices of homes for sale have remained practically stable throughout the year. Homeowners have relied on the cyclicality of the crisis and the hope of a quick recovery to keep their expectations intact. But in the first months of 2021, there could be a slowdown in the declines and an upward adjustment over the next year. For foreign readers: This will be seen in many real estate markets such as in Canada, so condominium units in the Oakville area and other neighboring cities will start to see a rise in sales.
- Rent: Several countries have taken advantage of the drop in demand to address different rent laws.
In addition to this information, experts in the real estate sector advise that, as a final factor for a buyer to decide to acquire a property without putting his personal finances in check, on average, it is important that the monthly mortgage payment does not exceed – under any circumstances – 40% of the net income of the family unit.