Everything You Need to Know as a First-Time Home Buyer!
Things you are going to want to consider when buying your first home.
1. Knowing How Much You Can Borrow
Before house hunting, figure out how much you can afford to spend. This depends on your income, savings, and other costs. Online calculators can give you an idea, but a mortgage broker can give you a more accurate estimate based on your specific situation.
2. Shopping Around for the Best Deal
While banks can be a good option, a mortgage broker can often find you better deals. Brokers work with many different banks and can compare offers to find the one that best suits you.
3. Down Payment
You usually need a down payment of 5% for the first $500,000 and 10% for anything more. This money can come from savings, gifts, or even your RRSP (if you’re a first-time buyer).
Remember, a deposit is just a promise to buy the house. It’s part of your down payment. So, if you need a $60,000 down payment and already have a $30,000 deposit, you only need another $30,000.
4. Getting Approved
A mortgage broker can make the approval process easier. You can apply quickly and get a pre-approval in just a couple of days. Our special software will find the best lender for you and help you calculate your total costs. To start the process apply now
Costs to Consider When Buying a Home
1. Land Transfer Tax: You might get a tax break if you’re buying your first home.
2. PST on CMHC Insurance: If you have a down payment of less than 20%, you’ll pay a tax on mortgage insurance.
3. Solicitor Fees: Expect to pay around $2,000 for legal fees.
4. Property Inspection: A professional inspection can find problems with the house. It costs around $300-600. A full survey might be worth the extra cost.
5. Appraisal: A professional evaluation of the property might be needed, especially if your down payment is 20% or more. It costs around $300-500. Sometimes, your lender will include this in their offer, but that might mean a higher interest rate.
Other Things to Think About When Buying a Home
1. Closing Costs: There are extra fees when you buy a house, like appraisal fees, title insurance, and legal fees.
2. Property Taxes: Find out how much property taxes are in the area you like.
3. Homeowner’s Insurance: Protect your house and belongings with insurance.
4. Moving Costs: Don’t forget to budget for moving your stuff.
5. Type of Home: Decide if you want a house, townhouse, condo, or co-op. Each has different features and benefits.
6. Your Finances: Know your income, expenses, credit score, and debt. This will help you get a mortgage and find the best interest rate.
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FREQUENTLY ASKED QUESTIONS
FAQ
Common questions first-time homebuyers ask
No, getting pre-approved by a mortgage broker typically doesn’t cost anything. They often provide this service as a value-added to help you in your home-buying journey.
Yes, first-time homebuyers in Canada can often benefit from various programs and incentives. These can include:
- FHSA (First Home Savings Account): A tax-advantaged savings account specifically designed for first-time homebuyers.
- HBP (Home Buyers’ Plan): A program allowing you to withdraw up to $60,000 from your RRSP for a down payment without paying tax.
- PTT (Property Transfer Tax) exemption: Some provinces offer exemptions or rebates on the property transfer tax for first-time homebuyers.
- Tax credit: Certain provinces may offer tax credits to help first-time homebuyers.
The length of time you need to be at your job can vary. Lenders generally look for stability in your employment. If you have a steady salary or guaranteed hours, you may be able to qualify with less time on the job. However, if your income fluctuates significantly, lenders might require a longer employment history, often around two years.
Getting pre-approved by a mortgage broker is often the first step. It doesn’t cost anything, and they can assess your financial situation to determine your eligibility and provide guidance on the next steps. Even if you don’t qualify immediately, they can help you create a plan to improve your financial situation and achieve your homeownership goals.
