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Are you a first-time home buyer looking to buy in Canada but have no idea what you're doing? Well, there are 5 things first-time home buyers absolutely need to know before buying a home in Canada; You need to have a down payment, must have a mortgage pre-approval, know about programs that help first-time home buyers, know your criteria and the process.
Prepare down payment
In Canada, there are designated percentages in relation to the purchase price for the down payment. If the house is $500,000 or less, you must have a down payment of 5%, if the house is between $500,000 and $999,999, 5% for $500,000 and 10% if the amount exceeds, and if the house $1,000,000 or more, there must be a 20% down payment. However, these percentages are just the minimums because the bigger the down payment, the better chance you have at getting your dream home.
Secure a pre-approved mortgage
Next, you need to have a pre-approved mortgage. For this, you will need to do a bit of research and figure out where you are getting the best rates from. The good thing is, if rates increase, that won't affect your current rate but if rates go down, so does yours! Pre-approvals can take anywhere from a few days to a few weeks but there is no guarantee yours will be approved. If your mortgage has been denied, try with another lender.
Apply for first time home buyer programs
Now that you have those figured out, let's look at programs that provide aid to make your first home buying journey easier. The Canadian government released the First Time Home Buyer Incentive (FTHBI) which allows the home buyer to borrow up to 5% of the purchase price of a resale house or 5-10% of the price of a newly constructed home. The best part of this program is the loan is interest-free and can be repaid at any time within 25 years or by the time the house is sold. To qualify for this amazing incentive, you must be a first-time home buyer and should have a household income of $120,000 or less. You also need to make sure the total amount borrowed is limited to four times the total household income. Canada also offers the First Time Home Buyers Plan which allows you to buy up to $35,000 from your RRSP and is also interest-free. For this plan, you must have a written agreement to buy or to build a home for yourself.
Know your criteria and the process
Once you have entered the home buying process, there is a checklist you should have prepared. In the checklist, you need to make sure you have an accurate price range after calculating things like insurance, mortgage, loans, repairs, moving and more. After that, you need to check your credit score as you are more likely to be approved for a mortgage with a high credit score. Include points like down payment, mortgage options, tax credit, and what type of neighbourhood you are looking for. These would help you get a better idea at what you want and how much you can spend.
After this is all cleared, find an excellent agent who will assist you in meeting your criteria. If you are looking at Pre-construction, the agent will represent you and will be able to guide you in choosing the right builder or developer. The pros of buying pre-construction are that you might be able to purchase a home with a low initial deposit, you can customize the house to your liking and can enjoy watching the value grow over the years. You will also have things covered by warranty but as the appliances will be new, there will be almost no need to spend extra money on repairs and maintenance.
If you have any question or need help buying your new home, contact me at 647-834-9928 or send an email to firstname.lastname@example.org