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First Time Home Buyer Guide
If you are a first-time homebuyer, getting professional mortgage advice is a great place to start. We specialize in the kind of education that can help get new homebuyers off to a great start! Although mortgage debt is ‘smart' debt, buying your first home is a huge financial decision and there is a lot to think about. It's one of the most important financial decisions that most Canadians will make in their lifetime.
You want to take advantage of today's low rate environment but it can be overwhelming to sort through all of the options out there. Your Mortgage Consultant will help get you the right combination of mortgage features, privileges and rate that is best matched to your needs. The right mortgage goes beyond just the rate--it's important to also consider term, prepayment options, refinancing penalties, restrictions, and fees.
Determine what you can afford. Before you start shopping for a home - and long before you consider putting an offer on one - let us help you determine how much home you can comfortably afford. Having a realistic budget to start will bring you confidence, knowing that you are not overextending yourself. Remember that home ownership involves costs beyond the monthly mortgage payment such at utility bills, insurance, taxes, home upkeep.
Be sure to talk to us about getting pre-approved, so you'll get your interest rate guaranteed for a set period, typically 90 to 120 days.
Downpayment options. Downpayment is one of your most important considerations before you look to purchase your new home. If you're in the "saving up" stage of preparing for home ownership, this is a great time to meet with us so we can discuss your downpayment options. In most cases you want to save five percent of the purchase price.
There are a few options to consider for first-time homebuyers who may have smaller amounts to start:
- The Home Buyers' Plan (HBP) - first-time homebuyers can withdraw individually $25,000 or $50,000 with a spouse tax-free from their RRSPs, provided they adhere to the repayment plan.
- Gifted downpayment from an immediate family member - can be a source of funds as long as the homebuyer receives in writing that they are not required to pay the money back at any time.
- Start off small - the dream house may be priced too high, so a starter home might be the right option for a first-time homebuyer. A smaller home or maybe a house just outside of the expensive area will help get a foot in the door. The homebuyer can take advantage of the low interest rates to pay off the home quicker and use the equity from the first home to buy the dream home later.
Build a team of professionals. We'd be happy to help you build a strong away team so that all aspects of your home buying experience are efficient and professional. Your team will include a realtor, lawyer, and a home inspector.
Plan for closing costs. There are additional costs that come with buying a home so you'll need to have some extra funds set aside to cover these costs. Generally, you can expect to pay between 1.5% and 4% of the home's selling price in total closing costs. We can outline all of your closing costs so you won't be caught by surprise.
Your Mortgage Consultant will also provide strategies to help you pay your mortgage off faster and shave thousands off interest costs.
There's so much to consider. Work with your Mortgage Consultant today so you can get into the market and start your wealth building with smart debt! We'll help you get off on the right foot in your home buying journey.
Mortgage Intelligence Website Article