So you’ve made the decision to buy your first home?

This is an exciting decision and the anticipation of visiting open houses and searching for that place that you’ll soon call home can spark the imagination! Despite the excitement, there are certain things to understand about purchasing your first home that will keep the process from becoming less stressful later on.

From down payments, home features that you’re searching for, and location or neighbourhood preferences, to eventually writing offers on numerous properties until you find “the one” – buying your first home can be a lengthy process and it’s important to consider all these things before you begin.

This is why we’ve created this guide to give you educational and informative points to consider as you embark on the home buying process.

DOWNPAYMENT

Saving the down payment to buy a home can seem overwhelming. First-time home buyers and those who've gone through the process before can experience the same anxiety. But it doesn’t have to be this way.

Sometimes saving for a down payment is as simple as making small changes to your budget or exploring other financing options. Both could help you save more money and reduce the amount of downpayment you need.

The amount of your down payment influences the type of property that you can afford, the type of mortgage you get and whether you need to purchase mortgage default insurance.

Depending on your goal, you may consider ways to save more for your down payment or find alternative funding options.

Minimum down payment requirements:

  • For homes that cost up to $500,000, the minimum down payment is 5%.

  • For homes that cost more than $500,000 and less than $1 million, the minimum down payment is 5% of the first $500,000 plus 10% of the remaining balance.

  • For homes that cost $1 million or more, the minimum down payment is 20%.

FIRST TIME HOME BUYERS INCENTIVE

The First-Time Home Buyer Incentive helps first-time homebuyers without adding to their financial burdens. Eligible first-time homebuyers who have the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada. Visit the webpage below for more details:

https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive


FIRST TIME HOME BUYERS TAX CREDIT 

To assist first-time homebuyers with the costs associated with the purchase of a home, including legal fees, disbursements and land transfer taxes, the Government of Canada introduced the FTHB Tax Credit in 2009. It represents a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief. To find out if you are eligible, please visit the webpage below:

 https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

PRIDE OF HOME OWNERSHIP

Pride of home ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results, will be to your benefit. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.


APPRECIATION

In Canada, especially in the last few years, homes have appreciated considerably and have added substantially to the owners net worth. Unlike stocks and bonds, you get to live in your real estate investment. In Canada your principal residence is exempt from capital gains taxes.


MORTGAGE REDUCTION BUILDS EQUITY

Each month, part of your monthly payment is applied to the principal balance of your home loan, which builds your equity. You can borrow against a home's equity for a variety of reasons such as home improvements, sending your kids to university or college, or starting a new business. Why pay off your landlord’s property when you can buy your own?

Homeowners accumulate wealth for the future while enjoying the benefits of a shelter that they have can use, improve, and sell. Their home is a safe haven for investment.


ARE YOU READY TO BUY A HOME?

First – do you have the financial resources? You should have five percent of the purchase price of a home for the down payment, but ideally even more. Are there other priorities in your life, for instance, starting a new business, which require your savings? If not, buying a home should be on your radar.

Second – do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before you relocate. Your job and home life should be stable.


WHAT CAN YOU AFFORD?

If you haven't already gone through the mortgage pre-qualification process, you will need to meet with a lender or mortgage broker. They will establish how much of a mortgage you will qualify for. Mortgage rates vary considerably and it is paramount that you shop around for the best rate, terms, and options.

Our Mortgage Calculator will help you determine what monthly mortgage payment you can afford and the maximum mortgage you can manage. Note: if you are buying a condo, the amount of your monthly assessment has a direct impact on how much you can afford to spend on your mortgage.

First time homebuyers may want to take advantage of the federal government’s Home Buyers’ Plan. Under this plan, you may use up to $25,000 of your RRSP towards the purchase of a home. The money is tax-free as long as you pay it back in the next 15 years. Ask your Royal LePage Sales Associates: Adam Virgilio & Mark Loewen for details.

QUESTIONS TO ASK WHEN ASSESSING HOME FEATURES

  • Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?

  • Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?

  • Do you plan to have children?

  • Downtown or suburbs?

  • Proximity to recreation or work?

  • Do you need a substantial backyard? Pets?

  • Is there adequate storage space?

  • Will any remodelling be required to make the home move-in ready for you?

  • What service providers (cable, Internet, telephone, Satellite) are available in the area, and is the house completely wired for each?

  • How good is the cell phone reception?

  • How much are the yearly property taxes?

  • How much do utilities run each month? Does the house use gas or electric for the furnace, water heater, and appliances?

  • How old are the major appliances, and which are included with the house?

  • Have there been any major repairs to the house, and if so, when were they completed? For example, how old is the roof? Has water ever damaged the basement or foundation?

  • Have their been problems with insects, such as termites and spiders, or rodents?

  • Older homes need to be carefully examined. Windows may need caulking or new sashes, bathroom tiles may need grouting, the home may need rewiring, a new hot water heater, or a new furnace.


LOCATION, LOCATION, LOCATION

  • How far will you be commuting and what is the traffic like? Factor in cost of fuel.

  • Where will your children attend school and how will they commute?

  • Are there recreational facilities and parks close by?

  • Are you close to family and friends?

  • Is safety or high crime an issue?

  • Is the property close to an obstacle or negative influence? (i.e. an apartment building, shopping centre, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project)

  • Is there access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals?

  • Adjacent undeveloped land - what is proposed for this or other green space?

  • Heavy traffic can be noise nuisance and a hazard for children.

  • Distance from the unit to amenities, parking, walkways, roads, public transit.

  • If looking at a condo, does the neighbourhood reflect positively on the value of your lifestyle?

  • Does this neighbourhood, for any reason, have a poor reputation?

  • Is the future economic climate for the area good? Are businesses moving in? Is there government investment?

  • Are people moving in or out of the neighbourhood? What is their age, income level, family size?

  • Are there plans for this neighbourhood that you may be unaware of (i.e. a future highway, a commercial development or a new housing development) that will provide competition on resale?


NOISE & PRIVACY Considerations

  • Proximity to highways, driveways, parking lots, playgrounds, trains.

  • Proximity to elevators, garbage disposal, fire exits, heating and air conditioners.

  • Building soundproofing.

  • Visit at different times/weekends to check noise levels and activity.