We know that owning a home is a dream that many Canadians aspire to. We want to help make your journey to becoming a homeowner as stress free as possible.
You need to formulate a plan and empower yourself with knowledge.
Here are some important steps to help you navigate home ownership:
- Save for your down payment
- Research programs are available to assist you
- Prepare your documentation
- Select your support team (e.g. realtor, home inspection firm, lawyer, mortgage provider)
- Obtain pre-approval for your mortgage
- Find your home and seal the deal
Step 1 – Save for your down payment
Start saving for your down payment by cutting your expenses and saving that money in a high-interest savings account. Other options include setting up auto-deposit from your paycheque, investing cashback funds from your credit card in RRSPs/high-interest savings account, and withdrawing funds from your TSFA.
First-time home buyers can also take advantage of the First Time Home Buyer’s Plan and withdraw from your Tax-Fee Savings Account.
Step 2 - Research programs are available to assist you
The Home Buyers’ Plan (HBP) allows you to borrow up to $35,000 per person from your RRSP tax-free, to put towards the down payment of your first home. Keep in mind, it needs to be repaid in full in 15 years.
The First-Time Home Buyer Incentive (FTHBI) is a government program that can help you increase your down payment. If you have at least 5% of the purchase price saved as a down payment, the government will give you an additional 5%-10%.
Later this year will be the launch of the First Home Savings Account (FHSA), a tax-free savings and investment tool designed to help Canadians tackle the considerable challenge of purchasing a home. The tool will allow buyers to set aside a maximum of $40,000 to put toward the purchase of their first home. Contributions will be tax-deductible and max out at $8,000 a year.
Many provinces also offer land transfer rebates when purchasing your first home. The City of Toronto also has its own land transfer rebate program as well.
GST/HST rebates may also be available for new homeowners. This partial rebate can offset the amount of GST/HST you are required to pay on the purchase of your home.
Not sure which program is best for you and your homebuying needs? Contact one of our Mobile Mortgage Advisors for their expert advice by clicking HERE.
Step 3 - Prepare your documentation
As you gather and prepare your documentation for home ownership, you’re going to need to provide copies of your most recent pay stubs (likely 2-3), your T1 general tax form from the previous tax year, savings and investments statements from the previous 90 days, and a void cheque. Plan to also gather an inventory of all other debts and assets.
If you’re planning on using the Home Buyers Program, you will need a proof of withdrawal from your RRSP. If a family member is helping with a financial gift, you will be required to provide a letter from the gift giver verifying this is a gift and not a loan.
Step 4 - Select your support team
Buying a home is a big deal! You’re going to need a team to help you. Find a relator you know and trust that can work with you to find a home that will meet your budget and mortgage requirements. A real-estate lawyer is essential to help with your home closing and all the paperwork required for legal home ownership. A licensed home inspector should be part of your support team to inspect your home BEFORE you close the deal, to ensure there are no hidden surprises with your home’s structure.
Step 5 – Obtain pre-approval for your mortgage
It’s important to get official pre-approval for your mortgage. Don’t rely on just an online mortgage calculator when preparing to buy your home. Online mortgage calculators typically provide you with the top end limit of what you could afford and fail to take into account planning for emergencies or other life events that could impact affordability.
Life can throw you curveballs. What happens if you or your spouse lose your job? Decide to start a family? Plan a renovation to your soon to be new home? Need to care for an aging parent unexpectedly? When you talk to one of our Mortgage Advisors, they will have these discussions with you so you can plan for life’s contingencies to ensure you can afford your home.
Step 6 - Find your home and seal the deal
After you have your support team in place it’s time to go house hunting! Decide before you start seeing houses what are your ‘must haves’ versus ‘wish list’ features for your home?
Know where you are willing to be flexible and where you are not. Research the neighbourhoods you’re interested in. Investigate what homes are selling for in the area you are considering.
If you have children or are planning on starting a family, research the local neighbourhood schools. Do you commute into your job? Is there accessible public transit and highways? These are all important considerations you need to take into account.
Preparation and knowledge of all resources available to you can help you achieve your goal of homeownership. The Alterna team is ready to help you make your dream a reality with great mortgage rates and experienced mortgage advisors ready to join your team. For more information, set up an appointment with us HERE.