PLANNING TO BUY YOUR FIRST HOME and not sure where to begin? Here are six homebuying tips to help you prepare.
Get with the program
There are various government programs available to help you buy a home.
Home Buyers' Plan (HBP). The HBP allows first-time buyers to withdraw up to $25,000 from their RRSP to put toward a down payment on a home. You have up to 15 years to repay the funds.
First-Time Home Buyers' Tax Credit (HBTC) to help offset the costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes. The credit can provide up to $750 in federal tax relief. More information on these programs is available at cra.gc.ca
First-time buyers can buy a home with as little as five percent of the purchase price as a down payment as long as the property is less than $500,000. Anything higher than that, and the minimum down payment for the portion of the price higher than $500,000 is 10 percent. So, assuming your price range is at the threshold, you'll need to come up with at least $25,000.
At that purchase price, depending on the market you're in, this could mean you'd then be looking at a townhome, semi-detached or even a condo, instead of a detached home.
Explore your options
Check with the bank of mom and dad
If your parents are baby boomers who have had the good fortune of building equity over the years as they paid down their mortgage while the value of their property multiplied, well ... they may be in a position to help. Many buyers are hitting up the bank of mom and dad. In the last two years, 28 percent of the first-time buyers called on the bank of mom and dad to help finance their purchase; from 2010 to 2014, only 17 percent did.
Become tech savvy
Mortgage consumers are becoming very tech savvy. In Canada Mortgage and Housing Corp.'s 2015 Mortgage Consumer Survey, 78 percent of respondents researched online, with 70 percent using a mortgage calculator to help determine their payments. And social media is playing a more important role - 20 percent used sites such as Facebook to learn more, 17 percent used a mobile device, and of those, 22 percent used a mortgage-related app. And all of these figures are growing.
Like many things in life, it's all about relationships. And whether you use a broker or a banker to secure a mortgage, you'll likely come to value the relationship. In the same CMHC survey, consumer loyalty strengthened the longer people stayed with their lender. But since we're talking about money, people are willing to switch lenders to get a better rate and save - a fact which is much more prevalent for bankers than brokers. And because brokers are able to offer products from multiple lenders, as opposed to bankers who offer only the products of their own institution, the market share held by brokers is growing notably, particularly among repeat buyers.
Befriend a broker or a banker
Research, research, research
These days, with prices rising as they are and uncertainty in some markets, thorough research is an absolute must. Everything from your target area, desired housing type, builder or realtor, finances, how much you can afford, who you borrow from and the structure of your mortgage - take your time. Take months. Don't rush anything. Anything.
Courtesy: Wayne Karl Wayne Karl is an award-winning writer and editor with experience in real estate and business. Fundamentally speaking Wayne explores the basics you need.