With any major life decision, there is a tremendous amount of effort and commitment involved. The best overall approach is to take your time, research, and ask a lot of questions. Ensure the assistance of professionals throughout this process. They will be your best information source.
Get in touch with your bank and be prepared to divulge all of your personal information; income and debt being key factors in the pre-approval process. The outcome of this process will allow you to use real figures when creating a monthly budget of what you can afford. Keep in mind- although the industry professionals are here to guide you through the process, be cognizant in terms of budgeting your own finances- no one knows your spending habits better than you do.
Ensure you record all of your fixed expenses as well as your variables. Be realistic. Don’t cross entertainment expenses off the list just yet. The idea of a budget is to work with your necessary cost of living but to also factor in your lifestyle. Don’t get us wrong, there are sacrifices to be made.
You need a professional. Buying a home is an intricate process and must be treated as such. A realtor will assist, advise, and ensure the transaction is completed smoothly and professionally. Not to mention provide you with prospective properties that match your criteria, accompany you to appointments, and work hard to ensure all of your questions and concerns are answered and dealt with prior to closing.
Here is where things get serious. Before you know it, you’ve fallen in love with a property and the seller has accepted your offer. A percentage of the purchase price is now required for payment in other words, it’s time to fork over the cash. Keep in mind, if you have RRSP savings, the Government of Canada allows an increased withdrawal limit to homebuyers buying their first home. If you haven’t saved up an amount equal to 20% of the purchase price, there may be additional fees or mortgage loan insurance required. The Canada Mortgage and Housing Corporation (CMHC) allows you to finance up to 95% of the purchase price of your home.
Now you are anxiously awaiting your closing date, all the while buying furniture and other household items. Well, you may not want to splurge just yet. Do you have enough savings for your Closing Costs and Land Transfer Tax? Payment of these costs are due upon closing and cannot be tacked on to your mortgage. Make sure to discuss this with your lawyer prior to closing.
It seems like it never ends! You’ve finally purchased your first home, but now you’ve maxed out your savings and the payments don’t end there. Well, allow us to shed some light.
Yep. Who doesn’t appreciate a good old discount?
The First Time Home Buyers Tax Credit (HBTC) is a non-refundable tax credit applicable to only first time buyers.
Any land purchased in the province of Ontario is subject to a Land Transfer Tax. First-time buyers are eligible for a refund or rebate. Ask your lawyer to review and explain the Ontario Land Transfer Tax Refund Affidavit.
We hope this aids the potential financial strain.
Phew. Unpack, unwind, and take it all in. You should be proud of yourself.
Now that you have a moment to breathe-remember, the responsibility of owning a property is endless but it does not have to be strenuous.
Your natural budgeting instincts will kick in, and the penny-pinching will begin. Save where you can. The last thing you want is to be unprepared for an unforeseen repair. Maintaining your property will benefit you in the long run when it comes to re-sale value. The responsibility factor is overwhelming at this point- you’ve not only made one of the biggest decisions of your life, but also one of the smartest in terms of investment.
May your new home be your castle.