When you are looking to buy your first house in Canada, you need to consider a number of things. Do you want a house with a big yard or one that is close to work? Do you prefer walking distance or daily transit time?
After choosing the type of home, there are a lot of other questions to ask. You’ll first want to find out how many bathrooms your desired home has and if it includes any other special features such as outdoor space. Next, think about whether or not the price for the home fits what you can afford. This will also give you an idea of what type of mortgage would be best for this property that you have in mind. If the monthly payments don’t fit into your budget or the home is on your wish list, there are a lot of other ways to find a new house that you will love and be able to afford.
There are a few other factors to keep in mind when you’re buying your first home in Canada. Let’s take a closer look at some of these factors to best prepare you for the exciting home-buying journey!
First Things First: Get Pre-Approved
You want to be preapproved for a mortgage before looking at any houses. Getting a preapproved mortgage means that you’ve already done all the necessary work and research to buy a house without the hassle of being declined for not having your papers in order. The process takes a few weeks, but it’s well worth it.
The first step is finding out what type of mortgage you qualify for based on your income, employment status, and other information. Once you know this, it’s time to do some research about price ranges and finding homes that suit your budget.
Look Into First-Time Home Buyers Programs
There are a lot of programs that were created for first-time home buyers in Canada that you can take advantage of. Some of these include the First-time Home Buyer Incentive, which is a program that provides up to $750,000 for the purchase of a new primary residence government mortgage insured by CMHC. The Home Buyers’ Plan allows Canadians to withdraw a certain amount from their RRSPs tax-free in order to buy or build a house.
The Home Buyers Tax Credit is a government program that provides an eligible Canadian with a refund equal to 10% of the purchase or construction costs of a qualifying home. This credit can also be used for qualified renovations to your property that will increase your living space such as an addition. The majority of the eligibility requirements need to be met before being able to receive this credit if you’re thinking about buying a house.
If you qualify, you can take advantage of land transfer tax in Ontario, British Columbia, and Prince Edward Island. This allows for a total exemption of the first $55,000 from land transfer tax if you’re buying your first home.
There are programs that can help pay down your mortgage faster as long as you meet certain qualifications. These include The Mortgage Acceleration Program or MAP which provides Canadians with an additional 20% of their gross household income to be put towards their principal and interest portion of their mortgage.
Budget Past the Down Payment and Monthly Mortgage
If you have a budget for your monthly housing costs, then you need to also think about how much you can afford to pay each month. Find out what the current interest rates are and set aside a certain amount of money that you can put towards your mortgage at the beginning of each month. If you need advice on how much this should be, call an agent in the area and see what someone with similar qualifications would do for their monthly budget. Make sure that you have enough saved up before moving into a new home or taking out a new loan.
With so many factors to consider and programs available, buying your first home in Canada is not as difficult as you may think. With a little research into the different options for financing that are out there, like pre-approvals, you can be on the path towards homeownership sooner than you imagine!