The first step in home ownership is twofold. You need to prepare yourself for the reality and financial responsibility that comes with home ownership and you need to make sure that you are in a position to handle those responsibilities and to get pre-approved for a mortgage.

Purchasing a home involves one-time costs and monthly expenses, so you’ll need to determine just how much home you can afford and if you’re financially ready for home ownership. You’ll want to determine:

Your monthly income

• Your monthly debts and expenses
• How much you have set aside for your down payment
• Have questions about what you can afford?

The Government of Canada has provided a handy tool to help with mortgage calculations, please click on the button below:

The purchase price of your new home is just one of the costs associated with home ownership. Experts recommend that you budget 1.5% of the purchase price of your home to cover these costs.

PRE-CLOSING COSTS:

Home Inspection – A home inspector’s job is to examine a home’s condition. Typical issues involve normal wear and tear, but can sometimes include serious material defects. Getting a home inspection before purchasing a property is one of the best decisions you can make.

Appraisal and/or Survey – In order to provide financing your lender will sometimes require an appraisal or survey of the property, to make sure that the value of the home matches its purchase price.

CLOSING COSTS:

Land Transfer Tax – A provincial tax based on the purchase price of your new home.

Mortgage Insurance – If your down payment is less than 20% of your purchase price, you’ll have to pay mortgage default insurance. The cost of this insurance varies depending on the amount of your down payment and will be rolled into the cost of your monthly mortgage payment.

Legal Fees – There are a number of legal fees involved in the purchase of a home, such as paying your attorney for the title search, deed preparation and registration.

Title Insurance – Protects you from situations such as title fraud or flawed surveys.

Home Insurance – Making sure that your home is insured is a condition of your mortgage. Your lender will require you to have home insurance before they release your mortgage to you.

Adjustments – Adjustments are made for things that the seller has paid for, but which you now owe part of because the home is now yours. This could include things like property taxes or rental fees for hot water heaters.

Utility Hookups and Moving – You will be responsible for any utility transfers and costs associated with moving into your new home, such as hiring a moving company.

After you’ve figured out what you can afford, it’s a great idea to sit down with a mortgage agent or broker and get pre-approved for a mortgage. This will make your home search easier by narrowing your focus and will prevent you from falling in love with a home that is outside of your price range.

CMHC’s FIRST-TIME HOME BUYER INCENTIVE
The First-Time Home Buyer Incentive, offered by the Canada Mortgage and Housing Corporation (CMHC), helps first-time buyers increase their down payment. It has two objectives:

• Make home ownership more accessible for first-time buyers
• Encourage developers to build homes to ensure that housing stock can meet the increased demand that the incentive will create

How much is the First-Time Home Buyer Incentive?

The incentive amounts to 5% of the property’s value for an existing home and 5% or 10% for a new home. The incentive is an interest-free loan. It must be reimbursed when the property is sold or within 25 years of purchase. The amount repaid will be based on the value of the property at that time.

A clear example:

A couple wants to buy a new condo for $400,000. They saved $20,000 for a 5% down payment and received a $40,000 incentive (10% of the condo’s value). Their mortgage therefore equals $340,000, to be paid in monthly installments of $1,745. Without this incentive, they would have paid $1,973, or an extra $228 per month. When they decide to repay the incentive, the couple will have to pay 10% of the condo’s market value.

Good to know:
Are you eligible for the First-Time Home Buyer Incentive? To be eligible for this incentive, your qualifying annual income must be $120,000 or less.
Please click on the button below:

Homeownership in Canada can be financially challenging; to help offset some of these costs, the federal government offers a number of tax incentives for homeowners. While some are specifically for first-time home buyers – such as the First Time Home Buyers’ Tax Credit and Land Transfer Tax Rebate – others can be utilized by anyone who owns their home. These include:

Multigenerational Home Renovation Tax Credit (MHRTC)
The newest tax credit to be offered to homeowners, the MHRTC is designed to make it more affordable for multiple members of the same family to live together in one dwelling. This credit offers a refund for eligible expenses for renovations that create self-contained secondary units, such as “in-law suites”. Up to $50,000 can be claimed for each completed qualifying renovation, with a credit of 15% of costs, up to a maximum of $7,500 for each claim.

Click the button below  for more details.

At this point you’ll want to sit down and figure out exactly what type of home you’re looking for. A simple way to do this is by making 2 different lists: a list of what you need from a home, and a list of things that you want from your home. The list of things that you need will include all the features that are necessary for you and your family to function comfortably during your daily life. Things such as the number of bedrooms you need for the size of your family, or a one storey home if accessibility is a factor. The list of things that you need will include features that you would like to have but that aren’t necessary, such as a pool or a den.

It’s also a good idea to make sure you are organized for your home search by doing some research on what area you’d like to live in. Look at all of the aspects of the location you are considering and the surrounding area: is it attractive based on your proximity to work, schools and amenities such as grocery stores, parks, commuter routes, etc.? Keep a detailed map on hand and highlight your areas of interest. Knowing what you need and what you want from a home, as well as what area will suit your lifestyle best will make searching for your new home easier and less stressful.

The purchase of your first home is one of the biggest and most exciting investments that you will make. This purchase will affect your family, your finances, and your lifestyle. For a decision this important you want to make sure that you have an experienced professional on your side who can guide you through the process and protect your best interests along the way.

Best of all, as a home buyer the professional services of your Buyer’s agent are completely free to you! As is the industry standard, your buyer’s agents fees are paid by the home seller. A licensed agent will protect your interests by making sure that you are fully informed about your purchase and by handling the legalities and negotiations.