So you want to buy your first home…
- Home Buying Tips
- Friday, July 22, 2016
So you’re thinking of buying your first home? Great news! We can give you some pointers, so read on for some brain food:
First of all, why would you buy your own home to begin with? You’re living a cushy life, whether you’re still living with family or you’ve got yourself an affordable home you’re renting in a great location. Well, there are many benefits to owning your own home: peace of mind, the ability to earn equity, the pride of home ownership and living in your own investment, and creating wealth for your future. After all, why would you put your hard-earned cash towards someone else’s mortgage?
Another thing to remember is that as a first time homebuyer, there is a federal program in place to assist you with the purchase of your first home.
Under the Canadian federal government’s Home Buyer’s Plan, you can use up to $20,000 in RRSP savings ($40,000 per couple) to help finance the down payment on your first home. The great news is that you actually have 15 years to pay back your RRSPs penalty free. This timeframe will give you plenty of time to get settled into your new home. For more information about the federal Home Buyers’ Plan and to find out if you qualify, visit www.cra-arc.gc.ca/hbp/
How much should I spend / how much “home” can I actually afford?
There are several factors to determine how much you should spend on your future home. Looking at your income will give you a better idea of how much you can put away towards a down payment. Often times, family members are willing to assist with down payment contributions, so have a chat with your family members to discuss if this is an option. Another factor to consider is how much your monthly housing expenses and bills will cost. These two combined should be less than 42% of your gross monthly income.
Keep in mind that your lender will require mortgage insurance for any down payments that are less than 20%. Ask your mortgage specialist or broker for more information about mortgage insurance.
Finally, start building your credit history! Your lender will want to check your credit – so make sure you’re not skipping any credit card payments, and always keep your bills in check!