Living in Canada is a dream come true. So, are you ready to move into a place you can call home? There is much to consider finding the right first home.
While many feel that the pandemic might not be the best time to spend on property, the experts know that the current low-interest rates can help buyers acquire homes fit for profitable re-selling assets.
Since this is your first home, there is a lot to learn about. From saving up to getting a mortgage, this site can help you learn about the financials. As for the basics, your first home purchase requires some thinking.
In this article, we will discuss how to buy a house in Canada and what you need to know along the way.
Preparing Yourself for the Purchase
Wondering how to buy a house in Canada as a first-time homebuyer?
Preparing for your home purchase is the first crucial step in the process. Understanding how to go about it and the finances involved, as well as navigating the legal jargon, all form essential parts of the experience. The following are quick tips to prepare yourself:
Learn About Down Payments
A down payment is the up-front lump sum that you pay towards your home. The more the down payment amount, the less you would need as a loan for the purchase.
So, if you can start saving early, you can take out a less substantial loan with an affordable interest rate.
If the home you choose costs $500,000 or lower, you need to pay a minimum of 5% of this value as a downpayment.
Keeping this in mind, you can opt for a home that fits well into your overall budget. By doing so, you can save money on both the down payment and the loan amount.
Affordable Homes Have Long-Term Value
Who does not want to splurge on their first home? However, being practical can help you save more money in the long run.
Set a realistic range within which you can buy a house without having to pay exorbitant interest rates on your home loan.
Make sure to also factor in your monthly hydro bill, overall monthly household incomes, property taxes, and other expenses. Knowing about these beforehand can help you budget better.
Maintain a Steady Income
Owning and maintaining a house is easier for a salaried individual than for someone more precariously employed. When you have a steady income, it shows your lender that you can responsibly pay your mortgage on time.
It also raises your credit score, lowers the interest rate, and helps approve your mortgage application in no time.
There are many other household benefits to having a steady income. For example, you can pay all your bills on time and still have disposable funds for unexpected repairs.
Of course, if you do not have a steady income and are looking to buy a home, it is best to speak to a professional lender.
Look for Pre-Approval
Getting pre-approved for a new home can help you shop for the best houses while staying within your budget.
Pre-approval allows you to carry the guarantee of receiving a loan from your bank when you are ready for purchase.
By applying for pre-approval, you can start to budget for your new home’s bills and expenses. It also helps you learn about your interest rate.
How to Buy Your First House in Canada?
Now that you are well-versed with preparing to buy your first house, here are some quick steps to purchasing it:
Keep Legal Paperwork Handy
When buying a house in Canada, ask your lender about mortgage rates. It can be helpful to purchase a home and pay off its value at affordable rates over time.
For this to happen, it is imperative to keep your legal and formal paperwork nearby. The approval process needs you to submit legal proofs through the following documentation:
- A void cheque
- All your investment statements from the last 90 days
- Your pay stub statement, employer’s letter, and the T4 tax form from your current place of employment
- Loan paperwork for cars and other assets
Keep these handy as being timely with paperwork can quicken your mortgage approval.
Pay Off Your Debts
Paying off your debts can raise your credit score, thereby lowering the interest rate on your home loan. Try to pay off the significant debts before opting to buy your new home.
By doing so, not only are you reducing your financial hassles but also improving your debt service ratio.
This is a ratio that lenders use to assess the amount to lend you for your home. These debts can include student loans, car loans, credit cards, and more.
Shop Around for Your First Home
After you have prepared for the financial aspects, it is time to find yourself a house.
If you have found a suitable neighborhood, you can now look for a real estate agent that can help you find the right property that suits your taste.
Know Which House Suits You the Most
The choice for your first home depends on more than just its looks. Its listing price, proximity to developing infrastructure, neighborhood, and of course, the lending rate each play a role in your decision.
When looking for your first dream home, make sure to look into factors that help its value appreciate faster over time.
It can help you evaluate if the property is profitable in the long run. Make sure to also check into the availability of basic amenities that can add comfort and also help raise its resale value.
If you’re looking to buy a house in Canada, it can take a while. But after you have finally settled into your new home, it is worth every step.
So, take your first stride, and look into the current property market to settle for the house that feels like your home.