House prices in Canada are soaring and the country’s millennials are worried they can’t own a home. In the latest survey, more than 72% of them feel that way.
But somewhere else, things are happening with happier results. Mortgage rates are dropping. The job market is improving. These two alone are empowering millenials to take a chance and buy a home rather than rent.
If you are one of these individuals who doubt about home ownership, brace yourself. All it takes to owning a home is careful planning, wise judgment and setting realizable expectations. Here’s what you can do.
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Go Small First
You are a first-time buyer, which means you don’t have equity yet. Established buyers already have equity which they can use as a bargaining instrument. That’s one of your goals – build equity.
For now, all you have is your savings in the bank. If the money there is small, you need not push yourself in order to buy an expensive home. Start small and with something you can afford. Be good at paying your amortizations. Then you can build a good reputation. Once you’re ready with a good equity, you can start thinking about leveling up.
Gear Up For The Down Payment
Having the capacity to pay your initial payment counts a lot. If you are ready, it can make you feel confident about pursuing a purchase. If there is nothing there, you will not be able to proceed.
Most people will recommend that you pay 20% of the mortgage as your initial payment. The purpose for this is to avoid paying mortgage insurance. But for most, this is something not achievable. In Canada, the minimum down payment set for buying a house is 5%.
To be repetitious, go smaller. Go with something that will not stress you out or something that might rob you of peace of mind.
Be Clear With The Other Costs
The truth of the matter is there are additional costs to factor in. So, don’t look only on the amount of the entire mortgage and the size of the down payment.
Make sure also that you are ready with your questions when you consult with an expert mortgage broker. You want him to talk to you about many things, but he might just forget to cover everything. So go to him with your questions in the hope that you can cover all the essentials.
Topics to ask the broker of are closing cost, insurance and property taxes. You want to make sure you will be getting what your budget can afford.
Take Advantage Of Refunds And Government Financial Aids
It’s true. The government is behind buyers’ back, especially first-time buyers. Tap onto your RRSP account. It can help you finance your down payment. The maximum amount that it can cover is $25,000 and it is tax-free.
Ask about First-time Homebuyer Credit. That can help reduce taxes you will owe the government out of buying a home. If you are buying in Ontario, avail of the province’s land transfer tax refund as well. In other provinces, this privilege is available, too.