Buying your first home is one of the most exciting times in your life, but it can also be one of the most overwhelming. Expectations are often thwarted by financial realities and these can leave you feeling disappointed in your options. However, with a bit of planning, you can avoid the pitfalls of expectations vs. affordability, and with the help of your real estate agent, find the perfect first home.
Plan your Budget
The most important thing you must do is plan what you can afford. A mortgage calculator can help you start the process. Mortgage calculators give you an idea of what your price range should be. It is also a good idea to contact a mortgage broker who can help you find the best financial institution for a possible pre-approved mortgage. Your own bank may not offer you the best option, so it’s important to investigate all options available to help with the cost of purchasing your home.
Take advantage of the financial incentives available for a first time home buyer:
First-Time Home Buyers’ (FTHB) Tax Credit
Introduced by the Government of Canada to assist first-time home buyers with the costs associated with the purchase of a home, a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
Home Buyers’ Plan (HBP)
Allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment. It is tax free and if you are buying with another individual who is also a first time home buyer you can both access from your RRSP for a total of $50,000.
Where Do You Want to Live?
Plan the area you wish to live in. If you are in a large city, you may have a few neighbourhoods that you consider ideal. You may have your heart set on one area or you may be open to several options. Consider what your priorities are and make a checklist. You may want to be close to public transit, walking distance to work, or a child friendly neighbourhood. Be flexible. Your ideal neighbourhood may not be financially feasible but another one may still have many things on your priority checklist.
Identify Your Needs
Make a list of the amenities that are a priority for you. How many bedrooms do you need? How many bathrooms? Is parking a necessity? Consider the amenities that are extremely important to you. The “must-haves” for your new home.
Identify your Wants
Now list the amenities that would be nice to have in your home. You may love the idea of indoor heated parking or granite counter tops in your kitchen.
Keep an open mind. More often than not, the picture in your mind’s eye of your new home and the reality of what is available are two different things. The more open you are to different neighbourhoods and home types, the easier it will be for your real estate agent to find you that wonderful first home.