Canada – we’re looking at you Toronto, Vancouver, Ottawa and Montreal – presently has one of the hottest real estate markets in the world. In some parts of the Great White North, housing values are surging double-digits, and even condominiums are being scooped at up rising rates.This is indeed a seller’s market, but that isn’t a good thing for first-time homebuyers.
Since the average home in Toronto comes with a $1 million price-tag, a millennial family earning a $60,000 annual salary will have a harder time being accepted for a mortgage. When you factor in other things – student loan debt, auto loan debt, stagnant income and maxed out credit cards – it is nearly impossible for millions of younger Canadians to get in the market.
What can you do? Well, there are multiple steps that first-time homebuyers can take to increase their chances of having their mortgage application accepted by their bank and to ensure that they can keep paying off that 25-year loan without any significant hurdles.
Here are five mortgage tips for first-time homebuyers:
1. Have All the Information Prepared
Now that you and your family have decided to purchase a home, you have to get down to the brass tacks. Remember, buying a semi-detached, townhouse or condominium is the biggest purchase you will ever make in your lifetime. It’s time to take the matter seriously.
Prior to submitting a mortgage application, it is imperative to determine if you have money for a down payment, what your credit score is, how much you currently maintain, what your total net worth is and the list goes on. These are all important factors for determining if you’re granted a mortgage.
2. You Must Get Pre-Approved FIRST
Before you start sauntering down the sidewalks of Leaside, Forrest Hill, Parkdale, Harbourfront and other areas of the city, you must get pre-approved for a mortgage first.
How many couples make the error of placing a bid on a home without even knowing if they’re pre-approved and how much money they can work with? The answer is a lot.
3. Think About Moving Out of the City
The major metropolitan cities in Canada are too expensive for the average person or family. Therefore, it may be prudent to start exiting these cities and moving out into the suburbs.
Of course, even then it can still be too costly to relocate to the boundaries of the city.
If your career affords you this convenience, you may need to move somewhere else in Ontario or British Columbia. Indeed, Paris, Ontario is much more affordable than Toronto, Ontario.
4. It Will be Costly to Get a Mortgage
Another common error that first-time homebuyers make is thinking that they only have to service a mortgage, maintain the home and not face any other mortgage. Get ready for a shocker!
Legal fees, land transfer tax, property tax, property insurance, closing costs and interest are just some of the pecuniary aspects that you must come face to face with. These are all expensive, and they can eat away at your monthly earnings and impact your down payment.
5. Prioritize Your Real Estate Strategy
Right now, your No. 1 priority should be finding the right detached house or condo suite. Until you find the best home for you and your family, you must spend your days and nights seeking out properties, visiting open houses, budgeting your finances and locating other options.
Buying a home is something that should never be done nonchalantly. It may seem counterintuitive, but it should flood your mind, keep you up at night and ensure you’re keeping up-to-date on any real estate changes.
Prioritizing your real estate strategy is the key to selecting the best home for you, your family and your pocketbook.
Let’s be honest: we all make mistakes; we don’t know every single fact on this planet.
First-time homebuyers are just learning. They may have the rudimentary facts in their back pockets, but when it comes down to the nitty gritty they’re abecedarian. Obtaining a mortgage is the biggest debt that most Canadians will ever incur.
Research, due diligence and dedication are all tools that every novice homebuyer must employ moving forward. Oh, and perhaps prepare yourself for some serious heartbreak, sweat and tears.