March 23, 2011

Are you planning to buy your first home this year?

  Your new mortgage will probably be the largest debt that you will incur in your life. Your property however, although being the largest investment you will ever make, will probably have the greatest return.  If you have been a tenant for a long time you know that you will never see any return on the rent money you have paid over the years. Now is the time to become an owner and to let your money work for you.

When pondering whether to make such a large investment, it is normal to have certain doubts and fears. Is it the right time? Can I afford to finally become a homeowner? How much would monthly mortgage payments be?  What is the difference between the monthly cost of a property mortgage as opposed to the current rent that I am paying my landlord?  How much can I afford to invest?  ? To help you, a mortgage calculator found on this website, can calculate what your borrowing capacity may be while taking into account, taxes, services, and other amounts that you would not normally pay as a tenant.

• Do you have a down payment? Your mortgage broker can explain the latest rules regarding the percentage of the purchase that you can finance. Generally, a minimum down payment of 5% is required. Does it come from your savings, a gift, or cash back on your mortgage? If you have already contributed to an RRSP, you could withdraw money – tax free – and use as a down payment with a HOP (Home ownership plan).

• Is your credit score good? Your credit score will determine whether your mortgage application will be accepted or refused.

• Have you allocated ample funds to deal with closing costs such as moving costs, legal fees, and land transfer tax (welcome tax)? You will however be happy to know that an amount of up to $ 750 could be reimbursed to you through a federal tax credit.

Finally, according to an Ipsos-Reid poll published in 2010, 91% of Canadians believe that home ownership is a good investment. More Canadians expect to purchase a home within the next two years than did in the two years previous..  Owning a home may not be for everyone, but the fact remains: More and more Canadians look forward to owning their little piece of paradise.

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