Buying Your First Home in Ottawa
First time home buyers in Ottawa - look no further!
We have compiled a full list of everything you need to know to begin the journey of buying your first home.
First and foremost, you’re going to need to set a budget. To do this, you can work with your Realtor and a Mortgage Broker to find out how much you are pre-approved for, based on your current income, assets, savings, debt, credit history, and more. Remember that this is a maximum and does not necessarily mean you will be approved for this much, so just use it as a guiding principle.
Your mortgage broker can help you break it down, but in practice, your mortgage payments cannot be more than 35% of your monthly income, and your debt cannot be more than 42% of your monthly income.
Next, you’ll want to ensure you have enough money for a reasonable down payment on your first home, as well as any extra costs that are associated with buying a home (lawyers, closing costs, taxes and fees, etc).
Your down payment as a first-time home buyer can be as low as 5% depending on a variety of factors. You should, however, account for it being 10-20%, and also be prepared for closing costs which could be 3-5% of the price of your home. You will need this money in ‘liquid’ cash, meaning it can’t be caught up in a long-term savings account or in investments.
Next, it’s time to actually find a mortgage that fits your needs. You’ll need to choose whether you want a fixed (stays the same) mortgage rate or a flexible one that rises and falls with the Bank of Canada’s announcements (meaning sometimes it will be lower, but can also be higher). Your Mortgage Broker can assist you with making the choice - many people lean towards flexible mortgages because of lower interest rates, but as interest rates are beginning to rise, more people are now leaning towards a fixed rate!
You will also want to consider whether or not you want insurance on your mortgage, in case you lose your job, become injured, ill, or pass away.
You can then start looking into tax credits. You can view all of these on the Government of Canada’s website, but they include returns for being a home buyer, GST/HST rebates, and more.
You will also want to account for other costs included in buying a home, including moving costs, new furniture, and more.
Now, you can begin to search for your new home! Working with a Realtor, you can find the right type of home for you or your family. This could include all sorts of things including the right price, right number of bedrooms, the style of the home, neighbourhood, outdoor space, fencing, kitchen appliances, and more. Each person will have a number of ‘must haves’ and ‘wants’ and it is your Realtor’s job to put those pieces together and find options for homes currently on the market within your budget! Realtors will also have access to possible ‘exclusive’ properties that are not currently on the market (aka not listed on Realtor.ca) but are being sold ‘off-market’ through personal websites and advertising.
Once you have found a group of homes you are interested in, you can attend showings and open houses with your Realtor to see which homes are for you. Then, you will begin preparing offers! Your Realtor will guide you through the process of deciding on a price, any conditions, and submitting the offer.
It may take a few tries to be accepted, especially in a competitive market like we are currently in. It is important to stay positive and focus on the bigger picture - you will find your new home!
Once your offer is accepted, you move on to paying your deposit (be prepared to have this money ready to go!) and soon after, you will get the keys to your new home!
Your final responsibilities will be packing your things and preparing for your life in your new home!
