Preparing to Buy Your First Home
Before you start looking for your first home, you’ll want to be sure you’re prepared to navigate the real estate market, and potentially make choices quickly and with confidence.
There are a lot of ways you can prepare to enter the market which will make your home buying process a lot easier. Let’s dive into some of the best advice:
If you’re a first-time home buyer, make sure you check your incentive and program eligibility:
Home Buyer’s Plan – This incentive allows a first-time home buyer to use funds withdrawn from an RRSP to help fund the purchase of their first home.
The First Time Home Buyer Incentive – With this incentive, a new home buyer can lower their mortgage payment without increasing their down payment.
Home Buyer’s Amount – This incentive takes the form of a $5,000 non-refundable income tax credit which first-time home buyers can use towards their purchase.
Choose values that suit your budget:
Balancing location, price, and what is most important to you in a home is a great way to work within your budget. If you drive, you may find more value in getting a bigger home outside of the downtown core in Ottawa. If you don’t drive, it may be more important to choose a smaller home within the city limits. If you’re looking for an investment property or property for tenants, then you may be interested in choosing the location, size, or amenities in a condo building, or access to public transit, depending on your ideal budget and tenant.
Get your finances in order:
If you have outstanding debt, it is best to have it paid off to at least around 40% of your total available credit. Too many late payments, delinquencies, or open accounts can also weaken your credit score, which will make getting a mortgage more difficult.
Get your paperwork together:
On top of this, you’ll need a large amount of information about yourself before you buy a home. Information like proof of your place of employment, receipts of your income, and information about all the payments you make on a regular basis will be valuable to ensure that you’re ready to get your financing approved when the time comes.
Then, you can get pre-approved:
Getting pre-approved is having a lender approve a certain amount of money that you can spend - or that they will loan you. This will be the ‘top end’ of your budget - it does not mean you have to spend this much on a home! The reason we suggest doing this after you have the rest of your paperwork and research in order is that pre-approvals only last for a certain amount of time. Once they expire, your next rate may not be as flexible as the one you received. So getting your pre-approval when you are ready to make a purchase gives you the most time possible with that rate to find the home that suits you best!
