Debt Management for First-Time Home Buyers

Although home debt is ‘smart’ debt, it’s a huge financial decision and there is a lot to think about. That’s why professional advice is recommended when making this enormous decision.

The first-time home buyer wants to take advantage of today’s low-rate environment but it’s hard to sort through all options and get the right combination of mortgage features, privileges, and rate that is best matched to their needs. The right mortgage goes beyond just the rate – it’s important to also consider term, prepayment options, refinancing penalties, restrictions, and fees. We can help you build your home-buying budget that includes considerations of your lifestyle, closing costs, and home ownership costs beyond the monthly mortgage payment.

How to Choose a Down-payment Method

As for the all-important down-payment, there are a few options to consider for first-time home buyers who may have smaller amounts to start with:

• The Home Buyers’ Plan (HBP). First-time home buyers can individually withdraw $25,000 or $50,000 with a spouse tax-free from their RRSPs, provided they adhere to the repayment plan.
• Gifted down-payment from a parent or blood relative. This can be a source of funds as long as the home buyer receives in-writing that they are not required to pay the money back at any time.
• Start off small. The dream house may be priced too high, so a starter home might be the right option for a first-time home buyer. You can take advantage of the low interest rates to pay off the home quicker and use the equity from the first home to buy the dream home later.

We can also provide strategies that will help you pay off the mortgage faster and shave thousands off interest costs. For instance, you could set your payments now at rates that could be expected at your renewal date so you pay down more principal and don’t experience payment shock, should rates be higher at renewal.

There’s so much to consider. Professional advice can get you into the market to start your wealth-building with smart debt and can save you thousands over the course of your mortgage.

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Rasha Ingratta & Mortgage Associates

By Mortgage Intelligence

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