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What is the best advice for first-time homebuyers?
Buying your first home is an amazing milestone. You don’t have to go through the home buying process alone.
Here are some of our best tips to make the home buying process as smooth as possible.
- Get a pre-approval to help you learn how much you can afford to spend on a home. This way you can look for homes within your budget and not waste time looking at properties that are outside of your price range.
- Start saving for your downpayment early. You can pay a minimum down payment of 5%. As an example, if the house is priced at $500,000, the minimum downpayment would be $25,000.
- A higher down payment helps reduce your borrowing and pay off your mortgage quicker. Also, you may avoid paying the insurance premium if your downpayment is 20% or more (i.e. Canada Mortgage Housing Corporation.).
- Pay off debts to minimize your debt load. This will help you get approved for a mortgage and allow you to save for some funds to use toward home renovations, buying furniture, etc.
How to maximize downpayment options?
There are many ways in which you can optimize your downpayment options, here are a few of them.
- Government Grants – There are some guidelines you must fall under that include your age, location, net worth, and income. If you fall under these guidelines you may be eligible for a downpayment assistance program.
- Saving for a Downpayment – Accumulation of funds overtime from payroll, income tax refund, small gift deposits under $1,000, long/short term investments i.e. stocks or GIC, etc.
- Financial Gifts – The source needs to be from an immediate family member to assist in the purchase of a home. These funds are being provided as a gift and will never have to be repaid.
- Borrowing from RRSP – Any RRSP contribution must be held for 90 days before being withdrawn under the Home Buyers’ Plan. A withdrawal from an RRSP can be made at any age. You must be a first-time homebuyer and you can take out up to $35,000. All withdrawals must be made in the same calendar year.
Which are more beneficial, bi-weekly or monthly payments?
Deciding on payment frequency? With bi-weekly or weekly mortgage payments, you will gain more equity in your home because you will be paying that extra payment that helps chip away at the mortgage payment. With that extra payment each month, more money will be going towards your actual mortgage rather than the interest.
How can we help?
If you need clarification or have any more questions on any of the above topics, call the ShopMortgages.ca team at 519-250-4848 and talk to one of our mortgage agents today!