Tips for first-time homebuyers in Canada

Introduction

Buying a home is a big step, and it can be intimidating. But if you're ready to take the plunge and commit to homeownership, there are some things that first-time buyers should know before they start shopping around for houses. Here are our top tips:

Choose your team.

The number one thing you can do to prepare for becoming a homeowner is to choose the right team. This means:

• Real estate agent
• Lawyer
• Mortgage broker
• Home inspector

Don't skip on your down payment.

Your down payment is the most important part of the purchase. The bank loan provider will want to know that you’re committed to making your payments, so be prepared to put 20% down on your home. If you can afford it, use more than 20%, because then you won’t have to get private mortgage insurance (PMI).

If you have less than 20% equity in your home, your monthly costs will almost certainly be higher: not only do you need PMI but also interest rates are higher for mortgages with lower equity.

Be prepared.

The first step to buying a home is to make sure you can afford it. You know the old saying, “you need to be able to afford the house before you buy it”? Well, this is very true in real estate as well. When you are shopping for your first home, make sure that your monthly mortgage payments will fit comfortably into your budget and not leave you short on money each month after paying for other bills and expenses like food or utilities. If this means living with less space than what you would like now (or even finding roommates), then that's okay! It's better than buying something too big that won't work for your current financial situation—and remember: no matter how much money we have saved up right now, there's always going be some unexpected emergency expense down the line that could throw off our budget if we're not careful!

Know what you can afford.

• Know what you can afford. Before looking for a mortgage, it's a good idea to know your budget and make sure that the monthly payments will be within your means. This includes taking into account all expenses related to property taxes (if applicable), utility bills and homeowners insurance, as well as other hidden costs like property maintenance fees or condo fees.
• Determine your debt-to-income ratio. The debt-to-income ratio measures the percentage of income that is used up by monthly debts such as car loans and credit cards versus what remains available for paying rent or a mortgage payment on top of regular living expenses like groceries and entertainment costs

Save money by doing it yourself.

• Do your own research. No one knows a market like you do, so get out there and learn everything you can about the city where you want to buy a house. Look into average prices for particular neighborhoods and check out local real estate listings online to see what's available in your price range.
• Don't pay someone else to do something that you can do yourself. If a bank wants an appraisal on your property or if they ask you to take on an expensive mortgage insurance policy, don't just accept their recommendations or hire someone else to handle it for you; be sure that these services are truly necessary before committing yourself financially (and ask around before hiring a professional).
• Don't pay for things early or unnecessarily. There are some cases where paying extra money up front may save money later—but only if those funds are used towards repairs or upgrades within six months of purchasing the home! Otherwise, it's best not to put down more than 10% of your home's value at closing time; keep this rule in mind as well when considering whether certain expenses are worth paying for—for example: Will these repairs really make our house more valuable overall?

Avoid leaky condos.

One way to avoid a leaky condo is to find out if there have been other problems with the building before you move in. You can do this by asking your real estate agent and the property manager about any past issues. If there were previous problems with the building, ask for copies of any reports about them. The more information you have about what happened, the better off you’ll be as a homeowner.

If possible, check out the building’s history before signing on the dotted line:

• Ask your real estate agent if there are any historical photos of your new potential home that might give you an idea of how well maintained it has been over time (or even just how much it looked like when it was built).
• Talk to some current tenants—they may be able to tell you whether or not they think that leaks are common or unusual in their condo complex.

Be patient.

Patience is a virtue. As a buyer, you're going to see homes that aren't perfect or exactly what you are looking for. But if you need to wait for that perfect house, then it may take longer than expected. This will allow you time to save more money for your down payment and other expenses that go along with buying a home. The key is not to rush into anything—especially if this is your first home purchase!

Be prepared for a bidding war.

A bidding war is when a home goes for more than the asking price. It’s not uncommon in Canada, but it can be a stressful process. If you find yourself in bidding wars, here are some tips to help you through the process:

• Know what you are willing to pay for the property and how much competition there will be for it. There are several ways to do this: ask your real estate agent, look at recent sales prices of similar properties in that neighbourhood, talk with neighbours living near the home, or go online and search for houses that have recently sold in your neighbourhood (just make sure they haven’t been flipped). The more information you have about market conditions and what other homes are selling for around yours, the better prepared you will be when making an offer on a property.
• Find out if there is any maintenance required on the house before buying it as well as how much those repairs may cost so that if necessary repairs need done after purchasing – like replacing plumbing pipes – having enough money saved up will allow homeowners peace-of-mind knowing they can afford these one-time costs without having them affect their overall financial health too much over time (i.e., paying off credit card debt).

Have access to cash in case something unexpected happens during the purchase process or after you have bought your home.

Have access to cash in case something unexpected happens during the purchase process or after you have bought your home. For example, if you are selling your current home but it takes longer than anticipated to find a suitable property and close on it, having some savings set aside will help you avoid having to borrow money from family and friends or take out a high-interest personal loan.

If you don't have enough savings, consider getting a second job or doing odd jobs around the house to raise extra funds. You could also try negotiating with the seller for more time to sell your current home if there are issues getting it listed on MLS (Multiple Listing Service), which is where most real estate agents search for homes when putting together potential deals for their clients.

Have a plan in place for potential maintenance issues to maintain the value of your home and protect your investment for resale purposes.

• Have a plan in place for potential maintenance issues to maintain the value of your home and protect your investment for resale purposes.
• Be prepared to spend money on maintenance.
• Don’t let maintenance issues affect your enjoyment of the home.
• Don't forget to factor in maintenance costs when doing your budget

There are some things that first-time home buyers should know before they start shopping around for houses

• Know the market.

When you are looking at houses, make sure you know the market value of the house you want to buy. The best way to do this is to speak with a real estate agent who can help you find out how much similar houses in your area have sold for recently. If there are no recent sales, then ask yourself what other homes in the neighbourhood have been listed for sale and give yourself a ballpark figure on what they might be worth before deciding whether or not they're within your budget range.

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