First-Time Home Buyers

Purchasing Your First Home

Buying a house for the first time is a huge milestone in life – congratulations! Of course there are many challenges and questions that come with this. How much do I qualify for, what can I afford, what are my costs? That’s where we can help. 

Understanding Mortgages

Conventional vs High-Ratio/Insured Mortgages

  • A conventional mortgage is a loan that has a principal amount of no more than 80% of either the appraised value or purchase price of the property.
  • A high ratio mortgage is when the principal amount is over 80% of either the appraised value or purchase price. You must pay for an insurance premium that the insurer will add to the mortgage.

Open vs Closed Mortgages 

  • Closed mortgages offer lower interest rates than open mortgages.
  • Open mortgages let you pay off as much as you want at any time, without paying a prepayment charge.

Short Term vs Long Term 

  • Short term mortgages are a better option for you if you think that interest rates will be lower when it’s time for renewal.
  • Long term mortgages are a good option if you think that the current rates are reasonable, and you want to be able to budget for the future.

Fixed vs Variable Rate

  • Fixed rates make it easier for you to budget for whichever term you select.
  • Variable rates fluctuate with the market. 
  • We can help you get the perfect combination between the two.

What will lenders need from me?

  • Identity confirmation 
  • Proof of Income (POI): paystubs, T4, T1 Generals or minimum two-year financials
  • 90 day history of the accounts you’ll be paying from
  • Assets and debts
  • Credit history
  • Employment history letter
  • Property value

What else do I need to consider?

  • You may need mortgage insurance 
  • Prepayment privileges 
  • Weekly or biweekly payments instead of monthly 
  • Portability – if I move, does the mortgage move with me?
  • Professional appraisal of house by a certified and approved lender appraiser
  • How to pay off your mortgage early?

Are there special programs for first-time buyers?

First-Time Home Buyer Incentive 

The Government of Canada may offer you financing without interest, which can help reduce your monthly payments. They may offer:

  • 5% of the purchase price of an existing home
  • 5% of the purchase price for a new and existing home
  • 5% or 10% of the purchase price of a new construction home

You may be eligible if:

  • your total annual qualifying income does not exceed $120,000
  • your total borrowing is no more than 4 times your qualifying income

See here for more details or contact us today.

Home Buyers Plan (HBP)

  • Allows you to draw funds up to $35,000 from your RRSP to buy/build a home for yourself or related person with a disability 
  • You can pay back the funds within a 15-year period
  • Certain conditions must be met – we can help you figure out if you are eligible 

See here for more details or contact us today.

Home Buyers’ Amount 

You can potentially claim $5,000 if:

  • You and your spouse/common law acquired a qualifying home
  • You are a first time homebuyer

See here for more details or contact us today.

GST/HST New Housing Rebate

You may be eligible for a new housing rebate if you have:

  • purchased new housing, constructed, or substantially renovated housing for your primary place of residence
  • purchased shares in a co-operative housing complex for your primary place of residence

See here for more details or contact us today.

What other costs should I expect?

There are many costs that you need to be prepared to pay for when purchasing your first home. We can help you figure out which ones apply to you.

This can be an overwhelming list, but this is what we do everyday! You can bet we are good at it, and can help guide you.

Property Transfer Tax Rates

  • 1% of fair market value up to $200,000
  • 2% of the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
  • 3% on the portion of the fair market value greater than $2,000,000, and
  • If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000

GST Rate of 5%

We will help you figure out if you qualify for GST New Housing Rebate, which can save you money!

  • If you are buying a new home for your primary place of residency and it is under $350,000, the rebate is 36% of the 5% GST, with a maximum rebate of $6,300
  • If you are buying a new home for your primary place of residency and it is between $350,000 and $450,000, you may receive a partial rebate
  • Homes above $450,000 do not receive a rebate

Contact us for more details and to see if you are eligible.

Insurance

  • Title insurance
  • Property insurance
  • Mortgage insurance

Other Fees

  • Lawyer fees
  • House inspection
  • Property appraisal
  • Property taxes & utilities (adjusted and paid at the time of solicitor signing)