Without a doubt, buying a house is probably one of the biggest purchases you’ll ever make. And planning for your first one is an even bigger battle.
But fear not. Our team of Mobile Banking Specialists uncovered a list of things many first time homebuyers might overlook when getting their first mortgage, and how to best prepare before signing off on the dotted line.
Not seeing the true cost of buying a home
Fees, fees, fees. A common mistake is not factoring in additional fees that you may incur as a new home owner, including:
- Legal Fees
- Inspection fees
- Appraisal Fees
- Strata Fees
- Annual property insurance
- Annual taxes
- Cable hook–up
- Moving costs
Not planning for emergencies
Accidents happen. Emergency funds are described as a financial safety net. Do you have funds set aside if the furnace or hot water tank unexpectedly needs replacing?
A good rule of thumb in Canada is to save up between 3 to 6 months’ worth of expenses (you can also aim to save 3 to 6 months of income). However, that may be difficult for most in the current real estate landscape. Saving a small amount for emergencies on a regular basis can make a big difference in the long term.
Not budgeting beyond the purchase price
Budget like a boss. Consider all the ‘extra’ things that will make the house you buy the home you want to live in, and be sure to include them in your home purchase budget. Also,factor in your day-to-day spending – food, entertainment, and travel all add up.
Aside from hitting up the Bank of Mom and Dad, you can take advantage of first time home buyer assistance offerings:
- The Federal Home Buyers Plan gives each qualifying mortgage applicant the option of borrowing up to $35,000 tax-free from their RRSP to purchase or build their first home.
- Get pre-approved, and then sit down with your budget and determine if the mortgage payment is affordable with all your other expenses identified.
- If you need a hand with budgeting, our Mortgage Calculator will help you determine how much you can borrow.
A good rule of thumb
Plan early–don’t underestimate the deposit. Start planning early to make home ownership a reality sooner. Include saving for the deposit (usually the first payment you will need to make). Find a competitive mortgage to help make borrowing the rest more affordable.
Ask for help
A good Financial Advisor will take the time to understand your wants, needs, and most importantly, your reality. You’ll want to be sure you’re getting the mortgage product, features, and rate that work for you. Our Mortgage team can help you choose the right mortgage for you and they’ll even help you save along the way.