First Time Home Buyer

First-time Homebuyer Mortgages in Toronto, Etobicoke, and Mississauga | CanadianMortgageCo.comCongratulations on your decision to buy your first home!

Since you’re here, you’ve obviously decided to get educated and informed.  I applaud you for that – it takes discipline and commitment!

Before you start seriously looking at possible homes, it’s important to understand the financial options available to you and how to get the best deal.

Here are the TOP 5 points to keep in mind:

1.  Mortgage planning is key

Why is mortgage planning so important for a first time home buyer? It’s more than just getting a pre-approval, which essentially gives you a rate lock and a rough idea of that “magic number”, the amount that a lender is willing to lend to you to help you buy your place. (And beware the “non-pre-approval”.)  A mortgage plan needs include a good understanding of all the other financial details related to your home purchase…   Any quirks with your income, your credit and your down payment should be looked at, and a game plan developed to maximize your purchasing power and ensure you will get the best possible rate.  You’ll want to know exactly how much you’ll need for your down payment and closing costs, what documentation you will need to pull together, and whether there are any issues that need to be taken care of on your credit bureau. And you want it to be specific to where you will be purchasing, geographically.  The costs for purchasing in Toronto will be different than those in Mississauga, Oakville, Milton or Hamilton.  My goal is to get you into the best possible financial position, so that you can qualify for the money that you need, and at the best possible rate.


2.  Saving up for a down payment

This is one of two key hurdles for first-time home buyers in the greater Toronto area.  The down payment is usually at least 5% of the value of the property (click here for down payment rule changes as at February 2016). If you don’t have the cash sitting in a bank account, there are other options. For example, with the federal Home Buyer’s Plan, you can access funds in your RRSP for a down payment – up to $25,000 per mortgage applicant. (Certain conditions do apply and you must repay the funds back into your RRSP within 15 years.) As well, some lenders offer “cash back” programs that allow you to use a portion of your mortgage to cover closing or other costs, so we can talk about that option also.  And we can discuss whether you might be able to qualify for a mortgage while using borrowed or gifted money for your down payment.

3.  What if you have less than perfect credit?

This is the second hurdle for home buyers – in the GTA and beyond.  Know what’s happening with your credit is really important.  A mortgage lender will be looking at your demonstrated ability to handle debt, as evidenced by your credit report and credit rating. I see people all that time that have an insufficient credit history, a credit history showing an imperfect track record of payments, or even mistakes on their credit bureau. Because of this, doing a pre-approval as early as possible is crucial.  It will enable you to fix these credit problems with plenty of time.  (For detailed information on credit improvement and establishing good credit, click here.) As a result, you improve your chances of qualifying for the best rates and terms.

4.  Lock in your mortgage rate

Getting a pre-approval gives you the price range you can afford, “locks” your interest rate (usually for 90 to 120 days, and sometimes longer) to protect you from rate increases, and gives you a good understanding of what to expect from the process moving forward.

5.  Put together a plan

I would be pleased to help you develop your mortgage plan so that you don’t encounter any surprises when you find and fall in love with your perfect place. There is no cost or obligation for this service!  I’m looking forward to hearing from you, and helping you buy the home of your dreams!

Ready to learn a bit more?

To read more on my site about Buying Your First Home, click here.  And if you have any questions, comments, or feedback, I’d love to hear from you!