Unlike renting, when you buy a home your mortgage payments are helping build your net worth. You’re saving a pool of money you can borrow against down the road or receive when you sell.
Buying a home is like having a “piggy bank” that pays interest. Over time you build equity from paying down the mortgage and increases in your home’s value.
Owning your own home gives you the freedom to make your living space your own and the satisfaction of knowing that any improvements you make to increase the value of your home, benefit you, not a landlord.
Homeownership gives you a sense of stability and security. It is making an investment in your future. To receive a free copy of my home buying guide click here.
Before you start the search for a new home it’s important to set a budget. Considerations include:
Whether you’ve decided to purchase a home in a year or one month, your budget will determine the type of house you can buy. Even if you don’t think you can afford a home, it’s useful to go through the process of speaking with a bank or mortgage broker.
If you currently don’t qualify for what you’d like to purchase, you can find out about financial tools and investments that can help you save for a home (i.e. high interest savings accounts, GIC’s, RRSPs, debt consolidation loans etc).
Buyers can withdraw up to $25,000 per individual ($50,000 per couple) from their RRSP’s interest and tax free to use towards the down payment of their first home. Contributions made to RRSPs made 90 days prior to withdrawal are also allowed as an RRSP tax deduction.
You can buy a home and claim the RRSP contribution as well. For more information on the RRSP Home Buyers’ Plan click here.
Through participating lenders, Canada Mortgage and Housing Corporation (CMHC) provides mortgage insurance for eligible buyers to finance up to 95% of a home’s value. In addition to an application fee that can range in cost from $75 to $235, there is a mortgage insurance premium, the cost of which ranges depending on the amount you are borrowing (additional charges may apply). The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments.
For more information on CMHC mortgage programs go to www.cmhc.ca.
First time home buyers can now claim a tax credit up to $750 for the costs related to purchasing a home. For more information on this credit click here.
When looking to buy a home, you should work with a realtor that is willing to take the time to find out about your needs and how buying a home fits into your short and long term plans.
Curious to find out what homes are for sale in your price range? Click here.