It can feel impossible to buy your first home. Not only do you have to get enough cash together, but the whole home buying process is a whole new world to you.
There is so much to consider, including what kind of relationship to have with your realtor and how on earth to go about getting a mortgage.
To get some more in depth advice for first-time homebuyers, Daily Hive spoke to Salina Kai, a Rennie Real Estate Advisor.
Here are her top five things to consider when buying your first home:
Affiliate with a really good realtor
This may sound obvious, but when you’ve never had to look for a realtor before, it’s worth doing your homework.
Kai said you should look for a realtor who is knowledgeable in the neighbourhoods you want to live in, and specializes in the type of home you want.
“Aligning with a good realtor is essential to the success of finding your new home,” said Kai. “A good realtor will also help guide you through the process as a first-time homebuyer.”
Kai says a good realtor should also be able to help you by:
- Disclosing market intelligence information that will help you make an informed decision when looking for a home, including data on average per square foot cost of similar homes and average sales prices.
- Giving advice and insight on any paperwork associated with a property, for example, strata council minutes and depreciation reports – and identify any areas that may raise some red flags.
- Providing recommendations on other professionals that you may need to
close the deal. This could include qualified inspectors and lawyers.
- Giving you tips on how to navigate changing markets and what the best way is to buy your dream home or investment.
- Getting quicker access to listings on public websites. Realtors typically have access sometimes 24 to 48 hours before a listing goes up – this lead-time can be
Kai said it’s important to ensure your realtor responds to your communication in a timely fashion. Some realtors have set hours of operation, so it’s good to ask beforehand.
Ultimately, said Kai, “find a realtor that you actually like – you will be spending a lot of time with them, so make sure you have a good feeling about him or her.”
Mortgage preapproval is a must
Kai advises talking to a mortgage broker or bank before you speak to a realtor or start looking for your new home.
“This will help you understand how much money you have to spend or how much you can get pre-approved for,” said Kai.
“By having all of this in place prior to making an offer on a home, it will help speed up
the home buying process.”
It will also help you secure your interest rate for a certain time period even if rates go up, said Kai.
“Make sure not to overextend yourself on your mortgage,” said Kai.
“This will help you ensure that you can cover any unexpected emergency home repairs or in a strata, a levy or assessment.”
Educate yourself about the process
For starters, said Kai, attend open houses in the neighbourhoods where you want to live. Take note of list prices and what the homes end up going for.
However, she said, there are many other things to know about the homebuying process:
- If you buy a pre-sale properties, you will be charged a 5% GST tax.
- Be aware of extra costs that come with closing a deal, such as home insurance. Some lawyers won’t close until you have personal content insurance.
- Know of the other insurance options required before you buy your home.
- Read and study all the forms and documents, such as strata meeting minutes,
strata plan, title search, depreciation reports, etc.
- If you are buying a place where renovations have been done, it’s important to
ask if they were completed with permits or in the case of an apartment, with
strata approval and city permits (if needed).
- If you plan to have someone rent a part of your new home to help with your mortgage, make sure it’s permitted and know the risks involved if it’s not.
- If you’re lucky enough to be considering a detached home, ask the City for the history of the property. Things to look for include: oil tanks, peat land, grow-ops, restrictive covenants, and any outstanding permits that have not been closed.
Get first time homebuyer benefits
There are programs that can help save you money as a first-time homebuyer, said Kai.
These include the First Time Home Buyers Program, which reduces or eliminates the amount of property transfer tax you pay when you buy your first home.
If you qualify for the program, you may be eligible for either a full or partial exemption from the tax.
As well, said Kai, first time homebuyers may also be able to use $25,000 ($50,000 per couple) from their RRSPs for their downpayment without incurring any penalties/taxes.
To qualify, the RRSP funds must be on deposit for at least 90 days. You must also provide a signed agreement to buy or build a qualifying home.
The best part is the withdrawal is not taxable as long as you repay it within a 15-year period, said Kai.
Hit up your friends and family
Sometimes the best way to find out about properties that have yet to the hit the market is by getting the word out to friends and family, said Kai.
“By letting them know that you are actively looking, they may know of listings that are
coming up,” she said.
“This can give you the upper hand and help alleviate any competition from other buyers.”