1. Save, save, save and aim for a 20% down payment!
If you haven’t already start saving do so now.
A comfortable property purchase requires a 20% down payment that will result in farer rates mortgages and better payment plans. This is not an absolute truth a property can be purchase with a 5% down payment and particular guarantees might be required by your bank along with a loan insurance.
2. Define your need list & your wish list in real estate just like in anything else people have the tendency to mix what they need and what they want. That is why you should dress a list of priorities related to your 1st property purchase, things that you can’t live without and that are non negotiable to you.
Needs vary from a person to another, but here is a list of the most common priorities.
Proximity to public transport
Proximity to a good school (Good school district)
Number of rooms required …. Do you plan on having children?
3. Evaluate your finances, credit and potential financing to establish what you can realistically afford.
Banks, lenders, mortgage companies and loan officers have established ways and calculation to establish just how much you can afford to borrow. But remember their role is to make money on interests on your loan, not to make sure that you can realistically afford it.
Make the calculations yourself to ensure that you can afford the propose payments plan. Make sure to include other non property fees into in: child care expenses, car loan, planned vacation, kids education fund retirement savings, and the cost of your regular life. Simply because the bank approves you for a $500,000 mortgage doesn’t mean you can actually afford the daily reality of the mortgage on top of your other payments.
4. Make sure to include to your overall budget: the closing costs, moving expenses & property repairs.
Closing costs usually amount to 1.5 to 3.5 per cent of the total cost of your property.
The closing costs could be some or all of the following:
• Home inspection fee
• Legal fees
• Property transfer tax
• Appraisal fee
• Land transfer tax
• Title insurance
• Interest adjustment
• Property and fire insurance
Get up to 10 000$ back on purchase by using buyersbroker.ca
Moving expenses can be costly especially if you are relocating to another province or city, make sure to include the cost of the movers, cleaning crew and so on.
Property repairs & improvements. Did you want to refresh your new home with a bit of DIY improvements and repairs? Make sure to include an amount for it in your budget of extra fees.
5. Get a pre-approved mortgage
Now that you know how much you can afford as a down payment, decided on what type of property you want with detailed need and wish lists and taken into account closing costs, it is now time to contact a bank or mortgage broker in order to get pre-approved for a mortgage.
A pre-approved for your mortgage simplifies the whole purchase and gives you an edge over other interested parties. This will increase the seller trust by letting him know that you are a serious buyer.
6. Understand the different payment options
Monthly, bi-weekly, and weekly payment options are usually available, make sure to choose one that reflects your income influx.
The sooner you pay your mortgage the more you save on interests, that being said a longer amortization period will decrease your payments and frees up cash in your budget.
Ask about the option to make extra lump sum payments, or the option to skip a payment. Make sure you understand what your options are, and that you are comfortable with the terms.
7. Don’t buy if you are planning to move soon.
One of the primary goals of buying a property is to get a return on investment.
If you are planning to relocate or move again in the near future (within the next 3-5 years), there is little to no chance for you to make money on that investment. Not only that you will have to pay the closing fee two times in a short period.
There is no exact calculation, since we cannot predict how the real estate market and the general economy will move. However, a safe estimation is that you will most likely always generate a profit on buying a home when you stay in it for at least five years.
This is not a guarantee but a noticed tendency made from years of working in real estate. Take note that a lot of other factors will play in your potential profit such as but not limited to: area of the property, planned local development, renovations and additions made to property and so on.
8. Buy with your head, not your heart
Falling in love with a property is dangerous and may result in paying way more then its real worth. Try to keep a cold head and think logically and realistically. After all this will be one of the biggest purchases of your life. Letting your emotions take over may result in never recuperating your losses.
9. Once you found a potential property stay with it.
Like my mother use to say it's better to have and not need. Like any other major decision in life, when it comes to picking a spouse, a car a career or a property, once you found something that works stick with it. Their will always be something that may look better on the corner but that surely has its own hidden defaults and vice caches.
10. Contact a buyer’s broker (buyers’ agent) Contact Me
Now that you know a bit more about the ins and outs of a property purchase, put all the chances on your side to profit right. Contact us today it’s free and you could get up to 10 000$ back on purchase!