THREE Things First Time Home Buyers Need to Know!
Buying your first condo can be an exciting time. You get to live out a dream you’ve been planning in your head for years. But how do you make that dream a reality? Hello Condo is here to help, so we’ve put together some invaluable resources to help you learn more about your financing options for your first home.
1. You’ll need a downpayment.
With most properties, you’ll be expected to provide a deposit or downpayment, which may vary slightly on a case-by-case basis. For pre-construction condos, the standard deposit is often approximately 20% of the total sales price of the unit. And while this figure may seem daunting, it shouldn’t be. These down payments are often laid out with payment schedules that stagger thee full 20% within approximately 500 days.
For condos, approximately 1% of the total sales price of the unit will be paid up front on signing, with an additional 5% minus the initial fee to be paid at approximately 30 days after signing. From then it breaks down into 5% payments every 30 to 60 days, with the final 1-5% to be paid once you take possession of the condo.
While this deposit structure can be helpful, sometimes you need more assistance to get the home you deserve.
2. Taking a mortgage stress test can be a great starting place!
In early 2018, the government implemented some changes to Canadian mortgage and housing rules which included the introduction of a mortgage stress test. Basically, the stress test assesses how much you can afford based on your income and expenses, and will also evaluate if you can afford your monthly mortgage payments under normal and extraordinary conditions with higher than normal interest rates. The function of the stress test is, above all else, prudence. It aims to assess a homeowner’s financial bandwidth while leaving room for unforeseen expenses that may go well beyond increased interest rates. From a big picture perspective, this cools the market, and protects us from possible market crashes and recession.
3. Do research on government tax credits and grants you can get!
The Ontario government offers many subsidized deposits, interest-free and with the potential for full forgiveness depending on your circumstances. The Canadian government offers upwards of 20 free grants, loan programs and more to new homeowners to help with their down payments. These government ministries and charitable organizations are hoping to help make affordable housing a reality, alleviating some pressure on a rental market that’s currently vastly over-crowded. You may also qualify for government tax credits like the First-Time Home Buyers’ (FTHB) Tax Credit, the Home Buyers’ Plan (HBP) that allows you to use up to $25,000 from your RRSPs towards building or buying a home for yourself or a relative with a disability, or the GST/HST New Housing Rebate.
Other Useful Information
The Government of Canada website offers a wide range of invaluable resources for new homeowners. Learn about how much you can afford for a new home, how to save up, what tax credits are available, and the ins and outs of buying a condo or buying to rent. The province of Ontario also offers options like the Ontario Home Ownership Savings Plan (OHOSP), a tax credit for low-income families looking to buy their first home.
Interest rates are expected to soften up this year which means that families and individuals alike looking to buy their first condo can afford a little bit more than they may have initially planned. Between government subsidies and tax credits, softening interest rates, and a multitude of options for financial support specifically geared towards first-time homeowners, the sentiment “you’re richer than you think” has never been truer.
Explore the HelloCondo website offerings to see what condo investment opportunities are available to you. Whether you’re a first time home buyer or someone looking to make a rental property (or several rental properties), think of HelloCondo as your solution to connect you with your ideal property.
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