We’re still in the first month of the new year, and prognosticators are saying that 2020 will continue to be a hot market for real estate in the region. People are moving here and looking to buy. Prices are high and they’re likely to stay that way for some time. That said, here are some tips to help you get into your new home.
Save as much as possible for your down payment.
This is the most expensive part of buying a new home, but it’s the necessary first step. Many Canadians put between five and 20 percent down. If you’ve looked around the market, you know the price range of homes in the various Toronto neighborhoods and the type of down payment you’ll need, and it goes without saying that the more you pay upfront, the less your mortgage payments will be.
If you’ve been saving for a down payment, explore options for growing your money. Look around to learn what options might exist for growing your savings, like an account that pays higher interest than what you’re currently earning. Continue to save. Every little bit helps.
Prepare for the other costs associated with new home buying.
There are a number of expenses you’ll need to consider; for example, closing costs, which can encompass several different fees. The land transfer tax depends on where you buy, but it represents a percentage of the overall cost of your home. Here in Toronto, if you’re a first-time homebuyer, you may be eligible for a rebate.
Then, there’s Canada Mortgage & Housing Corporation (CMHC) insurance. If your down payment is less than 20% of the home sales price, you’re going to need mortgage loan insurance in the event you can’t make your payments, and this insurance is taxable at the time of purchase. The good thing is that CMHC insurance allows you to get a mortgage for up to 95 percent of the purchase price of a home, while also ensuring that you get a reasonable interest rate. While we’re on the subject of costs, don’t forget about home inspection costs and any legal fees you might need to incur.
Check your credit score.
This number will determine how much your bank or other financial institution will be willing to lend you. It’s easy to check, and worth knowing — even for those not planning to buy a house soon. Your past financial and credit history, along with payments you’ve made and other factors combine to determine this score.
Take a good look at the Toronto area.
While you’re preparing your finances, look around Toronto and the surrounding areas to learn what’s available, and for how much. If you’re not independently wealthy, you might not be able to afford a luxury home in the city — but you might find something in another part of the region that’s just perfect for you and your family. Explore all the options to see how much house you can get for the amount of money you’re willing to spend. Consider the pluses and minuses.
For most people, a home is the largest financial commitment you’ll make, so it’s worth evaluating what makes the most sense in the long-term. As you’re getting to know various neighborhoods, ask friends or family members who live in those places for their opinions. It’s not unusual for some people to start out with one goal in mind, then change course along the way.