Have you been looking at classified ads for centuries and you finally found the house or condo you were looking for? Take a breath and let's take a look at the two necessary financing steps before submitting a purchase offer.
We are in a market where houses sell like hot cakes. The most serious real estate brokers will ask you for a mortgage pre-approval. The latter will tell you the maximum amount for which you are eligible for your purchase. In addition, you will be much more credible in the eyes of sellers when you put an offer on the table. Its simple, fast and free !
Find the down payment
Now, you need to find the down payment necessary to acquire this property. You must first have a minimum of 5 %. For a house of $ 300,000, this is equivalent of $ 15,000. If you have between 5 % and 20 % down payment, your mortgage will be insured by one of the three mortgage insurers in Canada (CMHC, Genworth and Canada Guaranty). There will therefore be an additional premium that will be added to your mortgage. More than 20 %? No additional bonus! You say to yourself: “Excellent and how can I find this down payment? I give you some leads here.
1. Accumulated savings
Your savings accumulated over several years are without a doubt the best and easiest way to make a first purchase. You had planned this purchase and you were right in saving your money, congratulations!
2. Home Buyers' Plan
Did you know that you can use the money in your registered retirement savings plan (RRSP) to buy your first home? You can withdraw $ 35,000 from your RRSPs and another $ 35,000 for your spouse, all tax free! The second tip with this product is to take out an RRSP loan. To accomplish this strategy, money must remain in your RRSP for 90 days before you can do the HBP. In both cases, you will have two years of grace and, thereafter, you will have 15 years to reimburse your HBP. Therefore, you must reimburse 1/15 of the amount per year, failing which the amount will be added to your income for the year.
3. Immediate family donation
This is another trick to find the down payment and afford the much desired home. By immediate family we mean: father, mother, brother, sister, son and daughter. All of these members can donate to you.
4. Cash back program
I have a few lenders who offer this program to help you. In other words, an amount between 1 % and 5 % will be added to your mortgage and hand delivered to the notary. This tactic is not suitable for everyone and, of course, certain conditions apply.
You are now ready to sign your purchase offer! I am aware that I have just given you a lot of information if this is your 1st experience. This is why it is essential to take the time to analyze your situation together and define a plan of attack. I do business with more than 15 lenders. Just make a phone call and I will save you time and money. I accompany you throughout the funding process, up to the notary and even after!