With a new year underway, there’s lots of anticipation and excitement in the air. New plans, opportunities and adventures await. If you’re a young professional in the Toronto area, or one who’s planning to relocate here, you might be looking at buying your first home. For my part, I’m looking forward to helping you accomplish that and will do everything I can to make that happen. One bit of advice that I’d like to share is this: plan ahead and be prepared.
As you likely know if you’ve done some research on the local housing market, home prices in the Toronto area have continued to rise. Last year, a report was issued by Sutton Eaves and Dr. Paul Kershaw of UBC's School of Population and Public Health that illustrates this fact. In their words, “Canadians between the ages of 25 and 34 continue to straddle a massive gap between housing prices that remain at near-historic levels in key parts of the country, and earnings for this age group that have been relatively flat, if not down, for several decades."
While it’s projected that housing prices will continue to rise in 2020, I will be glad to work with you to help you get into the starter home of your dreams. Before that, there are some things That I recommend you do to prepare.
Assess your finances.
This includes what you have in your savings as well what you’re able to get from your bank in the way of a loan for a mortgage. What you’ll need to do is meet with a loan officer at your bank to discuss your intentions. He or she will want to know your financial status. This includes your income, your credit history and any debts you might be paying off, such as an auto loan. In return, your banker will provide you with a pre-approval, which is a document that states how much the bank will agree to lend you for the purposes of buying a home.
Explore your personal housing needs.
It’s crucial before house-hunting to consider a wide range of criteria. Consider what you will absolutely need in your new home, like how much space, how big a yard and how many rooms. Make a list of the features you absolutely need, as well as those you’d like to have but aren’t deal-breakers. Also, think about where in the Toronto area you’d prefer to live, for example city versus suburbs. Are there certain construction materials you prefer over others? Do you want a space that’s modern or traditional? Is environmental friendliness a concern? With these considerations in mind, go online and get to know what’s currently available in the market. Compare locations and costs with respect to what you can afford. It’s important to be educated.
Apply for the First-Time Homebuyer Incentive.
This is something that was introduced by the Government of Canada just last year, and it could be really helpful for you. It’s an incentive that helps people in Canada purchase their first home by offering five or 10 percent of the home’s purchase price that can be put toward a down payment. Doing this lowers your mortgage costs and makes it more affordable to own a home. Essentially, the government allows you to borrow a percentage of the purchase price up front, then pay back the same percentage of the value of your home when you sell it or within a 25-year window.
Based on the government’s criteria, you could quality for the incentive if you have your minimum down payment in hand, your total annual qualifying income isn’t more than $120,000, you’re borrowing no more than four times your qualifying income, you (or your partner) are a first-time homebuyer, and if you are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada.
Select a real estate agent.
Our job is to help you navigate the process of buying your home, and we want you to be comfortable with the process and satisfied with your purchase. Your agent will help you identify properties that meet your must-have criteria, answer your questions and provide all kinds of help with regard to any concerns you might have. Buying a new home, especially your first one, is one of the biggest financial commitments you’ll ever make. Select an agent who will prioritize your needs and will help you to the fullest extent possible as you transition from renter to homeowner.