why did we write this
NOT SURE HOW TO PREPARE? READ THIS FIRST.
- SPARK & PONY
This is your step-by-step guide to buying your first home in Canada. We want you to have all the tools at your disposal to maximize your investment and choose the right fit.
Thousands of Canadian millennials are beginning their first-ever home buying journey in 2021 and the market is ripe with great options and low-interest rates. The only problem is, many new buyers have no idea where to start.
If this sounds like you, don’t worry… we got you covered.
We walk you through the process from start to end and answer the most common questions millennials have when it comes to homeownership.
STEP 1: GET ORGANIZED
Like every big thing in life, there is a lot of paperwork involved in buying your first home. When you apply for a mortgage, a lender needs a few things from you before they can approve you. This includes documentation of your income, any assets you currently own, and your credit score.
That means you need to get your government-issued ID, tax information, pay stubs, and social insurance number on deck for the mortgage application process. You’ll also need to show any credit card balances, car loans, lines of or student loans you might have.
The best thing you can do is get started on this process early in the game. Create an online folder and start downloading and collecting everything you need in one place. Once you have all your paperwork sorted, we highly recommend applying for a mortgage pre-approval.
STEP 2: GET A MORTGAGE PRE-APPROVAL
We have a way more in-depth explanation of what a mortgage pre-approval looks like and how you go about getting one. Head here to get all the deets.
For our purposes in this blog, we’ll lay down a quick summary of why getting a mortgage pre-approval is a great idea.
A mortgage pre-approval is a confirmation from a lender that you have been pre-approved for a mortgage, up to a certain amount of money. Not only does a mortgage pre-approval make the home buying process easier, it helps you stay laser-focused when it comes time to start looking.
Most first-time homebuyers have a general idea of what they can afford, but they forget to calculate the other costs associated. Remember to keep in mind the lawyer fees, income taxes, home renovations, and more that will eventually come along.
When you receive your mortgage pre-approval, you will have a very clear understanding of what your budgetary restrictions are. Then, you can begin to shop for only houses that fall within your budget. Not only that, a mortgage pre-approval gives you more clout when it comes to negotiating. It also gives the seller confidence in your ability to close the deal.
STEP 3: KNOW ALL THE RESOURCES AT YOUR DISPOSAL
What do we mean by this? First of all, Canada has a ton of real estate incentives available, especially for people buying their first ever home. Knowing which ones you can take advantage of could save you thousands of dollars.
For example, the RRSP Home Buyer’s Plan lets first-time homeowners withdraw up to $35,000 from their RRSP per person to fund a down payment. The RRSPs must be at least 90 days old, and you must sign an agreement to build or buy a home; but as long as you repay within 15 years, the withdrawal is tax-free.
There’s also the First-Time Home Buyers Tax Credit which offers a $5,000 non-refundable income tax credit for first-time home buyers. The credit provides up to $750 in federal tax relief.
While these are the two of the bigger incentives for first-time Canadian home buyers, there are several more rebates available. For a comprehensive list, head over here.
STEP 4: PREPARE FOR YOUR HOME SEARCH
Now, the fun part.
You have a mortgage pre-approval in your hands, a clear understanding of your budget, wants and needs. Now is the time to start hunting for your first-ever home – woohoo!
While exciting, this part of the process can also be incredibly daunting, especially if you are trying to go it alone. You need a real estate agent.
- An agent helps you organize prospective properties and navigate the process efficiently.
- An agent makes sure you never miss a step. That includes helping you find other professionals you might need, organize your finances, identify the right rebates and available savings opportunities, and yes, find the perfect property.
- An agent will also help you navigate the tricky world of negotiations. That means helping you make an appropriate offer and handle the back-and-forths that can feel overwhelming at times.
Even people purchasing their third, fourth or fifth property lean on an agent to help them navigate the complexities of the real estate market. For a first-time homebuyer, a trusted agent is an absolutely essential tool in your kit.
FIRST TIME HOME BUYERS INSIDER TIP
While most millennials have been saving for their down-payment for years, they often forget to put some money aside for closing costs, too. As a general rule of thumb, we recommend putting aside 1.5 – 4% of the price you plan on spending on a new home to cover all the costs that come with closing the deal. That includes lawyer and administrative feeds.
Who Are We?
ARIVL is the newest brokerage in Edmonton, Alberta. We are hyper-focused on helping millennials navigate the Canadian real estate market. Millennials across the country are purchasing their first homes and our passion is helping them make that process an enjoyable experience.
Consider ARIVL your home-buying guides, helping you navigate the complex questions of homeownership, making sure you have every tool to close your first-ever deal with confidence. With beautiful modern Edmonton neighbourhoods popping up across the city, this is a great time to invest in your future.
Our agents are especially mindful of the particular sets of hurdles millennials face when it comes to buying a house in 2021. After all, most of them are millennials themselves. Have a question about homeownership or anything else real estate related? Hit us up here and be sure to follow us on Instagram and Twitter.