You have been saving money to buy your first home for so long and it’s one of the most significant purchases you will make in your life. But with all the details and parties involved, it’s easy to get confused or blindsided by hidden costs and fees. We can help – here are some tips to ensure you get the most for your money.
1. Resolve credit issues before applying for a mortgage
Your mortgage rate is partially determined by your consumer credit score, so fix what you can before you apply. Even little things like late payments or errors on your record (it happens!) can jack up your mortgage payments.
2. Budget wisely and save for a down payment
It’s hard to be patient, but a decent down payment means more reasonable payments, saving you thousands over the duration of the mortgage.
3. Shop around for mortgage rates
Don’t assume the offer made to you by your bank or broker is set in stone. It will vary, especially if you make it clear that you’re comparison shopping! Closing costs and fees can also be negotiated – use them as bargaining chips.
4. Don’t take listing prices at face value
Found something you like? Research house values in the neighbourhood to be sure you’re dealing with a fair price. Your real estate agent can help, but you can also search for nearby listings online or attend open houses in the area.
5. Use your RRSP’s
In Canada, first-time homebuyers can take advantage of a federal government program called the Home Buyers Plan (HBP) which allows you to take up to $25,000 from your RRSPs, tax-free.
6. Don’t be scared to low-ball your offer
New buyers can be timid when it’s time to buy, but unless you know you’re headed for a bidding war, low offers can be countered. So you may as well give it a shot!
7. Make your offer contingent on closing dates
It’s easy to overlook small details like closing dates in the rush of making an offer. But don’t risk the cost of paying for temporary accommodation and putting items in storage if you run into last minute changes.
8. Get a list of fixtures and fittings included in the sale
Check the details to avoid opening the door to your new home and finding it stripped of light fittings, cables and appliances. Also, pay attention to what you’re paying for: the seller may list the price they paid for an appliance, but from how long ago? Would it be more cost-effective for you to exclude it from the offer and buy a new one?
9. Review your closing statement carefully
With all the details that go into buying a home, it’s not unusual to find mistakes in the fine print. Be sure you check the math prior to closing, so you don’t overpay based on a simple clerical error.
10. Opt for bi-weekly mortgage payments
Paying monthly means that you make 12 payments per year. But if you pay half that amount every two weeks, you will make 26 payments, which means you are paying down your mortgage faster.