This week’s episode is all about buying your first home (Part 2). My friend Denise and I chat about buying a property. Denise is a home owner and has gone through the whole home buying process recently, so is full of up to date, handy information to share with us. In part 2 this week, we cover getting a real estate agent, budgeting for home expenses, house hacking, and more.

Key Takeaways

  1. As a buyer, you don’t pay a real estate agent anything. The seller is the one who pays commissions (around 5% of the sale of the home). The selling agent would get 2.5% and the buying agent would get 2.5%. You’re able to work with different realtors who specialize in different areas if you’re not set on a certain municipality or region.
  2. When buying a resale home, it’s important to get an inspection report – this indicates potential things that could be wrong with the house (i.e. how is the roof, how’s the plumbing, how’s the exterior). However a home inspector can’t open dry wall and see what’s inside the walls so it’s important to have an emergency fund for unexpected expenses.
  3. Land transfer tax is a large one-time fee that you pay on closing as a buyer. It’s a marginal rate – you can find the link for Ontario below. In Toronto, that tax is doubled. There are incentives for first time home buyers.
  4. Make sure you get a good real estate lawyer! They will make sure your land transfer tax is calculated correctly, any rebates you’re entitled to are applied, and they will run a title search on the previous ownership of the house. This is really important to make sure everything is good with the previous ownership!
  5. Consider buying appliances instead of renting (i.e. hot water tanks). It could be worthwhile to purchase outright in the beginning.
  6. Consider house hacking! Buy a property, rent out a room or your basement suite. However, ensure that your basement apartment is in compliance with municipal codes. For example, Brampton, Ontario has really strict guidelines on basement apartments.
  7. Understand what you can afford and budget for everything!

Listen Now!

Links

Tarion Warranty on new homes

Land transfer tax in Ontario

Mortgage Calculator(from Gov’t of Canada)

Basement apartment regulations – Toronto

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Tangerine – new accounts get 2.5% interest (first 5 months), use my Orange key: 40411403S1

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Thanks so much for tuning in!

This week’s episode is all about buying your first home!! My friend Denise and I chat about buying a property. Denise is a home owner and has gone through the whole home buying process recently, so is full of up to date, handy information to share with us. In part 1 this week, we focus on mortgages, saving for a down payment, and also chat about different types of properties and how to budget for buying a place, as well as something you can use to help buy a home that feels illegal but isn’t.

Please tune in next week for part two where we cover getting a real estate agent, budgeting for home expenses and more.

Key Takeaways

  1. The first thing you should do when thinking about buying a property is establish what you can afford. Look around at the market, and the neighbourhoods you’d like to live in. Look at real estate websites to see what prices are like:
  2. The different types of properties you can buy are: condo, townhouse, freehold townhouse, detached house, semi-detached house. Each have their pros and cons, for example with a detached house, you own this piece of land, but there is a lot of upkeep involved (i.e. snow shovelling, lawn mowing, etc.). It’s important for you to write down a pros and cons list and determine what is important to you.
  3. You can take up to $35,000 out of your RRSP, tax-free, if you’re a first time homebuyer to fund the purchase of your first home. This is called the Home Buyer’s Plan and is a great incentive. You have two years to wait until you have to start repaying this into your RRSP, and then you repay it back into your RRSP over 15 years. This is a super incentive because you get this tax-free money, and in the future you will still have this money for your retirement in the future.
  4. It’s important to talk to a lender to determine what you can afford when looking for a mortgage. There is a new mortgage stress test in place (more info in links section below), which makes it harder to get a mortgage. Things like a higher credit score, and gross debt ratio and total debt ratio
  5. Mortgage terms can depend on your situation, and the rates will be different depending on the length of the mortgage. Usually they’re five years, but this can differ.
  6. A 20% down payment is required to not need to pay mortgage insurance. For a property that costs less than $500,000, the minimum down payment is 5% (with mortgage insurance). For a property that costs more than $500,000, the minimum down payment is 5% on the first $500k and 10% on the excess to a limit of $1m.

Listen Now!

Links

CMHC Mortgage Loan Insurance and Premiums

Mortgage Affordability Calculator

Mortgage stress test further reading

Sign up and get $10 to trade on Wealthsimple Trade

Sign up for no-fee banking with Tangerine or EQ using my referral code!

Tangerine – new accounts get 2.5% interest (first 5 months), use my Orange key: 40411403S1

EQ Bank – all accounts get 1.5% interest, TFSAs get 2.3% interest!

Thanks so much for tuning in!