Mortgage tips for 1st time buyers

Do you want to enter the housing market but don’t know where to start?

Preapproval for a mortgage is an important step in the home buying process, and it can help give you more confidence when searching for your dream home.

With Toronto mortgage brokers available to help navigate the process, finding a preapproved mortgage is easier than ever before. In this article, we use our experience to break down the mortgage process for you. We hope that first-time homebuyers can use this as a resource in acquiring a mortgage and navigating the process with less stress.

Preparing to apply for a mortgage

Before you apply for a mortgage, it is important to understand the terminology and different types of mortgages that are available. You can do some quick reading into the types of mortgages so you can decide between fixed and variable rate loans and determine which options you may have as a first-time buyer. You will also need to gather some documents like your T4s, a letter of employment, and proof of any other income sources.

Before applying for a mortgage it’s also a great time to get out ahead of your finances and eliminate any extra debt you may have. Try and bring your debt-to-income (DTI) ratio as low as possible, this will give you a much better chance of approval for a mortgage and getting a lower interest rate.

It is important to know how much you can afford to spend on a home before you start looking so that you do not get in over your head. Using an affordability calculator will let you know what you should be able to typically afford based on your monthly income and what you can expect in terms of monthly payments on your home.

Determine what your down payment on your home may be. Most buyers are recommended to submit a down payment of 20% of the full cost of the home. 20% is a requirement on homes over $1 million. The minimum down payment will be 5% of the price of a home under $500,000 or 10% of the price of a home on properties over $500,000.

Getting preapproved for a mortgage

The first step in a mortgage is preapproval. This involves working with a Toronto mortgage broker to provide information about your income, assets, and debt so that you can get an estimate of how much you can borrow.

A Toronto mortgage broker can help you get preapproved for a mortgage. The process is simple and easy to submit, and involves some basic information about your finances and then working with a lender to get a preapproval.

A First time homebuyer in Toronto also receive

-The ability to withdraw funds from RSP retirement savings for costs on their first home.

-First time homebuyers incentive of applying for a shared government mortgage with 5-10% shared equity from the government.

-$5000 in a non refundable tax credit for certain qualifying homes.

-GST HST housing rebate.

After preapproval

Once you are preapproved for a mortgage, the next step is finding your dream home. This can involve searching online listings or visiting open houses to find the perfect house on your budget.

The negotiation

Once you have found the perfect home and are ready to make an offer, it is important to negotiate carefully.

Toronto mortgage brokers can help guide you through this process with their expertise.

You may be able to negotiate the price of the home or other terms like closing costs or appliances to make sure that your final price is in line with what you can afford.

After the home closes

Once your offer has been accepted and the home closes, Toronto mortgage brokers can still help you with any inquires you may have about your new mortgage. They can also help you to refinance or renew your mortgage when it comes time to do so.

Contact one of our mortgage brokers to learn more.