When it comes to buying a home, many Canadians need to borrow money to pay for it, and they don’t usually pay for the full cost of the home all at once. Most Canadians finance the purchase of a new home in two steps:
1) They make an initial down payment on the house using money they’ve saved.
2) They borrow funds from a lender (such as a bank), then make regular payments to pay off the mortgage.
You Build Equity Every Month
Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity.
A Mortgage is Like a Forced Savings Plan
Paying that mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save—and that’s a good thing.
Long Term, Buying Is Cheaper than Renting
In the first few years, it may be cheaper to rent. But over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. But more importantly, you are not throwing away all that money on rent. You gotta live someplace, so instead of paying off your landlord’s home or building, pay off your own!
What Can You Afford?
If you haven't already gone through the mortgage pre-qualification process, you will need to meet with a lender or mortgage broker. They will establish how much of a mortgage you will qualify for. Mortgage rates vary considerably and it is paramount that you shop around for the best rate, terms and options.
Fine Balance between NEEDS Vs. WANTS
Adequate square footage for comfortable living.
Sufficient bedrooms for your family
Comfortable eat-in kitchen
Garage or basement for storage needs
Backyard for children’s play area
Easy access to school
Specific flooring, paint, exterior color
Built-in entertainment center
Brass lighting fixtures
I will find you a home that includes all of your Needs, and as many Wants as possible, while remaining within your budget!
Home Purchase Expenses
In addition to the downpayment, there are some additional costs that are incurred, such as
Legal Fees & Disbursements
GST (if applicable)
Property Transfer Tax
Property taxes and adjustments
Home Inspection Fee
Mortgage Loan Insurance Premium (if less than 20% down)
For more information on Grants and Rebates for Property Owners and Buyers, visit Real Estate Board of Greater Vancouver