Buying a house in Calgary can be the most exciting decision in your life. Calgary is a beautiful fast growing city with affordable housing prices. As the real estate prices are rising in Toronto and Vancouver, many are thinking to buy their first home in Calgary. So if you are thinking of buying your home in Calgary, this article is for you.
Know your budget:
If you are buying your first home in Calgary, make sure you know all the expenses of owning a house. The down payment for the house is 5% up to $500,000. Anything over the $500,000 threshold will increase the down payment to 10%.
The numbers bellow will depend on the price of the house and are provided as a general example:
If the house worth is $400,000, you will need:
- 5% down payment is going to be $20,000.
- Home insurance $2,500 / year.
- Mortgage Insurance – $11,500 (Will be added to the mortgage total amount).
- Admin fees – Lawyer & Home inspection will be $1300 extra.
- Property taxes: $1500 / year.
- Possible Condo Fees: around $200 / month.
- Other Expenses: Moving, locksmith, extra services you may have.
Simply put, for a $400,000 house you need to put a 5% down, pay the lawyer fees, moving fees and be prepared for the extra monthly expenses after purchase. Expenses such as property taxes, insurance, mortgage payments, utilities and possible condo fees.
Get pre-approved for a mortgage.
This is the first step that you should do when you are starting to search for your dream home in Calgary. New legislation in Canada is now forcing the mortgage companies to do a “stress test” prior to giving a loan. For example if the fixed interest rate is at 4%, the bank want to see if you can afford extra 2% on top of it. This is in case the interest rates go up in 5 years period, they want to test you if you can still afford your home. Meaning, you will get less money from the bank today, then it was few years ago.
It is important to lock down interest rate from a bank and know your house budget before you start searching. If you do not know what to expect, you may fall in love with an $700,000 house just to find out that the bank can only give you $680,000 mortgage.
Improve your credit history.
By now, you should know your budget and credit score. It is time to start building a good credit history to get a higher mortgage for your dream home in Calgary. In some cases it will be enough to get a credit card and paying your bills on time. A score between 300-600 is considered bad. Score over 700 is good and Any score above 800 is considered to be best. If your credit score is less than 700 , then you may consider talking to your mortgage broker / financial advisor on how to improve it.
This step involves saving up enough money for your house down payment. If you have a 20% down payment, you will not need to buy CMHC mortgage insurance. This means you can actually lower down the payments by paying off a larger portion of your loan initially. It would result in less interest payments and eventually lesser mortgage payment from you bank account monthly or bi-weekly.
Be patient and ready to commit.
When you are buying a house there are many expenses involved. Buying and selling a house in a short term can be very expensive and in some cases not worth it. House is a long term investment, be ready to commit at least 5 years. After few years down the road, your home will increase in value and you will make money selling it. So ensure that you love and ready to commit to the place before buying it.
Do not do it alone.
Get a real estate professional to assist you in buying your new home, it does not cost you anything. Realtor will help you understand the city, prices, help you find what you want and negotiate a better price for you. Realtors get paid by the seller of the house, take advantage of it and use their expertise to get you the best home on the market,.
Looking forward to read your comments and questions in regards to buying your house in Calgary!