How to buy Real Estate in Canada for First Time Home Buyers and New Immigrants? Watch the video bellow!
Part 1 in House Purchasing is: Money and Credit Score
Building your credit score:
In order to buy a home in Canada, you need to have a good credit score. If you are coming from the USA, your good or your credit score will not travel with you!
Being a new immigrant or a first time home buyer is not easy, because in order to get a good interest rate and get approved you will have to have a good credit.
How to Build you Credit Score?
- Get a credit card: Start using your credit card, keep it for a longer period of time, pay for it on time and make sure you do not use more than 30% of the credit card total available credit.
- Get a car loan: One of the easiest ways to build your credit as long as you do not miss any payments. A fixed amount of money will be going out from your chequing account on fixed periods of time.
- Do not apply for too many loans. It actually lowers your credit score, each time there is an inquiry to credit bureau.
Keeping an eye on what you are making and how much debt you have. It is important to keep an eye on your Total Debt Service (TDS) Ratio and Debt-to-Income Ratio (DTI) Ratio.
How to Make a Down Payment?
It is important to have enough money for a downpayment while buying your first house. You would need a minimum of 5% down payment to purchase a home in Canada.
- 5% Down Payment is a high ratio mortgage, it means you would have to pay for a mortgage loan insurance because you would be considered a “high risk” borrower.
- 20% down payment or above, you would be in “lower risk” and it you will not have to obtain a mortgage insurance.
How to Save for Down Payment?
Spending less than you are earning – That is a no brainer advice.
Saving money from your tax refunds – Once a year you may be able to get $1000 to $5000 if you are in a lower income category. It can help you a lot in your down payment. Please do not forget to file your taxes!
Part 2 in Home Purchasing is: House Hunting
Why You Should Consider Having a Real Estate Agent?
- It is Free: Majority of times sellers pay the commission of the buyer’s real estate agent.
- Market Knowledge: Real estate agents know the market.
- Guidance: Real estate agent will guide you through the process, help you decide on what you really want to purchase and help you around the city.
- Negotiation and heavy lifting: Your real estate agent will do all the hard work in your best interest while you get to concentrate on what you really love and passionate about! House hunting!
What Kind Of Home Do You Want To Buy in Canada?
Consider what kind of house do you want to buy, your real estate agent can help you out in having a better understanding on what is out there on the market that suits your needs and wants.
- Detached house
- Two story
- Bi level
- Other types of properties.
- What ownership right would you prefer?
- Property inspection: Hire an inspection company to do a property inspection for you to protect you from future surprises. It can also help you negotiate a lower prices and provide you with peace of mind.
- Legal Expenses: you would need to hire a lawyer to transfer the ownership or review the condominium documents if applicable.
- Moving expenses: It could be anywhere from $1,500 and up! Keep in mind that you would have some moving expenses as a minimum a U-haul track and some boxes.
- Renovations: It is expansive! In my house, I changed a roof for $7,500, windows for $5,000 and refinished floors for $4,500. Now my furnace is old and water tank is almost done. Keep in mind that owning a house is really expensive and it is best to have some extra savings with you and having your property inspected.