About your Budget
The sale price... and more
You're ready to make the big move? Congratulations! You must now set a realistic budget. Once you have accounted for notary fees, municipal and school taxes, heating, electricity and maintenance costs, how much is left over to pay for your home each month? Have you thought about what type of mortgage loan best suits your needs? Do you prefer an open fixed rate, a closed fixed rate or a variable rate? Your real estate agent can help you assess your financial capacity and introduce you to the right professionals.
And now, the financing
Many tenants don't think they can afford to become homeowners. However, when discussing this with your real estate agent, you'll see that there are many available tools to help you make that move.
- If you don't have at least 20% of the property's sale price as a down payment, mortgage loan insurance can help you purchase a home, even if you don't have any down payment for that matter, though under certain conditions (5% for two-unit properties, 10% for three- or four-unit properties). However, remember that the lower the down payment, the higher the mortgage.
- The Home Buyer's Plan (HBP), mostly for first-time buyers, allows you to withdraw up to $20,000 ($40,000 per couple) from an RRSP to put toward the down payment on a home. Thanks to this government program, you pay no interest on this amount and you have 15 years to pay it back into your RRSP. To qualify, you can't have been owner of a home in the past five years.
- There are also programs for self-employed buyers and people who wish to purchase a secondary home. Ask your agent for more details!