When buying your first home, the first thing you have to do is get pre-approval. This is “not” the same as being pre-qualified. Banks will tend to pre-qualify you but that doesn’t include a credit check. Even if you think you have good credit you must have the check done. Some things can show up that you are unaware of or by mistake. You must rectify this before going forward.
Now you know what you “qualify for”
Then ask yourself, “what do I want to spend?” You may qualify for a $400,000 mortgage but is that what you want to spend? This is a question only you can answer. Some people are homebodies and other like to travel. Decide what you want your lifestyle to be.
The next question is “where do I want to live?” This is critical to everybody. You may want to live in downtown Toronto but find that you can only get a small high rise for your budget. Are you willing to accept that or do you want to move further away? Again this is your decision. We can help you by letting you know what your budget can get you and where.
Are you more interested in getting a detached or semi home over location? This is critical because we need to know what your ultimate goal is. Is it a detached with a big back yard or something close to the highway?
Remember this is all about you. We as realtors need to get to know your wants and needs and to fulfill them as best we can within your budget.
A basic rule of thumb for qualifying for a mortgage is you can spend 30-35% of your income on mortgage, taxes, condo fees and some utilities.
Some extra costs to keep in mind are:
- the cost of a home inspector for the property. This will run about $400.
- a lawyer to process your offer ($1200+) There are many variables to take into account.
- Land Transfer Tax. This is the tax you pay when buying a home. This can be bundled with your mortgage (calculate).
- CMHC fees can also be bundled with your mortgage.