My name is Aristotle Abuyen and I am a multi-award winning realtor with Century 21 People’s Choice Realty Inc. Brokerage in Toronto, Ontario.
The real estate market continues to be a hot topic and one of the highlights of my profession is being able to help first-time homebuyers (FTHs) smartly enter the market. Here are my top five tips for FTHs.
1) Build your credit.
As a new Canadian immigrant or FTH, it is imperative that you build your credit by applying for a secured credit card. This is where you put an initial deposit on the card and borrow against that amount. The benefit is that you do not require a credit history. Once you have established a 3-6 month credit history, you can proceed to other credit cards and loans.
2) Find a mortgage broker who can optimize your finance.
It’s best to first discuss with the banks and if you are still not satisfied with the offerings, consider speaking with a mortgage broker. A mortgage broker is not a lender. Their role is to search for the best lender most suited to the client’s needs. They have access to several different lenders but not all mortgage brokers have the same lenders. It is crucial that you be comfortable with your mortgage broker. Ask questions!
3) Work with the right realtor.
Do your homework by researching online and asking your family and friends if they know a trusted realtor. There has been increased discussion on ‘for sale by owner‘ but when you work with a realtor, every aspect of the home-purchasing process becomes much easier. If you need clarity, do not hesitate to ask questions. As a realtor, it is their obligation to address all concerns or refer you to the appropriate professional (e.g., lawyer, home inspector) who can best answer them. A common misconception about forgoing a realtor’s services is that you can save money; in actuality, commission is paid by the listing agent (unless otherwise stated in the contract). A savvy realtor can even save you money!
4) Make use of your RRSPs.
As a FTH, you are eligible to use up to $25,000 of your RRSP savings ($50,000 for a couple) to help with your down payment. To qualify, the RRSP funds must have been deposited for at least 90 days. You must also produce a copy of the Agreement for proof of purchase on a qualified home. Note that if you’re planning to use your RRSPs as a deposit for an offer, beware of the timeline and ensure that it is readily available the day following acceptance of the agreement. This is a common hiccup for RRSP borrowers.
5) Plan for miscellaneous costs.
It is wise to save 1.5-3% of the purchase cost for closing costs. These may include land transfer taxes (except Alberta and Saskatchewan where there is a smaller transfer fee), mortgage default insurance PST if only a 5-10% down payment (only required in Ontario, Manitoba, Quebec and Saskatchewan), appraisal, home inspection, moving costs, final adjustments, legal fees, etc. The real estate transaction is an exciting process that can also be overwhelming or intimidating. A seasoned realtor makes the experience an easier one. Feel free to contact me if you have any questions; I am always happy to help!
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