The Real Costs of Buying A Home – What Every First-Time Home Buyer Should Expect
For many of us buying a home is the biggest investment we will ever make. When you are in a position to buy a home, there are 2 financial aspects you should be aware of:
1. The ongoing costs of homeownership
Regular mortgage payments
Maintenance and upgrades
Condo fees/neighbourhood association fees (if applicable)
Mortgage lenders prefer that clients spend no more than 32% of their gross monthly income on housing.
What you need to figure out is if you can afford that even if the bank/lender approves you for a large mortgage.
You have to consider your debt, your savings and your lifestyle – you don’t want to take up too much and become “house poor”.
2. The upfront and one-time costs of buying a home
An important consideration is your down payment. The larger the down payment you can contribute to the purchase price, the smaller your mortgage payments and the less interest you will pay on the loan.
If you can make a down payment of at least 20% of the home’s value, you will not have to buy mortgage insurance as required by law, which will add to your monthly burden.
If you qualify as a first time homeowner, you and your spouse can borrow up to $50,000 using your RRSP funds for your down payment.
Other upfront costs:
Home appraisal cost
Transfer taxes – Provincial/Municipal
Set up or administration fees for the various utility providers
If you plan carefully, save for a down payment, have a good understanding of how mortgages work and the costs associated with home ownership, your dream of owning a home can become a reality. If you are a first-time buyer looking for that ideal home that fits your budget, talk to one of our experienced real estate advisors. We have been advising clients on real estate in Vancouver for over 27 years. Please call on 604 913 1000 or email us.