Thinking of buying your first home but worried about making such a big commitment? We address 3 concerns shared by first-time buyers.
Young people can’t afford to buy a house anymore.
When the Government of Canada tightened mortgage requirements last fall, it was all over the news. House prices have evened out a little; as for condos, it’s still very much a buyer’s market. And that’s good news for first-time buyers!
Here are some tips to be able to afford your first home:
Get started early
Save for a down payment
Consider your financial commitments
Set aside 3% of the value of your house for start-up costs
Purchasing real estate is one of the biggest investments one can make in their lifetime, which is why it is so important to fully understand the associated legal implications. Can an offer to purchase be cancelled? What is a latent defect? A defect of consent? Interview with Martin Janson, real estate lawyer at Janson, Larente, Roy in Montréal.
1. Is there a difference between an offer to purchase and a promise to purchase?
The term “offer to purchase” is often used, but the correct term is actually “promise to purchase”. In this document, the buyer proposes an amount to the seller to acquire the property and sets a deadline for a response. Once the promise is signed, there is to a certain extent a contract. One party is obligated to purchase, while the other is obligated to sell. However, the buyer can stipulate conditions to the promise to purchase. The most common are obtaining the necessary financing, the sale of their current property, and a satisfactory inspection report. Continue reading →
According to a BMO 2015 home-buying report, the average Canadian expects to pay off their mortgage by age 59 — but 31 per cent think they’ll still have a mortgage by their 65th birthday. Looking to ditch your debt quicker — without over-extending your budget? It may save you hundreds (if not thousands) in the long run.
The biggest benefit is saving money on interest charges. The longer it takes to pay down your mortgage, the more you’ll pay in interest. The BMO report found that, on average, Canadians believe they’ll pay approximately $60,000 in interest on their mortgage (and this number hits $100,000 for B.C. residents).
First-time homebuyer tip: Curious how mortgage payments work? It’s all about the amount of money you’re borrowing and the length of the loan. Based on these factors, your lender will calculate your payment schedule. Some of your payment will go toward interest (the amount paid on the amount you borrowed), and some will go toward your principal (the amount initially borrowed under the mortgage). You may pay more toward interest than principal in the first few years of your loan, and more toward principal in the later years. Calculate your potential payment schedule with our nifty mortgage calculator.
Spring is in the air, which means peak home buying season is just around the corner. So Desjardins is offering an attractive fixed mortgage rate, $1,000 cash back and all the insurance you need for your home under a single roof.
One young couple recently discovered the benefits of choosing Desjardins for their home-buying needs and couldn’t believe their luck. “I’ve been a caisse member since I was a kid, but I never realized just how much they offered!” said Karim after his mortgage was approved. “We decided to look around and wound up falling in love with the first condo we visited—a little 5 1/2 near the canal. We weren’t ready and had to scramble to get our offer in. We talked to our advisor and looked at all our options to find the mortgage that was right for us. It was really stressful. And we thought we’d have to do the same thing over again for our home insurance and loan insurance. But Desjardins offered all the services we needed to buy our home. It was so easy!”
His wife Julie nodded. “The fixed promotional rate we got is incredible. And the $1,000 cashback offer really helped us out: We used it to buy the perfect couch!” Continue reading →
“There is never a single fixed price. Every property has both a floor and ceiling price,” says Patrick Juanéda, President of the Québec Federation of Real Estate Boards (FCIQ). On one hand, the seller wants to close the deal and obtain the amount closest to the ceiling price. While on the other, the buyer wants to pay something closer to the floor price. Irreconcilable differences? Not at all. Finding common ground is entirely possible, and that’s what successful negotiating is all about.
The power of negotiation
“The price is always negotiable,” says Mr. Juanéda. Expect the average reduction percentage to be from 2 to 3%.”
The real estate expert does stress however that each situation is unique: “If a house is listed at a “good price” (near the floor price) and it’s located in an active market (single family homes around $300,000, for example) overbidding can’t be ruled out. Do you really want to miss out to save a few thousand dollars?”
On the other hand, you have more room to manoeuver with a property that has been on the market for over six months and seen little activity.
Recognizing various scenarios forms the basis of any negotiation. A qualified real estate agent has the experience and instinct to guide the buyer. Without one, you’d have to study the local house listings and visit a lot of properties to develop a flair for negotiation. Continue reading →
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