First Time Buyers


DOING IT RIGHT THE FIRST TIME

Experience counts, especially when it comes to big decisions like purchasing your first home. Sherwood Mortgage Group has that experience - our team has helped thousands of first time buyers over the years - and can help you every step of the way.

Pre-Approval

Before you even consider buying your first home, the most important step you can take is to understand what you can afford. Lenders will pre-approve you up to a maximum amount based on their assessment of your ability pay back the mortgage. Knowing how much lenders are prepared to loan you and at what rate allows you to shop with confidence for a property within the pre-approved amount (plus the funds you have available to make a down payment).

A Sherwood Mortgage Group representative can help you get pre-approvals from multiple lenders. Pre-approval does not oblige you to borrow from the pre-approving lender. We are free to shop the market for the best rate available once a firm deal is in hand.

The pre-approval process also allows us to understand whether there are any issues that can make financing a purchase more challenging, and to find appropriate solutions before a purchase is made.

Deposit

Before shopping for a home, first time buyers should understand that they will need to have an amount of cash available for a deposit to be submitted with an offer to purchase. The deposit is only cashed in the event of an actual sale, but is intended to demonstrate to the person selling the property that your intent is serious. Your real estate agent can advise you on an appropriate value to offer on deposit and the circumstances under which you could forfeit your deposit.

Inspection

Though not typically a significant expense (usually under $500), a home inspection is a strongly recommended step in any home purchase. Your real estate agent should ensure that any offer to purchase you submit is contingent upon an inspection of the property by a qualified professional. A qualified home inspector can assess the condition of the home and provide you with a report detailing areas that may require repair or attention. It is important to know these facts, in order to understand whether the property really is affordable.

Down Payment

A down payment is the amount of cash a buyer will provide toward purchase. Added together with the amount provided by the lender, the house whole purchase price is met. A down payment for first time buyers in Ontario must be a minimum of 5% of the purchase price (e.g. $250,000 x 5% = $12,500).

Closing Costs

First time buyers should also understand what other costs they will incur when buying a home as these can be quite significant. These may include:

• Land transfer taxes
• Title insurance
• Home insurance
• Lawyer's fees
• Moving costs
• Incidentals

An educated estimate of these costs will help you understand what funds you will actually need to complete your purchase. Either deduct the amount from your cash available for down payment, or plan to put aside the amount prior to the closing date (the date on which you take possession of the property).

Beyond Possession

Purchasing a home is often just the beginning of the costs you should anticipate. Beyond mortgage payments, there are property taxes and usually lots of maintenance costs (unless you are part of a condominium corporation, in which case there are maintenance fees). And it is rare to purchase a home that you will not want to make some changes to. Even paint costs money, so plan ahead to have some funds available to make your new house your home.