First Time home buyer in the Comox Valley?
Although home debt is ‘smart’ debt, it’s a huge financial decision and there is a lot to think about. That’s why professional advice is recommended when making one of the most important financial decisions that most Canadians will make in their lifetime.
Homebuyers want to take advantage of today’s low rate environment but it’s hard to sort through all of the options out there and get the right combination of mortgage features, privileges and rate that is best matched to their needs. The right mortgage goes beyond just the rate – it’s important to also consider term, prepayment options, refinancing penalties, restrictions, and fees.
Good planning for the purchase of a new home is also essential, especially for first-time homebuyers who may be tempted to over-stretch their capacity. Work with a mortgage broker to build your home buying budget that includes considerations of your lifestyle, closing costs, and home ownership costs beyond the monthly mortgage payment. As for the all-important down payment, there are a few options to consider for first-time homebuyers who may have smaller amounts to start:
1. The Home Buyers’ Plan (HBP) –first-time homebuyers can withdraw individually $25,000 or $50,000 with a spouse tax-free from their RRSPs, provided they adhere to the repayment plan.
If you’re buying your first home, take advantage of the Home Buyers Tax Credit (HBTC). The credit is designed to assist first-time home buyers with the extra costs associated with buying a home, like legal fees, disbursements and land transfer taxes. The $5,000 non-refundable HBTC amount provides up to $750 in federal tax relief. You qualify if neither you nor your spouse (or common-law partner) have owned and lived in another home for the past five years*. If you have a disability – or are purchasing the home for a relative with a disability – you may also qualify for the program, even if you are not a first-time buyer. * For more information, visit the Action Plan website at
2. Gifted down payment from a parent or blood relative – can be a source of funds as long as the homebuyer receives in writing that they are not required to pay the money back at any time.
3. Start off small – the dream house may be priced too high, so a starter home might be the right option for a first-time homebuyer. A smaller home or maybe a house just outside of the expensive area will help get a foot in the door. Mortgage brokers can also provide strategies that will help you pay the mortgage off faster and shave thousands off interest costs. For instance, your broker may advise you to set your payments now at rates that could be expected at your renewal date so you pay down more principal and don’t experience payment shock should rates be higher at renewal. There’s so much to consider. Professional advice can get you into the market to start your wealth building with smart debt and can save you thousands over the course of your mortgage.