Buying a house is a significant transaction and complex process. Before you start, you must make sure you have the means to do it.
When you make mortgage payments, they should not exceed 35% of your monthly income. If you can afford it, learn how to buy a house and pay the mortgage.
Save enough money for a down payment
If you haven't done so already, you must save enough money for a down payment. In Canada, you must put down at least 5% of the purchase price of your home. But the larger your down payment, the more benefits you will enjoy.
Consider saving money in a Tax-Free Savings Account, for example, until you have accumulated quite a sum. Remember that buying a house will have additional costs, including legal fees, home inspections, and home insurance.
Pay down your debt
While you save for your down payment, you should try to stay on top of your finances by paying down any debt you might have. This will improve your credit score and make getting approved for the mortgage you want easier.
So, do your best to eliminate your student loan, car loan, and credit card debt long before you look for your dream house.
Shop around for a great mortgage rate
It's important to shop around for the best mortgage rates. It could save you thousands of dollars in interest over time! The mortgage with the lowest rate might not have the best terms. If you need advice on the most suitable option, consider working with a mortgage broker. They will do all the research for you and help you choose the optimal residential mortgage.
Prepare your paperwork to apply for a mortgage
When applying for a mortgage, you will need a lot of paperwork. Gather your documents in advance so the process goes smoothly.
You will need documents regarding your current employment, such as a T4 or a pay stub. You will need recent statements about your savings, investments, and any other source of income you might have. Among other things, you will also need a void cheque and an inventory of your assets.
Check whether you could be eligible for a grant
You might be eligible for a rebate or grant, especially if you are a first-time homebuyer. In Canada, many provinces offer programs to make it easier for Canadians to buy their first home. Not taking advantage of such programs would be foolish. Do some research to ensure you get the most savings.
Get pre-approved for a mortgage
You should then get pre-approved for a mortgage with your mortgage broker. Mortgage pre-approval allows you to determine how much money you can spend on a house, so it's best to do it before shopping.
Your mortgage pre-approval will also show you the different mortgage rates available to you and give you an idea of your monthly mortgage payments.
Search for a house you want to buy
Now that you know your budget, you can shop for affordable houses. Think about the features you need and want. Look at online listings or drive around different neighborhoods. Hiring a reputable real estate agent could simplify the process.
Make an offer for this house
Once you find a house you like, could you make an offer for it? Remember that if your local housing market is competitive, you might not be the only buyer to offer on that house. Your offer might not be accepted.
If your offer is accepted, you must pay a deposit and proceed with your mortgage application. You might ask for one if you think a home inspection is necessary.
Close the transaction
Your real estate agent will help you close the transaction with the seller. You must review and sign some paperwork, pay your down payment, and get the home title transferred into your name.
Eventually, you will be handed the keys to your new home, and you can move in.
Pay off your mortgage over time
Now that you know how to buy a house, you must pay the mortgage. You will simply have to make monthly payments until you pay this substantial debt.
If your mortgage terms allow it, you might be able to increase your payments or make lump-sum payments to pay it off faster.
