1. Not getting pre-approved for financing before you begin your search. True, online financial calculators are a great way to get an idea of how much you can afford – but you won’t know for sure that you can even get a mortgage until you talk to a lender. Getting pre-approved involves a bank or mortgage broker going through all the steps of qualifying you and committing to an interest rate for a certain period of time (usually 90 days). Better to know now that the Bell bill you didn’t pay in first year university is still haunting you, or that the bank doesn’t love the idea that you just started a new job. Knowledge is power. (Click here for more information on Financing a Home in Toronto).
2. Using your Mom’s friend who sells real estate in the ‘burbs to help you find a place downtown. Sure, your Mom’s friend may be a great realtor – but does she know the neighbourhoods you want to live in? Does she ‘get’ what’s important to you? Click here to read more about How to Pick a Great Realtor.
3. Not having a readily-available deposit when the time comes to make an offer. So you’ve fallen in love, made an offer and it’s been accepted – you’ll need to come up with a deposit (usually around 5% of the purchase price) within 24 hours. If your money is in an RRSP, you won’t likely be able to access it that quickly. If your money is in an investment that’s had a bad week, you may be forced to sell at a loss. Better plan: make sure 5% of your budget is available in cash – and click here to learn all about Deposits.
4. Not taking advantage of the government programs for first-time Buyers. There are literally thousands of dollars up for grabs for first-time Buyers, from rebates on land transfer taxes, to tax credits to help with closing costs. Click here to read about First Time Buyer Government Programs.
5. Not saving a big enough down payment. Buying a house or condo in Toronto is expensive and there will always be unforseen expenses. The more financial flexibility you have, the better. We chronicled our favourite Downpayment Strategies here.
You can read all about being a first time Buyer in our First Time Buyer Guide, or better yet, contact us to talk about what you need to know over coffee (or maybe a beer).