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Tips To Overcome Housing Affordability Challenges As A First Time Buyer

Capital Mortgages opened in January 1999 and has since serviced thousands of clients and arranged several billion dollars in mortgages in Ottawa area.

Tips To Overcome Housing Affordability Challenges As A First Time Buyer

Most Canadians spend over half of their monthly income on mortgage payments, which is far greater than the 30% figure that’s recommended to be financially sound. There are no two ways around it – buying a home is expensive, and saving up for a down payment is one of the greatest monetary challenges that many Canadians face. With the average price of a house sitting at $500,000 in Ottawa, it goes without saying that affording a property in our city can be tricky, even for those who are earning healthy salaries. This can be even more difficult as somebody purchasing a home for the first time.

To help ease the pressure, we have compiled a few tips to make housing affordability more accessible to you.

  1. If you have not purchased a home within the past four years, you may be eligible to qualify for the RRSP Home Buyer’s Plan. This allows us to borrow up to $25,000 tax-free from your RRSP to put towards a down payment. The money must be in your RRSP 90 days before your purchase.
  2. On September 2nd 2019, the federal government launched a national First-Time Home Buyer Incentive which offers eligible buyers up to 10% of a home’s purchase price to put towards their down payment. Note that this money is a form of a loan from the government, which will eventually need to be paid back.
  3. In certain Canadian provinces (including Ontario), you can receive a rebate on the land transfer tax you pay, which is generally between 0.5% and 2% of your property’s total purchase price and is one of the highest taxes you’ll pay.
  4. The First Time Home Buyer’s Tax Credit, introduced in the 2009 federal budget, allows first-time buyers to receive a non-refundable credit of up to $750 to offset legal fees, inspections and other closing costs. 
  5. If your home is less than $500,000, you will only be required to put down 5% as a down payment. However, note that any down payment under 20% of your home’s total price will require you to pay mortgage default insurance.

 

Hoping to discuss what kind of property you can afford with one of our mortgage specialists? Give us a call at 613-228-3888 today.

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