The opportunity to take part in a shared equity initiative run by Canada’s federal housing agency has closed, reducing assistance options for first-time buyers.
Canada Mortgage and Housing Corp wrapped up the program, called the First Time Home Buyers’ Incentive (FTHBI), on March 31 and will no longer accept applications for assistance.
Established in September 2019, the program was a foundation of the National Housing Strategy and offered interest-free loans of up to 10%.
In return, the government would take equity in the property and the loan would have to be settled by the owners within 25 years.
The program wasn’t without its critics, who often observed it did little to help first-time buyers keep pace with the rising prices. Some argued the scheme fed market momentum of the market, effectively backfiring on the people it was designed to help.
Buying property for the first time at any time can be challenging. So, below, our agents have set out eight ideas to help you through the process. We hope it helps provide the best chance to purchase a property and build your wealth in the years ahead.
Due diligence – Research the market to understand how much you’re likely to spend on your desired style of property and location. This will ensure you avoid paying too much.
Dollars and sense – Analyse your financial position. Look at your credit score, level of debt and savings to understand what you can afford.
Talk to lenders – Shop around for the best mortgage deals. Consider using a mortgage broker. The likely amount a lender will offer will be based on a number of factors, including your income and the appraised value of the property you intend to purchase.
Additional costs – Don’t focus on price alone. Other costs must be factored into your budget. These include closing fees, property taxes and home maintenance.
Spending limit – How much should you spend? As a general rule, don’t go beyond 33% of your gross monthly income. Your lender will work on this principle, too. If you overextend yourself, mortgage obligations may become onerous.
Pre-approval – Get a pre-approved mortgage so you can make a bid or offer on a property quickly. However, pre-approval does not mean you have a guaranteed mortgage. Approval will depend on the lender’s assessment of the property’s value.
Future thinking – Consider how your life might change in the coming years. For instance, if you’re a couple and want to start a family, there’s not much value in purchasing a one-bedroom apartment.
Consistency is key – During your home search, avoid spending money on big items, such as a car. And don’t change jobs. Banks like consistency, and your taking new employment may set you back three to six months until the lender is satisfied your new role is permanent.