Buying your first home can be one of the biggest financial decisions you will make. The decision process can lead to various questions and in turn a lot of stress. With home prices & economic environments continuously changing, making the right decision may not be as easy as you originally thought. Our team at Oberoi Financial Group want to help make that process as stress-free as possible. Here is our guide to help you save and realize your dream of buying your first home.

Identify government sponsored savings for home ownership

Did you know that the government has created programs specifically for first-time home buyers? Taking advantage of these plans is great way to get a head start towards purchasing that dream house.

• FHSA- New in 2023 this plan was create to entice Canadians to save towards their first home. Under this plan, eligible Canadians can deposit $8000 per year up to a lifetime maximum of $40,000. Each contribution is tax deductible in the year the contribution is made. Once withdrawn and used towards your home purchase, the funds do not need to be paid back.

• First Time Home Buyers Plan ( RRSP) - Not as new as the FHSA, the First Time Home Buyers Plan allows eligible Canadians to withdraw $35,000 from their RRSP towards the purchase of their first home. Funds must have been in the RRSP for a minimum of 90 days to be eligible for a withdrawal. Furthermore, you must start to repay the amount withdrawn in the second year after which the funds were redeemed over a maximum period of 15 years.

Identify other savings tools & incentives available

Now that we have identified and used the government sponsored plans available to first-time home buyers, ask yourself if you have enough for the down payment? If not, you should consider the following ways to cover the shortage.

• Use your TFSA: This a great way to add savings towards your down payment as all interest, dividends & growth is tax-free even when withdrawn.
• Home Buyers Tax Credit : First time Home Buyers may be eligible for a non-refundable tax credit of up to $150.
• GST / HST Housing Rebates: Allows an individual to recover some of the GST or the federal part of the HST paid for a new or substantially renovated house that is for use as the individual's primary place of residence, when all of the other conditions are met.

Once you have identified the right way to cover the shortage, it will be crucial to come up with a detailed plan to ensure reach your goal in time.

Obtain best mortgage terms available

A common misconception among many home buyers, is that they must obtain mortgage from the bank which they bank with regularly. While this may be the most convenient option, we highly recommend shopping around and look for the best mortgage to suit your needs. Consider some of the following tips to get mortgage rates & offers:

• Use a mortgage broker: A good broker, can help survey the market and get the best rates from various financial institutions. As an intermediary, the broker is committed to getting best rates and works for their clients.
• Consider a larger down payment: With a larger down payment, and lower debt ratios, lenders may be more inclined to offer better rates to their clients
• Maintain strong credit scores and debt to income ratios: Lenders always weigh the risk of their individual clients. The better your credit score and the lower your debt servicing ratio the more favorable you appear to a lender. This will increase the likelihood of better mortgage rates, terms and conditions.
• Look beyond the rate: While the interest rate is considered the most important element of your mortgage, it is not the only factor to consider. Other variables could include ; prepayment options, lump-sum & doubling payment options, mortgage transfers & restrictions etc.

Identify all other expenses related to home ownership

First-time home buyers, often get caught up in saving for their down payment and calculating mortgage payments, that they tend to forget the on-going costs associated with home ownership. While the mortgage payment, is likely the single biggest expense associated to the house, it is not the only on-going expense. We strongly suggest to factor in the following expenses as part of the on-going budget when planning for the that first home purchase.

• Welcome tax
• City, municipal & school taxes
• General maintenance, repairs, landscaping & furnishings
• Heating, electricity & utilities
• Condo fees ( If applicable)
• Home insurance, life & mortgage Insurance

Need Guidance?

As you can see, there are so many factors to consider when buying your first home, it can get overwhelming and getting help from a professional can to be prove extremely beneficial. At Oberoi Financial Group, our team of planners and advisors are ready to help provide clarity when it comes to buying that first home. Whether saving for the down payment, on-going budgeting or simply determining what is affordable our team is here to help. Feel free to reach out to get the process started and make that dream of home ownership a reality.

Shiv Oberoi: shiv@oberoifinancial.com

**Now Available! book a meeting with Shiv directly below**

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Shivani Oberoi : shivani@oberoifinancial.com

** Now available, book your next meeting with Shivani directly below:

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Oberoi Financial Group Inc | www.oberoifinancial.com | 514-362-8400