How do I know if I qualify?
You may feel ready to embark on the homeowner journey, but how do you know if you can qualify? Well, quite simply - you will have to demonstrate to your chosen lender that a) you can afford a mortgage b) what is your credit like? They are the two crucial aspects that a lender will consider, they will also look at the following:
- Income (before tax)
- Living Expenses
- Existing debts (if any)
- Credit report
- Mortgage amount requested (for the amortization period)
All lenders have to make these considerations before assessing if you qualify, set by the Financial Consumer Agency of Canada.
What are the perks for FTB in Canada?
Well, the first perk is the fact that this will be one of the best financial investments of your life. You are basically starting your retirement fund; if you make regular payments (on time), then you are capitalizing on your future. Not only that, there are a few government incentives, to make the buying process affordable. The main schemes are:
- FTB Tax Credit – This scheme is a $5,000 (non-refundable) tax credit, which is there to help new buyers achieve the closing costs of buying their first home.
- Home Buyers Plan – this program is fantastic for new buyers, it provides the opportunity for you to withdraw any money that you may have in your RRSP (registered retirement savings plan), that you can use towards buying your home.
- Land Transfer Tax Refund – this is a tax refund up to the amount of $2,000
There are various documents required, especially with your first home, and mortgage application. Below we have listed the usual requirements. However, it is important to know that more information might be needed depending on your circumstances.
- Proof of Identity
- Proof of Income
- T4 from employer
- T1 and Notice of Assessment (if you are self-employed)
- Property Documents – once you have selected your home, you will need an agreement on the proposed purchase
- Confirmation of deposit
- Bank statement
- Gift letter
One key thing that we do need you to be aware of to avoid disappointment is to apply to be pre-approved for your mortgage. We suggest that you do this before you start your house hunting journey.
A simple guide to your first mortgage:
- Step One: Get pre-approved
- Step Two: Make a wish list of your ideal homes (budget around your pre-approval amount)
- Step Three: Create a team – decide if you want to use a broker, realtor, or if you want to try the DIY route.
- Step Four: View your wish list
- Step Five: Make your offer and down payment
- Step Six: Close the deal
- Step Seven: Collect your keys, and congratulations you are now a Canadian homeowner!