Unimor Capital Corporation

Tag: homebuyer

  • A Complete Guide to Buying Your First Home

    A Complete Guide to Buying Your First Home

    Buying your first home is an exciting and a significant milestone in your life. If you’re considering purchasing a home, you’re in for a unique and rewarding experience. Ontario offers a diverse range of housing options, from bustling city condos to peaceful suburban homes, making it an attractive destination for first-time homebuyers. However, the process of buying a home can be complex and overwhelming, especially if you’re new to the real estate market. In this comprehensive guide, we will walk you through the complete process of buying your first home, from setting your budget to closing the deal.

    STEP 1: Assess Your Finances
    Before you start looking at properties, it’s crucial to evaluate your financial health. Review your income, savings, debts, and credit score. Your credit score is particularly important because it will affect the mortgage terms a lender will offer you. It’s also the right time to start saving for a down payment if you haven’t already.

    STEP 2: Establish Your Budget
    Next, you’ll want to establish a realistic budget. Before you start looking at homes, you need to determine how much you can afford. To do this, consider the following factors:

    • Down Payment: In Ontario, a minimum down payment is required, which varies based on the purchase price of the home. For homes priced up to $500,000, the minimum down payment is 5% of the purchase price. For homes priced between $500,000 and $1 million, you need to put down 5% on the first $500,000 and 10% on the remaining amount. Homes priced over $1 million require a 20% down payment.
    • Additional Costs: In addition to the down payment, you’ll need to budget for closing costs, which can include legal fees, land transfer tax (unless you’re a first time homebuyer), home inspection fees, and more. These costs can add up, so it’s essential to factor them into your budget.
    • Monthly Expenses: Consider your current monthly expenses, such as rent, utilities, and insurance. Your new home may have different monthly costs, such as mortgage payments, property taxes, and maintenance. Ensure that you can comfortably manage these new expenses within your budget.

    STEP 3: Obtain Mortgage Pre-Approval
    Once you have a clear budget in mind, it’s time to obtain mortgage pre-approval. This step involves working with an experienced Mortgage Broker, to determine how much you can borrow and at what interest rate. A mortgage pre-approval provides you with a clear understanding of your purchasing power and can help streamline the home-buying process. To get pre-approved for a mortgage:

    • Gather Financial Documentation: Be prepared to provide your financial information, including proof of income, employment history, and details about your assets and liabilities.
    • Complete an Application: Make sure the information you give is accurate and complete, this will ensure a smooth application process.
    • Choose a Mortgage Type: There are various mortgage types available, including fixed-rate mortgages, variable-rate mortgages, and hybrid mortgages. Consult with your Mortgage Broker to determine which type is best for your financial situation.

    STEP 4: Start Your Home Search
    With your budget and pre-approval in hand, it’s time to begin your home search. Ontario offers a wide range of housing options, from single-family homes to condos and townhouses. Consider your lifestyle, preferences, and future needs when searching for the right property. Here are some tips for finding your ideal home:

    • Hire a Realtor: Working with a qualified real estate agent can make the home-buying process more manageable. Realtors have local knowledge, access to property listings, and negotiation skills that can be invaluable.
    • Create a Wish List: Make a list of must-have features and preferences for your future home, such as the number of bedrooms, location, proximity to schools or public transportation, and any specific amenities you desire.
    • Research the Neighborhood: Explore the neighborhoods you’re interested in to ensure they meet your needs. Consider factors like safety, local amenities, schools, and commute times to work.
    • Attend Open Houses: Visit open houses and schedule private viewings to get a feel for different properties. Pay attention to the condition of the home, the neighborhood, and any potential issues.

    STEP 5: Make an Offer
    Once you’ve found the perfect home, it’s time to make an offer. Your real estate agent will help you prepare a written offer that outlines the purchase price, any conditions, and the closing date. In Ontario, it’s common to include conditions such as a home inspection and financing approval. The seller can either accept, reject, or counter your offer. Here are some key points to keep in mind during this process:

    • Negotiate Wisely: Be prepared to negotiate with the seller to reach a mutually agreeable price. Your real estate agent can provide guidance on the negotiation process.
    • Include Contingencies: Including contingencies in your offer, such as a financing condition, can protect you in case unexpected issues arise.
    • Deposit: When your offer is accepted, you will need to provide a deposit, typically held in trust by the seller’s brokerage. This shows your commitment to the purchase.
    • Home Inspection: Consider arranging a professional home inspection to identify any potential issues with the property. You can use the inspection report to negotiate repairs or a reduction in the purchase price if needed.

    STEP 6: Secure Financing
    With an accepted offer in hand, it’s time to finalize your financing. This involves working closely with your Mortgage Broker to complete the application process. Be prepared to provide updated financial documents, and ensure that all conditions in your offer, such as financing approval, are met. Your Mortgage Broker will then arrange for a property appraisal to determine the home’s value.

    STEP 7: The Legal Process
    The legal process of buying a home involves several important steps:

    • Hire a Real Estate Lawyer: You’ll need to hire a real estate lawyer to handle the legal aspects of your home purchase. They will review the purchase agreement, conduct a title search, and ensure that the property has no outstanding liens or issues.
    • Land Transfer Tax: In Ontario, you’ll need to pay a land transfer tax when you buy a property. The amount depends on the purchase price and other factors. First-time homebuyers may be eligible for a rebate.
    • Closing Costs: Your lawyer will provide you with a statement of adjustments that outlines the closing costs you need to cover. These costs may include property taxes, utility bills, and legal fees.
    • Property Insurance: You will need to arrange for property insurance to be in place at the time of closing.

    STEP 8: Finalize the Deal
    As the closing date approaches, you and your lawyer will work together to ensure all necessary paperwork is in order. This includes signing the final documents, transferring funds to cover the purchase price, and closing costs, and conducting a final walkthrough of the property to ensure it’s in the agreed-upon condition.

    STEP 9: Closing Day
    Closing day is the culmination of the home-buying process. On this day:

    • The seller’s lawyer transfers the property’s title to your name, and your lender provides the funds for the purchase.
    • You’ll receive the keys to your new home, and the property officially becomes yours.
    • Your lawyer will register the transfer of the property and pay any outstanding fees, including land transfer tax, if applicable.
    • Your lender will set up your mortgage payments as per your agreement.

    STEP 10: Move In & Settle In
    Congratulations, you’re now a homeowner! After closing day, it’s time to move into your new home and settle in. Here are some essential steps to consider:

    • Utilities: Ensure that you transfer or set up utilities such as electricity, water, gas, and internet in your name.
    • Change of Address: Update your address with important institutions such as your bank, employer, and any government agencies.
    • Home Maintenance: Begin regular maintenance tasks to keep your home in good condition.
    • Enjoy Your New Home: Take the time to explore your neighborhood and make your new house feel like home.

    Buying your first home is an exciting and rewarding journey. By following the steps outlined in this comprehensive guide, you can navigate the process with confidence. Remember to establish a realistic budget, obtain mortgage pre-approval, work with a real estate agent, and conduct thorough research to find the right property for you. With careful planning and the support of professionals, you’ll soon be enjoying the benefits of homeownership in this beautiful province.

  • Interest Rate Hikes: How it Could Impact Your Finances

    Interest Rate Hikes: How it Could Impact Your Finances

    What is the policy interest rate?
    The policy interest rate is the fixed interest rate set by a financial institution for a country or group of countries. This determines how much it will cost to borrow money from a central bank. In our case, the Bank of Canada is the one that is regulating, among other things, the country’s economic activity. Once the Bank of Canada sets the policy interest rate, other financial institutions use it to set the interest rate on a variety of loans (personal, mortgages, etc.) offered to clients. The current increase is an attempt to counteract inflation, which is rising in Canada and the US.

    What is inflation?
    Inflation is an overall increase in the average price of goods and services. When inflation is low and predictable, it means that the economy is doing well, and the overall value of money is stable. Long story short, it means you have more money in your pocket.

    When inflation is too high, consumers, businesses and investors lose purchasing power. This means overall economic development suffers. When this happens, the Bank of Canada will usually step in with a policy interest rate hike to try and stabilize the economy.

    How does an increase in the policy interest rate affect my finances?
    Most people will be affected by a policy interest rate increase. This means that they’ll pay more interest on their loans. Households and businesses are more likely to reduce their expenses when this happens. Demand for goods and services is expected to decline and their prices may stabilize in the future:

    • New homebuyers may have to pass a mortgage stress test at a higher rate. Currently, the mortgage stress test is at the higher of 5.25%, or the mortgage rate plus 2%.
    • If you have a variable rate mortgage, your monthly payments will increase. Fixed rate mortgages will only be affected when you renew.
    • This could be an opportunity to make new investments. While the market is down right now, it could be the right time to buy low on interesting stocks. Also, investments such as GIC’s or bonds see their interest rates rise in a period of rising rates.
    • If your mortgage term expires in less than 6 months, an early renewal may be the key to helping you secure a lower rate before the next rate increase without penalty. If your term expires in more than 6 months, you’ll need to consider the penalty fee when making a decision on early renewal.
    • While food, gas, and furniture cost more than this time last year, now’s the right time to readjust and evaluate your budget.

    Policy interest rate hike: do I need to review my financial plans?
    If there’s a policy interest rate hike, take some time to think about your current projects and future plans, and make informed decisions. You might save money by postponing a major project rather than tackling it now. Alternatively, now be the time to consolidate your debt and get your ducks in a row before rates increase further.

  • COVID-19: Should You Buy a Home Now, or Wait?

    COVID-19: Should You Buy a Home Now, or Wait?

    Housing markets across the country are changing swiftly—but with interest rates at historic lows, this might be a good time to buy.  Here are all the factors to consider.

    It almost goes without saying that COVID-19 has had a far-reaching impact on the Canadian economy and healthcare system in the first half of 2020. As expected, the spring housing market was much cooler than 2019, with the Canadian Real Estate Association (CREA) confirming that May 2020 recorded the lowest volume of sales in May since 1996.  Despite the significant drop in sales volume due to the pandemic, though, national home prices remained relatively stable.

    After a quiet April, market activity began to pick up in local housing markets across the country in May: more buyers resumed their home searches, and more sellers began to list their homes. With more home buyers and sellers hopping off the sidelines, housing competition is starting to heat up in many regions.  In Toronto and Vancouver—Canada’s largest markets—demand and supply were evenly matched in May, whereas in Southern Ontario markets like Ottawa and Hamilton-Burlington, buyers faced ever fiercer competition for available homes than last year.

    Given how swiftly conditions have changed and continue to evolve in housing markets across the country, prospective home buyers may be wondering: Is now a good time to jump into the market?  Perhaps.  With interest rates at historic lows, if you are able to buy and hold a home for the medium to long term, this might be a good time to buy.  Here are all the factors you should consider as you make your decision.

    Account for your finances and your lifestyle needs.

    For many Canadians, finances are just one part of the story, and the decision to buy a home often goes beyond the dollars and cents.  To put it simply, people need to make changes in their lives and move—regardless of whether there is a pandemic or not.  If you have done the math and are confident about your financial ability to carry a new home, this is a great opportunity to take advantage of low interest rates.

    Consider why you want to buy in the first place.

    Perhaps you’ve had a relationship or family change; a divorce or a baby on the way are common reasons people choose to move.  Alternatively, do you want to be closer to family, in a good school district, or have better transit access?  If you started planning a move before the pandemic, consider whether and how COVID-19 has altered these priorities.

    Once you’ve determined why you need to move, consider how your lifestyle needs may evolve.  After all, you will be living in the home you purchase for at least a few years, so you need to think about whether the home you buy is a fit for your needs both today and tomorrow.  If you can find what you want, in the location you desire, and are comfortable living there for at least five years, take the leap.

    Get local with market data.

    When you’ve made the decision to move forward with a home search, you’ll likely turn your attention to how the housing market is performing.  After all, buying a home is a major personal commitment, and also one of the biggest financial investments most people will make.  With everything going on, in addition to sales updates from national and local real estate boards, a number of Canada’s most established financial institutions, economists and housing corporations have attempted to predict the size and duration of the impact of COVID-19 on the housing sector.

    While high-level data from real estate boards and financial institutions can provide valuable perspective on how the housing market is performing at the macro-level, real estate is hyper-regional, and in many respects, local.  The type of property, the neighbourhood you’re interested in, and your budget will all play a role in the level of competition you’re likely to face and ultimately the price you can expect to pay.

    Working with a real estate agent you trust is one way to cut through the noise and understand how far your dollar will go in real estate based on your situation and your needs.  A good real estate agent acts as a trusted expert who can provide you with the facts, data and insights that are most relevant to your purchase decision, so you can make an informed choice that you are comfortable with now and in the future.

    Remember that real estate is a long-term decision.

    Finally, remember that real estate is a long-term investment.  If you are looking to make short term, speculative investments, this is a particularly risky time to do that in real estate.  Further, churning real estate has real costs that eat into any sale price, which include but aren’t limited to land transfer taxes, realtor professional fees and moving costs.

    Once you’ve carefully weighed your personal needs against your financial appetite and obligations and have also considered the context of the real estate market in your area, take the plunge if you’re confident that everything lines up.  If you can buy and hold for the long term, there are some great pockets of opportunity out there.