If you are a first-time Toronto home buyer, you must be wondering how to finance your first place. With the cost of renting nearly on par with actually buying a home, saving for a downpayment can be challenging. Since you need to put down a minimum of 5% for a high-ratio mortgage, you’ll need to figure out based on your income, ability to save and desire to own property and your timeline for getting into your own place, then it’s a matter of building a strategy.
The best way to determine what you can afford and how quickly you can raise a downpayment for your first place is by creating a realistic budget and projecting how much you can save every month and how much that will total in one year. Next you have to figure out if you want your first place to be a condo or a single family dwelling as that will definitely impact the price of the property you will buy and how much you will need to save for the down payment.
Several factors will affect how much your first property will cost – property type, location and condition. Generally the further out from the city, the lower the cost. Condos will be less expensive than townhouses, which in turn are less costly than detached homes. Resale properties also tend to be more affordable than new ones.
If you want to move into your own place as soon as possible, then set your house-hunting budget at a modest amount – say something under $300K. It will mean a down payment of $15K. If you can only save $5000 a year, then it will take you 3 years to gather the money. If you can save more, then it will be less. However, keep in mind that you will also need to save up the closing costs, which tend to run another $5,000-$15, 000 due to notary fees, welcome taxes, back taxes, insurance, etc…
Financing your first home is always the toughest part – but after that moving up is simple as you can draw on the equity of your existing property to fund your next home. As long as you are disciplined and have a goal in mind, you can make your dreams of home-ownership a reality.
The best way to determine what you can afford and how quickly you can raise a downpayment for your first place is by creating a realistic budget and projecting how much you can save every month and how much that will total in one year. Next you have to figure out if you want your first place to be a condo or a single family dwelling as that will definitely impact the price of the property you will buy and how much you will need to save for the down payment.
Several factors will affect how much your first property will cost – property type, location and condition. Generally the further out from the city, the lower the cost. Condos will be less expensive than townhouses, which in turn are less costly than detached homes. Resale properties also tend to be more affordable than new ones.
If you want to move into your own place as soon as possible, then set your house-hunting budget at a modest amount – say something under $300K. It will mean a down payment of $15K. If you can only save $5000 a year, then it will take you 3 years to gather the money. If you can save more, then it will be less. However, keep in mind that you will also need to save up the closing costs, which tend to run another $5,000-$15, 000 due to notary fees, welcome taxes, back taxes, insurance, etc…
Financing your first home is always the toughest part – but after that moving up is simple as you can draw on the equity of your existing property to fund your next home. As long as you are disciplined and have a goal in mind, you can make your dreams of home-ownership a reality.
