Valley First

First Time Homebuyer Tips

Taking the pain out of home buying

With house prices in the Okanagan among the steepest in Canada, it may seem like home ownership is a far-fetched dream for many 20- and 30-somethings. However, with interest rates currently sitting near record lows, Valley First experts say it may be the right time for first-time home buyers to join the market.

“Entering the housing market is daunting,” says Loren Hawkins, manager of mortgage development at Valley First. “There are so many factors to consider. From saving for a down payment to figuring out how much you can afford, to understanding the costs associated with home ownership. However, with careful financial planning, patience and research, home ownership may be a lot closer than people realize.”

It may seem like an overwhelming task, but as with any big purchase, Hawkins states the first step to home ownership is to save for the down payment. While it may be tempting to take advantage of current low rates by putting down the minimum possible, Hawkins cautions that is not always the best solution.

“The larger the down payment you make, the smaller your mortgage will be and the less interest you’ll pay over the term of your mortgage. If you have a large savings goal, like a down payment, pay yourself first. Before spending any of your pay cheque, transfer a set amount into a savings account that way you’re not tempted to spend the money. You’ll be surprised how quickly it adds up.”

First-time home buyers can also take advantage of a one-time opportunity to withdraw up to $25,000 from their RSPs to finance their home purchase and use those funds to offset a down payment or to help with other closing costs.

Hawkins also says while it may seem obvious, it is important to remember to buy only what you can afford today, and in the future when the inevitable interest rate increase arrives.

“All home buyers should meet with a financial professional to help them identify all the costs associated with home ownership,” says Hawkins. “Generally, your monthly housing costs should not exceed 35 per cent of your gross monthly income. While you may be able to afford that today, you should also understand the impact of interest rate increases.”

Beyond the initial purchase price of a home, there are many other costs people need to consider such as inspections, appraisals and legal fees, tax adjustments and applicable.

“Buying your first home can be both exciting and intimidating,” says Hawkins. “There is a lot to learn and there are many big decisions involved. Many credit unions, like Valley First, will work with you to take the worry out of home financing and give you the information you need to make an informed decision and take that first step towards home ownership.”


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