The cost of living has been a major concern for many Canadians, especially in recent years. And nothing quite compares to the prices of houses these days! People lucky enough to have some equity have a little more breathing room, but what about the first-time buyer?
Certain Canadian cities may make you feel as if buying a home will never be possible. But take heart, because here comes Edmonton to the rescue! Our low cost of living is the envy of the nation, which also comes with a fun and dynamic lifestyle that people of all ages can fall in love with.
If you’ve got your sights on buying your first home, here’s everything you need to know about achieving that milestone in Edmonton.
Do you want even more details on buying a house in Edmonton? Learn what to look for, what to avoid, how to create a compelling offer, what to expect during the closing process, and more in our comprehensive Buyer’s Guide. Download your copy for free right here.
When Should You Buy Your First House?
Buying a house can be intimidating, especially when you’ve never owned one before. It requires time, knowledge, and a sum of money that might make you gasp with shock. This is one part of “adulting” that none of us are ever quite prepared for.
Over the years, housing prices have increased everywhere, even in my home city. There is a bright side to this situation, though. Once you own a house, higher prices become something to celebrate, not dread. That’s because every time real estate values rise, so does your equity.
One of the best pieces of advice I heard early from my mother (who was my inspiration as a successful real estate agent), was to get into the market as soon as you can, any way you can.
Once you’ve got your first house, other options will open up to you.
For many buyers, it could mean starting out with a small condo. It might not be everything you ever dreamed of in your new home, but it doesn’t have to be. As prices rise, you gain more purchasing power.
After you’ve been in the market for a few years, you’ll be in a better position to buy your dream home. Think of it this way. Real estate prices will inevitably rise. If you don’t own a house, it’s to your detriment. If you do, it works to your advantage. Today, you’re taking your first step!
Work With a Real Estate Agent
It surprises many people that there are often no fees associated with working with a real estate agent to buy a house. Just remember that it’s generally the seller who pays the commission, which means you could benefit from advice, guidance, and endless support – with no out-of-pocket expenses.
A real estate agent has a fiduciary duty to serve your interests as a client. When buying, this means diving deep to uncover suitable listings and then working hard to secure the best price and terms.
You’ll avoid houses that are hiding serious problems while being able to quickly spot a hidden gem. One insider tip is to look for a house that you will be able to sell. This may feel a little premature when you haven’t even bought yet. But it’s a great way to know if you’re making a high-value purchase.
Quick plug: if you work with me, you’ll also get access to my vast network of service providers all over the city. If you need a professional mover, a lawyer, a mortgage broker, or a general contractor, I know just the person!
Are you looking for more support in buying your first home? Here are just a few more ways I can help:
Prepare to Get Financing
As intimidating as the purchase of your first house may be, it’s nice that you can break it down step-by-step. It all gets easier and more streamlined when you see that there is some logic behind all the chaos.
One of your first steps is to figure out your finances. First, you’ll set aside what you plan to use as your down payment. In Canada, the minimum down payment requirements are as follows:
- 5% on the first $500,000, which works out to $25,000. In Edmonton, first-time buyers can find a house for that amount or less, particularly in the condo market.
- If you do buy a more expensive home, you’ll need 5% on the first $500,000, then 10% on any remaining amount up to $1.5 million.
- For any amounts in excess of $1.5 million, you need 20%. (That would be quite the opulent home for a first-time buyer!) Note: a 20% down payment also means you can avoid mortgage insurance.
With your down payment safely set aside, you can now get pre-approved for your mortgage. This lets you know how much a lender is willing to provide so you can create a realistic budget for your purchase.
Why choose Edmonton for your first home? Find out in Edmonton Versus Toronto: Where to Buy Your First Home.
Take Advantage of Government Programs for First-Time Buyers
Saving for your first home can seem daunting. Fortunately, there are also several government programs in place to help you get into the market – hopefully sooner rather than later.
The First Home Savings Account: Starting at age 18, you can open an investment account just to save for a house. You can contribute as much as $8,000 per year to a maximum of $40,000. Any profits from your investment can also go toward your home. The sooner you start saving, the more this resource will benefit you. There’s also nothing to repay after your purchase.
Home Buyer’s Plan: If you’ve already been saving toward your retirement, you can divert some of those funds to buy your first home. The Home Buyer’s Plan allows you to withdraw up to $60,000 for your down payment. Are you buying with a partner who is also a first-time buyer? You can both take advantage of the program and have $120,000 to put toward your home. You will need to repay any amount you withdraw within 15 years to avoid a tax penalty.
First-Time Home Buyer’s Tax Credit: You can claim a credit of $10,000 when you do your taxes in the year you buy your home. This reduces your total amount owing by $1,500 and can result in a refund depending on how much you have paid in taxes.
City of Edmonton’s First Place Program: The cost of land is a significant factor in the purchase price of a home. Edmonton has a unique plan in place to address the needs of first-time buyers. Under this program, you can apply for a 5-year land cost deferral on a townhouse built on surplus school sites.
Are you ready to further explore the exciting world of homeownership in Edmonton? Send me an email at jolene@jolenelangelle.com or give me a call at 780.910.1317 today to chat about the possibilities.
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