Are you a First time Home buyer in 2020? Check these tips to buy your first House in Canada!

We all know how difficult it's getting for First Time Home Buyers to secure their own Home in Toronto. Considering the fact that Bank Rates are now going down this will even take the property prices to sky. 

In this article, I will share with you some insider tips for First Time Home Buyers which can help you decide whether it's a good idea to buy your first house now or you should wait? 

We will also discuss what criteria should you consider while buying your home and what type of houses are available for the First time home buyers under 500K? Keep reading! 

Read until the end to see what type of properties are available in Brampton under 500K in today's market?

First Time Home Buyer

Save for Down Payment or Buy what you are getting today?

Every day it's getting harder and harder for the First Time Home Buyers to secure a decent mortgage amount from the banks in Canada and on the other hand, it's even harder to save for down payment (which is now around 20%).

Every year buyers try to save as much as they can for their down payment but every year house prices are also going up by almost 5% which makes it very hard for any average earning First Time Home Buyer to catch up.

There are thousands of people who are actually trying to save for their down payment but still can't catch up with the roaring prices here in the City of Brampton or the whole Toronto Area for that matter.

Now the question is whether the buyers should keep saving for the down payment and wait until they have enough down payment to buy the house they call it their dream home or just get what they are capable of getting today for the money they have right now.

Because if they decide to wait for 2 years to buy their dream home then they should also consider the fact that the house they are eyeing for today will not be the same price in the next 2 years and they will need more down payment for the same. so, the cycle keeps going on...

So, looking at the bigger picture its best to just buy what you are able to get today under your affordability and capability. Otherwise, this vicious cycle of saving downpayment and home prices is never gonna end.

Freehold vs Condo Townhouse?

Once the First time home buyer decides that he is going to buy a reasonably priced home now instead of waiting to save down payment. Now the question arises what type of property should they consider?

Mostly the available options for First time home buyers are A Condominium, Condo-Townhouse or Freehold Townhouse because these types of houses are some of the least priced properties in the market. Let's see what is the difference between these?

What is a Condominium?

First Time home Buyer
Condominium Building
A Condominium also called "Condo" is a type of home (like an apartment) where you own a single unit inside a single building with multiple units owned by individual residents. Condos can be of different sizes but they share the walls with other units. 

Residents of condos are responsible for only their interior elements like kitchen faucets, washroom tubs, sinks, etc but the exterior elements like the hallway, reception area, mailbox area, entry system, gym, and pool are taken care of by the Corporation of the building which is responsible for the building. For this maintenance, the residents have to pay monthly fees to the Corporation. That is the reason the condos always come with a "maintenance fee" that is an expense to the residents for the cost of the common elements they enjoy living in the condominiums. 

Some people take these shared elements as a benefit for them because they are not responsible for any external maintenance like snow shoveling, lawn mowing, etc. But, some take it as a disadvantage of additional fees to their monthly expenses. 

Now, It is purely a personal choice to buy a condominium. Usually, the condominiums are smaller in size as compared to individual houses and that's why their price range is also less. Which makes it a good choice for First Time Home Buyers to consider buying a Condo.

What is a Townhouse?

A Townhouse is a single-family home that shares one or more walls with other houses in a row. It is an independent house with all the levels of the house owned by the same owner but the walls are shared with other units. Townhouse prices are usually more compared to condominiums but less than the semi-detached and detached. For the sake of this article, we are only covering Condominiums and Townhouses as an option for first time home buyers. 

First Time home Buyer

There are 2 types of Townhouses: Condo Townhouse and Freehold Townhouse

Condo townhouse has some monthly maintenance fee attached to it and the owners have to keep paying this fee forever as long as they own the house. This fee usually increases as the house gets older because the cost of maintenance increases with age.

In return to this fee, the townhouse corporation takes care of the external components which include common areas on the property, parking spaces, and the yard, etc. Before buying a Condo townhouse its the responsibility of the homeowner and ultimately the buyer's realtor to check about the townhouse corporation, how much will be the monthly fee and what is covered under this fee. 

Freehold Townhouse is the same as Condo Townhouse except that the owner is responsible for all the internal and exterior components of the house. There is no monthly fee attached to this type of house. The houses are still row-houses and may share the exterior walls with other units in a row. 

First Time Home Buyers can consider either of the 2 types based on their personal preferences whether they want to take care of all the components themselves and save the monthly fee or they are okay with paying a monthly fee to the corporation for which they can avoid the pain of taking care of external components. 

Old vs New Home? 

Some buyers think that it's not worth buying an old house as there will be more costs associated with the maintenance of the house. Well, to answer that query we can take a small example.

For example, if you buy an old house in Brampton or GTA area and then if you spend around 25K to 50K on that house you can make it look like a new house. If the same 50K is added to the price of the house then you will have to check if you will still qualify for the mortgage from the bank or not with additional 50K. And that qualification criteria adds a risk here. 

For renovating or upgrading any old house you can later borrow money from your Line of credit or Renovation loans available from the Government based on your choice. Every home buyer should understand this math because there are many buyers who wouldn't buy a small or old house just because they think it's not worth investing in that house and that will cost more to maintain that house. Which fortunately or unfortunately it is not correct.

Think Investment!

Talking about investment, Mortgage Rates are historically low based upon further rate cut from Bank of Canada on 04 March 2020. You can read more about it here: Bank of Canada Rate Cut

Any investment done under this rate would never be a loss because universally, the value of money goes down with time. So, First Time Home Buyers Act Now and secure a home today for what you can qualify for today rather than waiting for saving a decent amount of down payment for the higher-priced houses. 

Find Properties under 500K in Brampton for First Time Home Buyers:

Click the link below to see all the latest properties in Brampton under 500K.

           Brampton Properties under 500K

Leave a comment below if you want me to cover any more Real Estate related topics and information in the future?
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