A Few Tips on Buying Your First Home in Mississauga
If there are two things a lot of young people are thinking about, it’s networking and homebuying (especially since homebuying has been a hot and fraught topic for months now).
While it’s difficult to purchase a home in this climate, it’s not impossible—and an interesting networking event that just took place attempted to help people gather the tools they need to purchase property.
As for networking, Insauga recently published “Top 5 Networking Events for Young Professionals in Mississauga.” Networking is an important tool for young professionals in Mississauga. We are always seeking new connections, taking advantage of new opportunities, and building relationships to improve our professional and personal lives.
While the five events profiled are indeed noteworthy, that isn't to say there aren't other networking events in Mississauga. You just have to know where to look, or know the right people that could get you connected.
Unless you're a very niche group like the Institute of Engineers, chances are you will have a hard time finding a focus at a networking event and getting something concrete from the use of your time.
But there are networking groups that host seminars about certain topics that are relevant to young people with the intent of providing some meaningful topics of conversation for those who attend in between networking. Last week, the Mississauga Chinese Business Association (MCBA)'s Young Professionals chapter held a networking event and information seminar this past week at the 3 Brewers at Heartland Mississauga.
The seminar was focused on the topic of being a First Time Homebuyer, presented by Lawrence Wong, a consultant with Investors Group. As a young person, buying your first home can be stressful, time consuming and difficult—especially in a red hot housing market like in the GTA. With Mississauga recently being named the third most expensive city in Canada, getting some solid, general information about first time homebuying is rather crucial for a young professional looking to plant stable roots in Mississauga.
Wong's seminar consisted of some basic information outlining what to do about buying a home for your first time. Here are some general takeaways from Wong's presentation:
Who could be considered a "First Time" homebuyer?
First time homebuyers must be residents of Canada, whether as citizens or permanent residents. They must have intentions to buy a home, build a home, or enter into an agreement to do either of those things.
They must also have never used the Home Buyers Plan (HBP) before—meaning neither they nor their spouse have purchased a home since January 1, starting four years ago. Finally, the last criteria is that they plan to occupy the home they are about to purchase (meaning the home will serve as their primary residence).
I thought this last point was very telling. Confirming that you intend to have the home as your primary residence is more likely due diligence on the part of the industry; they need to confirm that you are actually going to live in that home and not use it to rent out to tenants, or keep it vacant for whatever purposes.
Who can qualify for a mortgage?
In order to qualify for a mortgage in Canada, you need a credit score of at least 600. Also, as recently announced by the federal government, you now need to pass a minimum stress test if your mortgage rate was at the Bank of Canada's 5-year fixed rate (the recent rate last checked by Wong was 4.64 per cent as of March 15).
Wong also offered a general rule of thumb: a qualifying mortgage is four times your annual income, if you're looking to do an approximate estimation of how much you need to pony up.
Build a team around you
Wong advised that in order to be a successful first time homebuyer, you should surround yourself with a team of experienced professionals who can guide you to make the right decision. Having a real estate agent is a no brainer; they know the ins and outs of the market and can research the neighbourhoods that best suit your needs. Agents can also advise you on pricing. There is also the benefit of having a good real estate lawyer; someone who can spot unfair deals and advise you on how to structure your offer. A lawyer can also let you know what conditions you should include in your offer, such as whether to strip out home inspections or not.
Speaking of home inspections, Wong also advises that you should actually get home inspectors as part of your team, in order to properly examine the home you're looking at to ascertain any problems or issues in the home itself. And finally, having a good financial planner doesn’t hurt either. A financial planner acts as the "quarterback" of your team. They are the ones that plan everything and link up with the other "players" to work together for the client's benefit.
A good financial planner would:
Create a plan to help you efficiently accumulate a down payment, balancing risk and return; efficiently withdraw funds to reduce or avoid tax to buy your home; and help you sustain your home ownership financially after the purchase.
Work with a mortgage specialist to make sure you have the right mortgage that meets your needs and has the features you want so you can pay it off sooner.
Create a plan to protect you and your ability to continue contributions to your down payment, and after the purchase, to the financial obligations of home ownership should anything happen to your or our spouse.
Overall, the takeaway points are that while there is a lot of information to absorb, the main thing one can do is to get a team of seasoned professionals to help you out in making the right decision. Buying your first home really is a team effort, and coming to networking events like the one hosted by the MCBA's Young Professionals chapter is a good way to meet people in various industries, like real estate and financial planning, to help you achieve those life goals.
So, if you need a little guidance, don’t be afraid to assemble a strong team. In this market, millennials need all the help—and expertise—they can get.