Personal Finance

First time home buyer advice

  • Last Updated:
  • Mar 15th, 2011 9:17 pm
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Deal Addict
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Dec 26, 2010
1736 posts
776 upvotes
Calgary

First time home buyer advice

not
9 replies
Deal Guru
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Jun 26, 2005
10111 posts
1966 upvotes
Toronto
Save as much as you can. Seriously. Stop going out for dinners (or reduce it), drop your internet, tv, cell to the lowest plan you can stand.

You sound like you are already pretty well off compared to others with debt.


Then buy where it is a GOOD LOCATION. 3 rules of real estate: LOCATION, location, location


Condo will let you live in a better location that is convenient. Where a house would cost almost double the condo price.
Deal Addict
Nov 24, 2004
4664 posts
1242 upvotes
Toronto
wm009 wrote: His advice to me was to save up my minimum down payment (5%) as fast as I could and buy as fast as I could because prices were heading up. And I believe this was based on December or January data. I don't know if that is going to be a trend or if it is something safe to say with a city like Calgary. I have a suspicion that prices will be choppy all year long, but who the hell knows.

My impression was that Calgary prices are already a few years past their peak.

http://cuer.sauder.ubc.ca/cma/data/Resi ... algary.pdf

It may be worthwhile to keep saving a larger downpayment and see where the market is when you have 20% saved. Having a 20% down-payment will save you tens of thousands of dollars in mortgage insurance and interest over the long-term.
Deal Addict
Oct 30, 2008
2120 posts
59 upvotes
Toronto
If you have little to no debt and verifiable income, a 5% down mortgage may work. But I wouldn't buy into all the hype about ownership these days. While owning a home certainly has its benefits, it's much easier to afford it when you have a spouse and both of you share the expenses through multiple income streams. As mentioned by others, home ownership does come at a premium compared to renting (mortgage payments, property taxes, maintenance, condo fees if applicable, utilities, etc.) and for the first few years you're not exactly building much equity as most of your payments cover the interest portion of the loan (unless you make additional prepayments). That's why it's recommended to save as much as you can. You will save a lot of money in the long run by putting down a bigger down payment.
Lior Hershkovitz
Broker at Mortgage Edge, specializes in construction financing and private lending
Construction rates start p+2.5%, 2nd mortgage start 5.99%, private financing start 7% max. 95% LTV
Deal Addict
Jan 28, 2009
2013 posts
613 upvotes
Calgary
Hi there, I bought a house in Calgary in march. Prices aren't going up anytime soon. Interest rates are going to jump and prices will DROP.

Stay where you are and save up 20% downpayment.
Sr. Member
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May 17, 2007
744 posts
147 upvotes
Toronto
wm009 wrote:
I have another question to throw out there. I've had my bank account through PC Financial for a few years now. I know that they offer mortgages, but they may not offer the most competitive ones. I'm curious if I need to develop a relationship with a real bank for the sake of a mortgage? I was basically thinking of opening an account at one of the bigger banks, keeping it flush with cash and using them.

Thanks for all the replies. This is all very helpful.
I just bought a place myself. I've only banked with PC Financial but found that all the banks were willing to offer me the same rates. I think it comes down to how attractive you are to the lenders. By the sound of it you probably have very good credit and make a very good annual Salary. Shop around for your rates but what I think is more important than the actual rates is the flexibility of the mortgage.

In terms of buying/renting you've done your analysis and it looks like there is a pretty large savings with renting. Would you not be able to buy a place and have a roommate as you were expecting to do when you were renting?

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