The first thing we need to think about is why we are looking to purchase real estate. Here are some of the most common reasons people purchase properties.
Once we decide why we want to purchase property then we need to look at affordability. How much can you afford? What kind of a down payment can you afford? Do you already have property that you will be using the equity from? How much savings do you have to use towards your down payment?
Banks will look at debt vs income. What is your debt ratio? How much do you earn and how much do you spend each month on housing, food, bills, credit card payments, etc.
Most banks like a debt ratio closer to 30% but depending on what the debt is banks could look at a percentage closer to 40%. What that means is that approximately 30-40% of your income goes towards paying bills and housing costs.
The down payment changes depending on what you already own, what kind of property you are looking at – land only, residential/commercial. Typically you are looking at a down payment of 25%. Some buyers can qualify for a minimum of 5% down payment. These lower down payment requirements may come with higher interest rates, higher insurance costs, more factors you may need to qualify for.
If properties are land only you would be looking at anywhere from 40-50% down, depending on what kind of services are available or existing on the property.
If you will be needing a mortgage it’s a good idea to establish a relationship with a bank or lending organization and get pre-approval for a purchase. This way you won’t miss out on any great properties that come on the market. You will already know what you can or cannot afford and it allows you and your Realtor to fine tune your search.
For a quick look to see what you can afford click here.
When you buy a newly constructed home, condominium or townhouse, or land that has been newly subdivided, the entire sale price is GST applicable. There are some GST rebates in place. For information on potential GST Rebates please follow this link
Some common examples of exempt supplies of property and services are: used resi dential housing or land. This means that if a home or property is considered “used residential” then the transaction is exempt from GST.Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it.