When you’re looking for mortgages in Burlington, Ontario,
there’s more to do than just call a lender. You should go into the meeting
knowing how much you can afford each month and how much you have as a down
payment if it’s your first mortgage.
The Home Buyers’ Plan for Canadians
Before you start shopping for mortgages in Burlington, you
should check to see if you qualify for the government’s Home
Buyers' Plan (HBP). This plan for first-time home buyers lets you and your
partner withdraw up to $25,000 each from your RRSPs—tax-free. That’s a total of
$50,000 that you can put toward a down payment for your Burlington home.
You’ll need to repay the money within 15 years after
withdrawing it from your RRSP. Your repayments start at the beginning of the
second year after your withdrawal. Failure to repay in a given year results in
the unpaid funds being added to your income for the year. That means you’ll pay
taxes on the money.
Consider whether the HBP is the right plan for you. If it
will help you reach a down payment of at least 20% of the house’s value, then
you can avoid mortgage default insurance. This can save you thousands over the
course of your mortgage. However, by taking the money out of your RRSP, you’re
missing out on the growth that the money could see if it’s left in your
account.
Your Mortgage and
Refinancing Options
If you’re having trouble making your current mortgage
payments or paying for your child’s education, you should consider a second or
third mortgage on your home. The equity you’ve built up in your Burlington home
can help you secure a mortgage with a lower interest rate than many personal
loans. It can be a low cost way to consolidate debt, pay for home renovations,
pay tax arrears, or find the down payment for a cottage. If you’re carrying a
high credit card balance, this may be the right option for you.
You may also want to consider if it’s time to
refinance your mortgage.
Refinancing a mortgage means taking out a new mortgage to pay off the existing
one. It can save you money if you get a lower interest rate or a shorter
amortization period. You can also use it to increase your cash flow with lower
monthly payments or a longer amortization period.
Pre-Approval for Your Burlington Mortgage
Before you start your house hunt, it’s worth seeking
pre-approval from your lender. This lets you know the maximum you can spend on
your house so you can stay within your limit.
It also locks your lender into the current interest rate. If
the rate goes up, you’re protected for two or three months. If it goes down,
your lender will likely offer you the lower rate.
Before you start exploring mortgages and house hunting in
Burlington, it’s important to understand how much you can afford and the
difference a higher down payment can make.