{"id":5098,"date":"2018-12-27T20:55:11","date_gmt":"2018-12-27T20:55:11","guid":{"rendered":"https:\/\/www.torontorentals.com\/blog\/?p=5098"},"modified":"2018-12-27T21:27:36","modified_gmt":"2018-12-27T21:27:36","slug":"things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer","status":"publish","type":"post","link":"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer","title":{"rendered":"5 Things You Should Know When Transitioning From a Renter to a Homebuyer"},"content":{"rendered":"\n

When you\u2019re a renter, there are very few things you need to worry about. You only really have to deal with rent, utilities, and insurance. But when you want to become a homebuyer, there are many more things to consider<\/p>\n\n\n\n

Find out how much you can afford<\/strong><\/p>\n\n\n\n

You need to ask yourself: \u201chow much can I afford<\/a>?\u201d For the answer to that question, try using a mortgage affordability calculator<\/a>. Put in your annual salary, monthly debt payments, property taxes, heating costs, and condo fees (if applicable) to get an estimate. Once you have a general idea of what you can afford, you\u2019re going to need to come up with a down payment<\/p>\n\n\n\n

Have money for a down payment<\/strong><\/p>\n\n\n\n

You\u2019re going to need to save money\u2014a lot of money.<\/p>\n\n\n\n

You need at least 5% down in order to buy a home if the purchase price is under $500,000. If it\u2019s more than $500,000, but less than $1 million, you\u2019ll need 5% down on the first $500,000 and 10% down for the portion above $500,000. For example, if the home you want to buy is $600,000, you\u2019ll need to come up with at least $35,000 ($500,000 x 5% = $25,000 + $100,000 x 10% = $10,000). And if the home is costs more than $1 million, you need at least 20% down.<\/p>\n\n\n\n

If you don\u2019t want to pay for mortgage default insurance<\/a> (also known as mortgage insurance or CMHC insurance) for a home that costs less than $1 million, you need a down payment of 20% or more.<\/p>\n\n\n\n

Where you can get a tax-free loan<\/strong><\/p>\n\n\n\n

<\/p>\n\n\n\n

If the down payment amount seems daunting, you\u2019re allowed to make a tax-free withdrawal from your RRSP under the Home Buyers\u2019 Plan<\/a> as a first-time homebuyer.<\/p>\n\n\n\n

You can withdraw up to $25,000 for your down payment. If you\u2019re buying with a spouse or partner, you can each withdraw up to $25,000 for a total of $50,000. You must repay that amount over a 15-year period, but the first payment isn\u2019t due until two years after the money is withdrawn. So if you borrow $22,500, you must make annual payments of $1,500 a year. If you don\u2019t, the amount you don\u2019t pay back is considered taxable income. Also, repayments aren\u2019t considered to be RRSP contributions and they won\u2019t affect your deduction limit.<\/p>\n\n\n\n

Have a good credit score<\/strong><\/p>\n\n\n\n

As a renter, your landlord may have checked your credit score. As a potential homebuyer, a low score may prevent you from getting a mortgage. However, a high score can help you get a great mortgage rate whether you\u2019re a first-time homebuyer in Ontario<\/a>, a first-time homebuyer in B.C.<\/a>, or anywhere in Canada for that matter.<\/p>\n\n\n\n

If you want to improve your chances of getting a mortgage, it\u2019s best not to apply for a credit card or line of credit right before or during the mortgage application process. Trying to get additional credit may have a negative impact on your score.<\/p>\n\n\n\n

Prepare for a stress test<\/strong><\/p>\n\n\n\n

As a homebuyer, you have to undergo a mortgage stress test<\/a>. You must qualify at either the Bank of Canada\u2019s five-year benchmark rate (currently 5.34%) or your lender\u2019s rate plus two percentage points\u2014whichever is higher. For example, if your lender offers you a rate of 3.59%, you\u2019ll have to qualify at 5.59% (3.59% + 2%).<\/p>\n\n\n\n

This stress test is to help make sure you can afford your mortgage in the event rates rise, but it could also hurt your ability to get a larger mortgage. The rules don\u2019t apply to all credit unions so you may want to consider getting a mortgage from one of them instead.<\/p>\n\n\n\n

The bottom line<\/strong><\/p>\n\n\n\n

Making the transition to a homebuyer from a renter may seem daunting. However, you don\u2019t need permission from your landlord to make any changes and you can do whatever you want to the property you live in. Best of all, you don\u2019t have to pay someone else\u2019s mortgage.<\/p>\n","protected":false},"excerpt":{"rendered":"

When you\u2019re a renter, there are very few things you need to worry about. You …<\/p>\n","protected":false},"author":26,"featured_media":5104,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,6],"tags":[],"coauthors":[220],"class_list":["post-5098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-rental-guides","category-top-list"],"yoast_head":"\n5 Things You Should Know When Transitioning From a Renter to a Homebuyer<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"TorontoRentals.com Blog\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\"},\"author\":{\"name\":\"TorontoRentals.com Blog\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/#\/schema\/person\/53503b1c0fd1a6bc186b273abbee8d44\"},\"headline\":\"5 Things You Should Know When Transitioning From a Renter to a Homebuyer\",\"datePublished\":\"2018-12-27T20:55:11+00:00\",\"dateModified\":\"2018-12-27T21:27:36+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\"},\"wordCount\":665,\"image\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.torontorentals.com\/blog\/wp-content\/uploads\/rawpixel-1053187-unsplash.jpg\",\"articleSection\":[\"Rental Guides\",\"Top List\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\",\"url\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\",\"name\":\"5 Things You Should Know When Transitioning From a Renter to a Homebuyer\",\"isPartOf\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.torontorentals.com\/blog\/wp-content\/uploads\/rawpixel-1053187-unsplash.jpg\",\"datePublished\":\"2018-12-27T20:55:11+00:00\",\"dateModified\":\"2018-12-27T21:27:36+00:00\",\"author\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/#\/schema\/person\/53503b1c0fd1a6bc186b273abbee8d44\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#primaryimage\",\"url\":\"https:\/\/www.torontorentals.com\/blog\/wp-content\/uploads\/rawpixel-1053187-unsplash.jpg\",\"contentUrl\":\"https:\/\/www.torontorentals.com\/blog\/wp-content\/uploads\/rawpixel-1053187-unsplash.jpg\",\"width\":4000,\"height\":2754,\"caption\":\"house keys new home\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/things-you-should-know-when-transitioning-from-a-renter-to-a-homebuyer#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Toronto Rentals Blog\",\"item\":\"https:\/\/www.torontorentals.com\/blog\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Rental Guides\",\"item\":\"https:\/\/www.torontorentals.com\/blog\/rental-guides\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"5 Things You Should Know When Transitioning From a Renter to a Homebuyer\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.torontorentals.com\/blog\/#website\",\"url\":\"https:\/\/www.torontorentals.com\/blog\/\",\"name\":\"Toronto Rentals Blog\",\"description\":\"Looking for an apartment in Toronto? 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