Tips & Tricks for First-Time Home Buyers

This guide is for first time home buyers. Please don’t be shy, call me! 867.333.1095.

I love answering questions, especially if you’re feeling overwhelmed. I will explain how to buy your first home in Whitehorse.

The Whitehorse real estate market is fastpaced and can be tricky for first time home buyers.

Read The Buying Process for step by step instructions on how to buy real estate in Whitehorse.  

Why Buy? 

The beauty of buying real estate is that when the market goes up, the value of your property increases. 

Let’s use the example of a brand new home in Whistlebend, asking $500,000. To purchase it, the minimum downpayment is 5% ($25,000). Now that you are the owner, the value goes up with the market. If the real estate market goes up 5% in one year, your home is now worth $525,000, plus you have paid down your mortgage, building equity. Had you not bought the house one year ago you would have needed to save an additional $25,000 over 12 months to be able to replicate the financial benefits of being in the market today.

FAQ 

Q: Isn’t the market maxed out?  Won’t prices go down soon?

A: No – there are lots of affordable options for buyers and the real estate market in Whitehorse has lots of growth potential.  

Q: What if I want to travel? 

A: I will help you buy a place you can easily rent out, so you can be free to travel and work abroad. 

How to Buy with 2.5% Down 

If you have saved 2.5% of the purchase price, Yukon Housing can lend you the balance. 

Be sure to contemplate if you want to access some great home-buying programs available from Yukon Housing. They could lend you ½ your downpayment. 

How to Buy with 5% Down

You can buy a home with a 5% downpayment, keeping the purchase price under $500,000. If your purchase price is between $500,001 and $999,999, there is a “staggered down payment system,” where your down payment is 5% of the first $500,000 and 10% of the remaining purchase price.  

For example, if your purchase price is $700,000, your down payment is $45,000.

5% of $500,000 = $25,000

10% of $200,000 = $20,000

Total down payment = $45,000

Mortgage tip: If you’re a first time home buyer, buying with less than a 20% downpayment, you will need CMHC mortgage insurance, it’s just part of what your bank will do for you.

How to Borrow Your Downpayment 

Access the 25K down payment you didn’t know you could get!

If you don’t have enough savings to put a downpayment together, here is one creative idea to make it happen: 

You can get an RRSP loan to buy a $25,000 RRSP, and 90 days later withdraw the funds and use them for your down payment.  The beauty of this is that you save the income tax on the $25,000. If your income tax bracket is 29% federal and 9% territorial, you now have $34,500 to use towards your down payment.  The additional $9,500 are your tax savings. 

Use Your RRSP to Supplement Your Down Payment  

Did you know, you can withdraw up to $25,000 from your existing RRSP accounts towards your down payment?

  • You and your partner can each withdraw up to $25,000 from your respective RRSPs. 
  • At least 1/15 of the funds must be repaid each year, beginning two years after the funds were withdrawn, the full amount can be repaid at any time. 
  • You can only do this once in your lifetime.

For details see Canada Revenue Agency.

Why You Need to Get a Pre-Approved Mortgage 

Mortgage calculators are fun to play with, but you will need to sit down with a professional to know your real budget. 

Beautiful homes sell fast, and some are listed and sold in one day.  Not having your mortgage pre-approved is the #1 way to lose the home you love. 

To get pre-approved, the bank will need to look at your notice of assessment, most recent pay stubs, letter of employment, and financial history. The pre-approval process can take several days, in addition to sometimes having to wait for an appointment. If they request additional documentation, there can be further delays. 

I can refer you to the right mortgage professional based on your situation.

Mortgage Stress Test

The stress test is part of your pre-approval. It ensures that your current income can accommodate a 2% increase in your mortgage interest rate.

Changing your financial situation is risky, for instance:

  • Don’t touch your down payment money.
  • Don’t change or quit your job without speaking with your lender first.

Hidden Expenses  

  • Legal Fees: You will need to pay your lawyer or notary for their services a few days before you move into your new home.
  • Property Inspection Fees: Paid at your inspection
  • Moving Expenses
  • Home Insurance 
  • CMHC Mortgage Insurance Fee: If you want to buy with less than 20% down, your purchase price must be under $1M (CMHC insurance is not available for homes over $1M). This one-time fee is added to your mortgage and rolled into the payments.

Finding a Home

House shopping is the fun part for first time home buyers!

There are a few different ways to find new listings. The most accurate and reliable way is through a custom property search that I will set up for you. The search will email you properties that match your wish list before they appear on any other search platform. If you see a new listing that catches your attention, notify me immediately because great listings sell fast.

I will show you the home, inform you of crucial details, and if you love it, help you purchase the home.

Avoid Problematic Properties 

If you are nervous about accidentally buying a property that needs unforeseen repairs, I will make sure this doesn’t happen by recommending that you have the property professionally inspected.  

Before you make an offer or pay for an inspection, we will review the building permit history and any disclosures so that you have a good understanding of the building’s history. 

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