What A First-Time Home Buyer In Edmonton, Alberta Should Know

So, you have decided to make a long-term commitment to being an Albertan?

Well, buying your first home in Edmonton is definitely a huge thing but before you get too caught up in the excitement, here are a few things to keep in mind as a first-time homebuyer.

To begin with, we’ll talk about sorting your finances and a few incentives that you may be eligible for, and then, we can explore the process of buying a home.

Things To Know As A First-Time Home Buyer In Edmonton, Alberta

With the right guidance, you can explore the real estate market like a pro, so let us look at a few tips that every first-time homebuyer Edmonton should know –

Get Your Finances In Order

Before you start scouring the listings, you need to be sure that your finances are in order. 

Now this means checking your credit score, saving up for a down payment, getting mortgage pre-approval as well as finding incentives that you may be eligible for.

Of course, you would not want to fall in love with a house only to find out that you can’t afford it. Trust me, that’s a real heartbreaker!

So, what’s the deal with credit scores?

Well, your credit card report will be used by the lender to anticipate how likely you are to pay back the loan on time.

And, the higher the credit score you have, the better interest rates and loan terms you will get. But, if your credit score is less than stellar,  don’t fret!

There are certain things you can immediately do to improve it, like paying your bills on time and keeping your credit card balances low.

The next thing is to save up for your down payment.

You will have to pay this amount of money upfront when finalizing the deal. In Canada, the minimum down payment is 5% of the total purchase price.

However, it is ideal to pay more if you can afford it, as this will help you save money in the long run as you will be paying lesser interest over the life of your mortgage.

Moreover, as a first-time buyer, there are certain schemes that can help you sort your down payment amount from your retirement and other such savings. We will discuss this in the next step.

Now, get pre-approval for your mortgage.

Based on your financial situation, the potential lender will evaluate and provide an estimated amount that they will be willing to lend you to purchase a home.

Getting a pre-approval will help you know your affordability so you don’t have to let go of your preferred home just because you are unable to get the said amount of loan. 

Moreover, a pre-approved mortgage also assures the seller that you are a serious buyer.

First-Time Home Buyer’s Incentive

Since we are talking finances, of course, you need to know the several first-time home buyer incentives that you may be eligible for.

A few of the popular First-Time Home Buyers Incentives Edmonton include –

The First-Time Home Buyer’s Incentive (FTHBI)

FTHBI is a federal program offering shared equity mortgages to all eligible first-time home buyers in Edmonton as well as across Canada.

Basically, the government will contribute a portion of the funds that you need to buy your home, so you will have to make a reduced monthly mortgage payment.

Now, this amount that the government contributes will depend on several factors like your income, home price, etc.

RRSP First-Time Home Buyer’s Plan

Home Buyers Plan is another popular program, offered by the Canadian government, where you can use your retirement savings as a down payment and then gradually make the repayment later.

So, if you have been saving under the RRSP (Registered Retirement Savings Plan), then you may be eligible to withdraw up to $35,000 from that contribution.

This withdrawal is tax-free and you can use it as a downpayment towards the purchase of your home in Alberta or anywhere in Canada.

You can repay this fund within 15 years of withdrawal, hence it is an excellent option that you might want to consider.

The First Place Program

First Place Program is a local initiative by the City of Edmonton that allows financial advantages to first-time home buyers in Alberta.

Under this initiative, you get a 5-year deferral on land costs, meaning that as a homeowner, you have to only pay for the cost of your units, taxes, and utility, and not worry about the land costs for the first five years of purchase.

Besides, in case of any adverse emergency, the program also offers an early withdrawal option where you may sell the house before those 5 years based on the situation.

Alongside, you get other advantages such as a First Time Home Buyers Tax Credit, property management assistance, and many more, making home ownership easier.

PEAK program was another local initiative, which is not available currently, that offered subsidized home ownership, down payment assistance, home grant repairs and many other options to make the first-time home buying affordable.

Land Transfer Tax Refund

Land Transfer Tax is one of those hidden costs that come along with home ownership and can often be overlooked by a first-time buyer.

However, in Edmonton, the government offers a land transfer tax refund to all eligible first-time home buyers to help them offset this cost.

The maximum amount of refund is about $5000 and it can make a huge difference in making your purchase more affordable.

Location, Location, Location!!!

Now that you are aware of the several incentives that you can avail of, it’s time to start thinking about where exactly you want to buy your home, if you haven’t thought about it already.

Edmonton is a huge city and it has many different neighbourhoods, so you have to research and find the area which will suit your lifestyle as well as your budget.

For instance,

• If you are looking for a family-friendly neighbourhood with good schools, you can consider the areas like Windermere, Terwillegar, or Riverbend.

• alternatively, if you are a young professional looking for a trendier spot. you might want to check out areas like Whyte Avenue or Oliver.

•  and, if you are looking for a more affordable area, check out Millwoods or Clareview.

The location you choose will be one of the biggest factors affecting the price of the home, so if you are planning to buy a home as an investment, you should choose an area that is likely to appreciate over time.

It’s important to closely evaluate the Edmonton real estate market or work with a professional so you can find a qualifying home at your preferred location.

A Quick Glance At The Home Buying Process

Alright, so now you have your finances in order and have narrowed down a few neighbourhoods for purchasing your first home, let’s look at some tips for first-time homebuyers –

• Find a good realtor to guide you through the process.
• Make a list of “must-haves” and “nice-to-haves” so you don’t end up missing out on something important.
• Remember that taking time is better than rushing into a decision that you will regret later.
• When you find a good home, it’s time to make an offer with the help of your realtor.
• Once you make the offer, the seller may make a counteroffer, which will then be negotiated by your real estate agent so you can come to an agreement that works for both parties.
• Don’t forget to get your home inspected before you finalize the sale. If you find any major issues during the home inspection, you can even negotiate further and purchase the home at a much lower price.
• After everything is in order, it’s time to finalize the sale. This will involve signing a lot of paperwork and transferring funds to the seller.

A realtor can help you work through the process as well as provide tips on choosing the right incentives in Alberta. When you have your finances in order, it becomes easier to go through the process of purchasing your home.

Are You Ready To Buy Your First Home In Alberta?

Buying a new home is a huge milestone, especially for first-time homeowners, but with the help of the government of Canada, the first-home purchase becomes much easier and more fun.

Now that you know the essentials of buying a new Edmonton home, it’s time to start getting your finances in order, pick the right program, choose a suitable neighbourhood from the province of Alberta and work with a professional.

Congratulations that you are soon going to buy your first house and all the best to your journey to finding the right place to call home in Edmonton, Alberta.