Deciding on a home in Southern Georgian Bay means you’ll share a home with a collection of freshwater islands, beautiful sunsets, walking trails, a natural forest, and of course the beach! But before you can move in, you need to navigate home financing. We’ve got some helpful insight to make it as easy a journey as we can.

Government Incentives-Home Finance

The Government of Canada provides a First-Time Home Buyer Incentive in order to make homeownership more affordable and accessible. There are a few requirements, however. Your total annual income must not be more than $120,000, your total borrowing can not be more than 4 times your qualifying income, you or your partner must be first-time homebuyers, you must be a Canadian citizen, have permanent residency, or be a non-permanent resident who is authorized to work in Canada, and you must meet the minimum down payment requirements using traditional funds. That is to say, it must be from savings, using money from an RRSP, etc.

Choosing Between Fixed-Rate and Variable Rate Mortgages

A fixed-rate mortgage means your interest rate and payment rate stay the same for the term of the mortgage while a variable-rate mortgage can see the interest rate increasing or decreasing according to the lender’s prime interest rate. While one may not be better than the other, making the decision between fixed-rate and variable rate is an individual one. There is an element of financial insecurity with a variable-rate mortgage, but it could very well save money since a low-interest rate would likely be lower than a fixed-rate mortgage. Choosing one does not mean the other option is never available, as you can change your rate type when you renew your mortgage.

Know your Finances

Before you seek out a mortgage, make sure you’ve done your own homework. What’s your credit score, what’s your debt-to-income ratio? Should you look at paying down some other debt? How much have you saved for a down payment (the minimum down payment for a house less than $500,000 is 5%)? Having that knowledge before you approach a bank or a specialist means there are no surprises.

Bank Vs Broker?

Sometimes keeping everything in the same general area is a lot easier when going to home finance. That’s why some homebuyers get a mortgage from the bank they do their daily banking with. That bank is limited to what they can offer. A broker, however, works with many different lenders — and finding a good broker with a solid lender network is important! A broker will also do a lot of the legwork for you, finding the best mortgage and interest rate for you.

Get Pre-Approved

Getting pre-approved means you know exactly what kind of budget you’re looking at before you even start looking. With that budget, you can focus on the houses that match your budget which will ultimately save time.

Mortgage Amortization

Homebuyers have the option of choosing between a short-term or a long-term amortization period — that’s the total amount of time to pay off your mortgage in full. A short amortization is appealing to those who want to pay off the loan sooner, with less money going toward the interest. A shorter-term, like 15 years, however, means that monthly payments will be higher.  Conversely, a long-term amortization period means monthly payments will be lower, but the amount paid into interest over the life of the loan. A typical long-term amortization period is around 25 years.

Payment Frequency

You’ll decide how frequently your mortgage payments will be: weekly, bi-weekly, semi-monthly, and monthly. Choosing the right one for your financial needs will make payment less stressful. There are opportunities to pay off a mortgage early, but as there are factors attached to that, speaking to your broker or your banking expert is the way to go there.

One thing to be aware of is that it’s okay not to be the expert. There are a lot of professionals out there who know the ins and outs of home financing and they’re there to help. You don’t go on this journey alone; don’t be afraid to reach out for help.