If you’re interested in mortgages in Brampton, it’s time to do some research to ensure that you end up buying a house you can actually afford.

 

 

If you’re a first-time home buyer in Brampton, you may qualify for the Home Buyers' Plan (HBP). This government plan allows you to use money from your RRSP toward your down payment—without tax penalties.

 

The plan lets you and your spouse or partner withdraw up to $25,000 from your RRSPs to use toward a down payment. That’s a total of up to $50,000 for your down payment. You’ll need to start paying the money back at the beginning of the second year after withdrawal, and have it fully paid back after 15 years.

 

If you can handle the payments each month, this may be a good move for you. If it increases your down payment to 20% of the house’s value, you will avoid the need for mortgage default insurance. That can save you a lot of money over the life of your mortgage. On the other hand, you will be missing out on the growth that money could have experienced if it were in your RRSP for the 15-year period.

 

 

Once you know how much you have as a down payment, and an idea of how much you can afford, it’s time to find out how much your lender will approve for your mortgage.

 

Pre-approval lets you know the maximum you can spend on your house. Your lender will consider details like your income, down payment amount, credit rating, debt, and other important data.

 

It locks your lender into an interest rate, so if the rates go up, you’re still eligible for the agreed upon rate for a set amount of time (normally two or three months).

 

 

As you pay your mortgage, you create equity in your home. The term "equity” refers to the difference between what your home is currently worth and the amount left on your mortgage. If you’ve been paying off your home for years, you may be surprised by the amount your home is worth. Skyrocketing real estate prices in the GTA have added thousands, and sometimes hundreds of thousands, to many people’s pockets.

 

A second or third mortgage can help you pay for expensive items or consolidate debt. You can use a second mortgage to pay for renovations on your home, potentially increasing its value. You can also use that money to pay for your child’s education, a cottage, outstanding taxes, and more. If you’re struggling with a high balance on your credit cards or store cards, the interest rate on a mortgage is much lower than card interest rates—it’s usually lower than the interest rate on personal loans for similar amounts.

 

Another option is to refinance your mortgage. Instead of adding another mortgage, refinancing pays off the existing mortgage. You can take out a mortgage to get a lower rate or a shorter amortization period. You can also use a second mortgage to increase your monthly cash flow with lower mortgage payments or a longer amortization period.

 

It doesn’t matter whether it’s your first mortgage or your third, it’s important to research lenders and ask about any extra fees or penalties involved with making extra payments or refinancing.