Purchasing a home is one the largest investments you will make over the course of your life. Many physicians will begin to think about purchasing their first home some time after residency. Once they have determined where they will be practicing, they are often eager to plant their roots and start the next chapter of their lives.

But a financial decision like purchasing a home requires careful consideration and extensive knowledge of the transaction you are about to make. In order to properly weigh all of the options available to you, it’s critical to ensure that you are asking the right questions. A financial advisor can help guide you through the home buying process, saving you time and money in the process. Below are some commonly asked questions when it comes to buying a home.

When should I buy my first home?

When it comes to buying your first home, every situation is unique. There are many factors that need to be taken into consideration to decide when the timing is right for you. Physicians often move around a lot during the first few years of schooling and residency, so it’s usually best to wait until you have settled into a permanent position, so that you can become familiar with the area you will be working in, before committing to location.

When it comes to buying your first home, every situation is unique. There are many factors that need to be taken into consideration to decide when the timing is right for you. Physicians often move around a lot during the first few years of schooling and residency, so it’s usually best to wait until you have settled into a permanent position, so that you can become familiar with the area you will be working in, before committing to location.

Will I qualify for a mortgage?

It is to be expected that most physicians graduate medical school with a substantial amount of debt. But fortunately, this does not deter financial institutions from their willingness to loan. In fact, physicians are more likely to get preferred rates- despite being in more debt than the average first time home buyer. Alternatively, if you have not yet completed your residency, you may qualify for one of the mortgage lending programs that are available for pre-practicing doctors, which take into account the projected income of the physician, upon completion of their program. Physicians are seen to be a low lending risk, as they are known to have strong earnings potential over the course of their career.

How much can I afford?

The banks will determine the amount of mortgage you qualify for based on your projected income. Additionally, you will have to come up with a down payment. A down payment of at least 5% on the first $500,000 of the home’s purchase price, and 10% for the additional portion of the price over $500,000 up to $1 million. Properties over $1 million require a minimum down payment of 20%. You will also need to account for other costs associated with home ownership, such as insurance, property taxes, and closing costs.

Should I get a fixed or variable mortgage rate?

Depending on your financial circumstances, one rate may be more favourable than the other. A fixed rate mortgage does not change over the course of your loan term. Fixed rates typically follow the rates of Canadian bond yields or interest rates. Variable mortgages are based on the Bank of Canada’s policy interest rate, meaning that when the prime rate is adjusted due to economic factors, your mortgage rate will adjust to reflect these changes as well. 

In addition to these frequently asked questions, there are several other factors and circumstances that should be evaluated during the decision process. It is highly recommended that you consult with your financial advisor to determine which strategy best aligns with your financial goals.

Need more advice on purchasing a home? Contact one of our financial planners at (905) 581-0878.