New Year, New Home: How to Prepare for a Mortgage in 2025
January 16, 2025 | Posted by: Keith Leighton
New Year, New Home:
How to Prepare for a Mortgage in 2025
The beginning of a new year is the perfect time to reflect on your financial goals, and for many Atlantic Canadians, homeownership is at the top of the list. If you’re considering buying a new home in 2025, getting your mortgage in order is the first step to turning that dream into reality.
Here’s how to prepare for a mortgage in 2025, with tips tailored to the unique housing market in Atlantic Canada.
1. Evaluate Your Financial Situation
Before diving into the mortgage process, it’s crucial to take stock of your current financial position. Lenders look at several factors when assessing your mortgage application, including your:
• Income: Stable employment and consistent income are essential.
• Debt-to-Income Ratio: Your monthly debt payments (like car loans or credit cards) should be manageable compared to your income.
• Savings: You’ll need funds for a down payment, closing costs, and moving expenses.
Atlantic Canada remains one of the most affordable housing markets in Canada, but affordability can vary by city. Evaluate your finances to determine how much house you can afford in areas like Halifax, Moncton, or Charlottetown.
2. Check Your Credit Score
Your credit score plays a major role in determining the mortgage interest rate and terms you qualify for. A higher score can mean better rates and lower monthly payments.
Tips to Improve Your Credit Score:
• Pay bills on time, every time.
• Reduce credit card balances below 30% of your credit limit.
• Avoid applying for new credit in the months leading up to your mortgage application.
In 2025, lenders are paying closer attention to credit history due to fluctuating economic conditions, so even small improvements can make a big difference.
3. Save for Your Down Payment
In Canada, the minimum down payment is:
• 5% for homes priced at $500,000 or less.
• 10% for the portion of a home’s price above $500,000.
• 20% for homes priced above $1 million or to avoid mortgage insurance.
For first-time buyers in Atlantic Canada, saving for a down payment may feel daunting, but it’s achievable with a solid plan:
• Open a dedicated savings account to build your fund.
• Explore the First-Time Home Buyer Incentive, which offers shared equity with the federal government to reduce monthly mortgage payments.
4. Get Pre-Approved
A mortgage pre-approval is a key step in your homebuying journey. It gives you a clear picture of how much you can borrow, helps you set a realistic budget, and makes you a more competitive buyer in the market.
Benefits of Pre-Approval:
• Rate Lock: Secure a rate for 90-120 days, protecting you from potential increases.
• Confidence: Know exactly what you can afford before starting your home search.
In a competitive housing market like Halifax, where homes can sell quickly, being pre-approved shows sellers you’re serious and ready to move forward.
5. Understand the Mortgage Stress Test
The federal government requires all mortgage applicants to pass a stress test, ensuring you can afford payments even if interest rates rise. For 2025, the qualifying rate is typically the greater of:
• The mortgage rate you’re offered plus 2%.
• The Bank of Canada’s benchmark rate.
Work with a mortgage broker to understand how the stress test impacts your budget and borrowing power.
6. Research Government Programs and Incentives
Atlantic Canadians can benefit from several programs designed to make homeownership more affordable:
• First-Time Home Buyer Tax Credit: Receive up to $1,500 in tax relief for your first home purchase.
• Home Buyers’ Plan (HBP): Borrow up to $35,000 from your RRSP to put toward your down payment.
• Green Home Incentives: Save on energy-efficient upgrades to reduce your long-term costs.
7. Work with a Local Mortgage Broker
The mortgage process can feel overwhelming, but you don’t have to do it alone. Your DLC Ideal Mortgage broker understands the Atlantic Canada market and can help you:
• Compare rates from multiple lenders.
• Find products tailored to your needs, whether you’re a first-time buyer or upgrading to a larger home.
• Guide you through the entire process, from pre-approval to closing.
8. Plan for Additional Costs
Buying a home involves more than just your mortgage payment. Be prepared for expenses like:
• Closing costs (typically 1.5%-4% of the home’s price).
• Home inspections.
• Property taxes and insurance.
• Moving costs and immediate repairs or upgrades.
Factoring these into your budget will help you avoid surprises and start your homeownership journey on the right foot.
9. Set Realistic Expectations
The housing market in Atlantic Canada is diverse, with everything from urban condos to rural properties. While affordability remains a strong point in the region, it’s important to set realistic goals based on your budget and needs.
10. Start Now
The earlier you start preparing for a mortgage, the more confident you’ll feel when it’s time to buy. By improving your finances, researching your options, and partnering with a trusted mortgage broker, you’ll set yourself up for success in 2025.
Ready to Make 2025 the Year You Become a Homeowner?
At DLC Ideal Mortgage, we specialize in helping Atlantic Canadians with the mortgage process. Whether you’re a first-time buyer or looking to upgrade, our team is here to guide you every step of the way.
Contact us today to start your journey toward homeownership in Atlantic Canada. Let’s make your “new year, new home” resolution a reality!
