Thinking of buying your first home? For most Canadians, buying that first home will be one of the biggest financial decisions they will ever make. There is a lot to consider but in the long run, the benefits of owning your own home are plenty! Here are some things to consider before you buy:
Pride of Home Ownership
There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results, will be to your benefit. Home ownership gives you and your family a sense of stability and security. It’s an investment in your future.
Investing & Equity Building
A home is a safe haven for investing. Unlike stocks and bonds, you get to live in your real estate investment while it appreciates. Plus, every month, part of your mortgage payment is applied to the principal balance & builds your equity & net worth. Homeowners build wealth for the future while enjoying the benefit of a shelter they can use, improve and sell. Eventually you can use your accumulated equity for things like sending your kids to college, renovating or starting a new business. In Canada your principal residence is also exempt from capital gains taxes. Why pay-off your landlord’s property when you can own your own?
Are You Ready?
Do you have the financial resources you need? At a minimum, you should have five percent of the purchase price saved for your down payment, but ideally even more. Are there other priorities in your life e.g. starting a new business, which require your savings? If not, buying a home should be on your radar.
And, do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before having to relocate. Your job and home life should be stable.
What Can You Afford?
Before you even make an appointment to view a home, you need to get pre-qualified for a mortgage. A lender or mortgage broker will help you establish how much of a mortgage you will qualify for and since mortgage rates vary considerably, it is paramount that you shop around for the best rate, terms and options.
Make your wish list!
Begin your search by making a list of your “must haves” and “wants”. Be prepared to sacrifice some of your “wants” in order to satisfy your “must haves” and be realistic about what your budget will allow. Here are some things to consider when making your list:
- How many bedrooms and bathrooms do you need? Do you need space for a home office, a two-car garage?
- Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
- Do you have or plan to have children and need room to grow?
- Do you need a substantial backyard? Do you have pets?
- How much storage space will you need?
- Do you want “move-in” ready or are you looking to build equity in a “fixer upper”?
- Location! Location! Location! How far will you be commuting to work and school
Other things to consider!
- Are there recreational facilities and parks close by?
- Are you close to family and friends?
- Is the property close to an obstacle or negative influence? (i.e. an apartment building, shopping centre, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project).
- Access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals
- Adjacent undeveloped land – what is proposed for this or other green space?
- Heavy traffic can be noise nuisance and hazard for children
- Distance from the unit to amenities, parking, walkways, roads, public transit
- Does the neighborhood reflect positively on the value of the condo and your lifestyle choice?
- Does this neighborhood, for any reason, have a poor reputation?
- Is the future economic climate for the area good? Are businesses moving in? Is there government investment?
- Are people moving in or out of the neighborhood? What is their age, income level, family size?
- Are there plans for this neighborhood that you may be unaware of (i.e. a future highway, a commercial development or a new housing development) that will provide competition on resale?
- Proximity to highways, driveways, parking lots, playgrounds, trains.
- Proximity to elevators, garbage disposal, fire exits, heating and air conditioners.
- How well is the building soundproofed.
- Visit at different times/weekends to check noise levels and activity.
Once you have been pre-approved and have your wish list ready, let the search begin!