Am I ready to own a home? Seriously think about this and consider all the possibilities. Everyone wants to own a home; however, no one really seriously stops to think of the responsibilities that come with home ownership.
It is the Canadian dream to become a homeowner. And rightfully so, I mean where else can you generate a huge return on an investment overtime, while paying into something you need… in my opinion it sure does beat renting.
However, home ownership isn’t for everyone – it takes discipline and dedication to be a homeowner. As there are so many moving parts one has to consider.
Now a days the thought of home ownership is becoming more and more of a distant foreign object to the youths of today. Of course, depending on where they reside. There are some markets in Canada that are considered to be overpriced and hard for first time buyers to enter the marketplace.
Most millennials say the following reasons for not owning as yet: 1) no down payment 2) not wanting long term commitment to a set location 3) can’t afford it 4) bad credit 5) student debt
Here is my advice:
- Make sure you really want this: we have been conditioned by society that home ownership is the only way. However, just like vehicles some people lease; and as such there are pros and cons to both approaches. The big question should be is, does home ownership fit into the life I want?
Home ownership comes with RESPONSIBILITY, increased expenses, maintenance and upkeep. More importantly, you have a long-term financial commitment that is tough to trade in if you need to relocate for a job or other circumstances.
- Save, save, save, save take advantage of any opportunities you have to save; use RRSP, most employers offer a retirement plan where there will match your contributions. The best way to save is to always pay yourself first. If done right from your pay cheque you won’t even notice it, and over time you will have a huge nest egg.
- Don’t Overextend – excitement sometimes causes confusion. Don’t overlook the numbers – when it comes to your finances be very diligent to ensure that you are not going to be in a rut and the end of the month not run out of money. No one likes to live on the edge. Fortunately, the mortgage system in Canada is designed to protect borrowers to ensure that they are not overextending. Some may even say it’s a little to overprotected, with the stress test and all. However, believe it or not it is designed for the greater good. Some may beg to differ. Once again, as always there are pros and cons.
- Think long term: if you don’t plan on staying in the same place for at least 7 years, then renting might be a better bet. The cost of buying and selling majority of the time out weight the appreciation of the property, unless you’re planning on staying for a significant amount of time to reap the benefits of both appreciation and mortgage principle being paid down.
- Starter home: evaluate your long-term goals and build a plan around where you want to be. It’s easier to plan towards a direction, if you know where you want to go. Is it beneficial to get a starter home now, or wait a bit and get a property that has two units that, so that you can live in one portion and rent the other? Do you have aspirations to own multiple properties? Do you plan to upgrade it? Your goals and the timelines will determine what’s right.
When in doubt seek professional advice. Call me. Let’s have a chat!
