While entering Canada’s housing market for the first time can be intimidating, many renters still dream of making the leap to homeownership.
In fact, a recent survey found that 84% of 25 to 35-year-old non-homeowners in Canada intend to purchase a home in the future – and 68% plan to make the move over the next five years.
But purchasing a house is a big financial decision, so how do you know you are ready? Below, we look at five signs that you might be prepared to buy a house during the spring buying season.
1. Your income is stable.
For most first-time homebuyers, purchasing a house indicates that you can make regular payments to service a mortgage. Accordingly, you should make sure you have a secure and steady flow of income to make these payments over the length of your home loan period.
While this is often thought to mean that you work a full-time job, many self-employed Canadians also have stable incomes – and alternative lenders, such as Home Trust, are willing to listen to their unique financial situations.
2. You are ready with your down payment.
Having enough money on hand for a down payment is important because the amount will impact the type of house you can buy, the amount you need to borrow and the range of financing options you qualify for.
If you are in the process of saving for a larger down payment, we outline several strategies that can help you out.
3. You found an area you can grow in.
Buying a house means putting down roots, so you need to make sure that you can buy a house in an area that suits your needs and lifestyle. You should also be able to envision yourself living in that area over the next five to 10 years.
4. You feel comfortable managing your debt.
Paying for a house involves having the discipline and commitment to stick to a budget. Take some time to track your spending habits over a couple of months to find out if you are comfortable setting aside roughly 30% of your income to pay for your mortgage debt.
5. You have an emergency fund on hand.
Owning a home means that unexpected home maintenance expenses, such as plumbing and electrical repairs, could eat into your budget. So having an emergency fund on hand to cover six months’ worth of expenses will allow you to cover these unforeseen costs.
Finding, financing, purchasing, maintaining, refinancing, and selling a home is a complicated financial process. But if you feel that all the signs point to “yes,” an experienced mortgage broker like Maurice Kwok will be able to help you plan out your homeownership journey and discuss your financing options.
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Source: Duffie Osente