Taking the plunge into homeownership is intimidating at the best of times. When real estate prices are skyrocketing, buying your first home can seem out of the question. But with some strategic planning and research, it’s possible to find a place to call your own sooner than you think.
First things first, you’ll need to get your finances in order. This can be easier with the help of a financial planner. An expert can help map out a plan to set aside money for your downpayment and additional costs. This process will also determine what you can afford.
A financial planner will investigate and present you with options to help your savings grow and maximize funds you already have. For example, the federal government offers a first-time home buyers’ plan, which may allow you to withdraw money tax-free from your RRSP to put towards buying a house.
You should also consider getting pre-approved for a mortgage. This means a lender has looked at your credit history and income and will grant you a mortgage for a specific amount. Pre-approval will prevent you from bidding on a property and then getting rejected by a financial institution for the mortgage amount you need.
Once you have a realistic handle on your finances, start looking at locations with a critical eye. You may be tempted by fancier neighbourhoods with turn-key homes. But remember that you’ll pay a premium to live in these types of areas. Larger, newer homes often mean higher utility bills and property taxes. Do your homework on these costs in areas you’re interested in to get a full picture of what your monthly expenses would be.
You can also look closer at land-lease homeownership, found in recreational and retirement communities. This option allows buyers to purchase and own their home, but lease the land on which it sits. The purchase price of a land-lease home can be up to 30 per cent less than a comparable freehold home in the same market. As a bonus, land-lease communities managed by companies like Parkbridge offer amenities such as pools, recreation facilities and bike paths.
You may need to start small or think outside the box to buy your first home. Whatever path you take, you’ll build equity and value that will go on to help you move into your forever home.
— News Canada