01 Nov Purchasing a “starter” home
A starter home is a “somewhat” small house or condo that meets the requirements of young people buying their first home. This is usually the case for the vast majority of young people (single or couples). So, what should be your priorities if you are part of this group?
Budget! Don’t hesitate!
Going from renting to owning can be challenging. It is a source of anxiety for many. However, it can also be a very rewarding experience. Track your spending and make budgets to the best of your ability to see what you can work with. Work closely with a mortgage broker to determine what you can afford. We will create the check list of everything you need to pay for when you own a property, including mortgage payments, utilities, and property taxes. Often times, you will discover that mortgage payments cost less than rent, especially in cities like Toronto. If you manage to save enough for a down payment, don’t hesitate. Start planning the purchase of a “starter” home.
Get PRE-APPROVED for a mortgage
We can’t stress this enough. It is THE most important part of this entire process. Once you’ve figured out your budget, your expenses (be honest to yourself about your lifestyle), visit a mortgage broker. A broker will look at your finances to figure out how much money a lender can lend you and what interest rates are available to you (check our posts on interest rates and types of mortgages). We recommend not taking the maximum amount you’re approved for to avoid becoming house poor, in case you are not sure about your income in the future. However, if you are sure your salary is guaranteed and may even double in a few years from now, then it may not be a bad idea. Just keep in mind you have to pay closing costs and put some money aside for “surprises” that may show up, such as repairs and other unforeseen circumstances.
Above all, settle for a house that is close to what you are looking for. The perfect house does not exist and so you shouldn’t expect to find all the items on your list.