Is it time to buy?Making the decision to buy a property can be a difficult – and intimidating – experience. For one thing, nothing spells “responsibility” more than owning your own piece of property. Secondly, in today’s market – where many areas across the country are said to be overheating – it can be difficult to decipher whether buying is really the smartest financial move.
Unfortunately, there isn’t one sweeping answer to the question of home ownership. For some people, it makes sense. For others, it might be prudent to wait. In the end, it really comes down to your particular situation.
One way to determine which choice is right for you is to really explore the reservations that are holding you back from buying a home, if you have any. As an example, we had one client whose fear of responsibility was the only reason preventing her from pulling the trigger. After renting for the last 30 years, and holding down a steady job with a secured income, she had saved enough of a down payment to put down 20% on her first home (which would make her mortgage payments less than her current rental payments). With her finances and timing intact, the only thing holding her back was fear of going out on her own – without the safety net of a landlord. The responsibility of home ownership was giving her cold feet, but after closer inspection she realized it was the best decision for her financially.
When deciding whether or not to buy, it’s important to establish a realistic budget and a comfortable amount of savings. It’s also wise to know the difference between what you qualify for (ie what a bank is willing to lend you) and what you can really afford. Your lifestyle should also play a role in your decision. If you want the flexibility to take a job promotion across the country – or if your current employment status is less-than-secure – you might want to think about whether being tied down to real estate really makes the most sense for you right now.
Above anything else, your real estate purchase should be a decision that makes sense for you financially – both today and down the road. This article in Canadian Business explores Canadians’ obsession with home ownership – and how many of us purchase homes because we’ve been taught that’s what you do when you become a “grown up”. Unless you’re planning on holding onto your home for more than six years, however, the article says many of us won’t see a return on our investment thanks to real estate fees, moving costs and taxes. The article goes on to say that, depending on your local rental rate, it might be more financially savvy to rent and save the difference in low-risk bonds than actually own a property.
That being said, many of us don’t have the discipline to go that route – and paying off our mortgage acts as a means of forced savings. There are also a lot of nice benefits to owning your home – you don’t have to worry about dealing with a difficult landlord, or asking if you can paint a room a certain colour. So, once again, it comes down to your personal situation – but, as always, we’re here to help. If you’re struggling with the homeownership decision, we can help you weigh the pros and cons and make the decision a little easier.
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