Are you a millennial aiming to purchase a home in Toronto? While it can seem like a struggle to get into the market, there are steps you can take now to progress towards home ownership. Put yourself in a good position to buy a house with these six tips.
Pay off your debts
You’ll want to lower your Total Debt Service Ratio in anticipation of purchasing a house, which balances your income against your monthly housing expenses and debt. That means the amount of debt you have will affect the size of mortgage for which you can qualify.
Raise your credit score
Your credit score is another factor in determining your mortgage qualification, so make every effort to give it a boost before house hunting – you should aim for a score of 680 or above. This means paying off bills that have gone to collection agencies, making sure to pay all bills on time, and not taking out additional lines of credit or opening new credit cards. Also, check your credit report for any inaccuracies.
Save for a down payment
There may be some lifestyle adjustments you can make to help save for a down payment. This might include setting a budget and making some sacrifices, like using public transportation instead of owning a car or living with a roommate. Tip: Set up auto deposit for a portion of your paycheck so it goes directly into a savings account that you can’t access with your debit card, and put any cash gifts or bonuses right into savings as well.
Get preapproved for a mortgage
Find out the maximum mortgage for which you can qualify and estimate your monthly mortgage payments by getting preapproved. This process involves providing personal information, including your assets and debt, as well as proof of employment and more. Learn about mortgage preapproval and try the Mortgage Qualifier Tool.
Know what you want and buy smaller
It’s great if you know what you’re looking for in a house, but make sure your goals are realistic and not a laundry list of must-haves. Getting into the market is easier if you make a few sacrifices the first time, including compromising on square footage – you can work your way to up-sizing once you’re in the market.
Work with an agent
It’s wise to work with an agent you trust when searching for your first home. Agents not only have access to properties that aren’t on the market, but they can show you tricks to find properties you can afford, like looking for homes that have been sitting on the market past their offer date. They can also put you in touch with a good mortgage broker for your mortgage preapproval.
Ready to start looking for a home in Toronto? Contact our team today.