Buying a home is one of the biggest financial decisions of your life, so it’s natural to want to be as prepared as possible. If you’re planning to purchase a house, here are some important questions to ask yourself before starting the process.
How much do I have saved?
One of the biggest hurdles to buying a house is saving up for the down payment. Since you need to put down between 5% and 20% on a home, it’s a large sum of money. Setting aside money for that lump sum is the first step to owning property.
How much money do I need to be making?
Once you have enough for the down payment, you need to consider what size mortgage payments you can afford based on your income. This can also play a factor in the type of mortgage, fixed or variable, you opt for—if you choose a variable mortgage, it’s important to realize how much your payments could rise should interest rates increase.
Am I ready to lock myself into a 5-year mortgage?
Though you can choose a shorter mortgage term, such as two years, you should try to be financially prepared for the next five years of home ownership, regardless of external factors like the market, economy, and Bank of Canada interest rate hikes.
What sacrifices am I prepared to make?
Home ownership often requires some lifestyle sacrifices in order to get into the market—whether that means sacrifices to save for a down payment before purchasing, or sacrifices that can come with home ownership. You’ll want to consider other expenses, such as utility bills, insurance, property taxes, renovations or unforeseen repairs, and purchasing furniture.
When do I want to start looking for a house?
It’s helpful to have a timeline in mind for home ownership. Not only does an ideal date give you time to save money, get your finances in order (like paying off debt before applying for a mortgage), and figure out what you’re looking for in a property, but it also gives you a goal to work towards.
What kind of a property can I afford?
Being realistic with what kind of property you can afford is a huge help when getting into the market. Figuring out your finances and talking to a mortgage broker can give you an idea of your budget before you begin your home search.
