It’s been the subject of many an article in recent years: Why aren’t young adults buying homes anymore? To which many young adults reply: “We would if we could afford it.” The rising cost of real estate has made it a pipe dream for younger generations, but it doesn’t have to be. It is possible to buy a home when you’re still young and, if you do, it’s one of the best investments you can make. Here’s how to become a homeowner if you’re under 35.
In order to even get a home loan, you need to have some money to your name. So, save in any way you can. Open a high-yield savings account and put away every bit of money you have left over after paying bills, debts and the necessities.
Of course you can still have avocado toast, but you’ll save money much much faster if you spend less. Before you buy that luxury item, ask yourself if you really need it. Have potluck dinners with your friends rather than going out to a restaurant. Upcycle your old clothes rather than buying new ones. There are many ways to live more frugally without having to give up everything that makes life worth living.
Don’t Spend More Just Because You Earn More
As you move up the ranks in your career, you’ll most likely start earning more. With a bigger pay cheque comes the temptation of wanting to spend more. After all, you can afford it. However, if you resist the temptation of upgrading your lifestyle as your income increases, you’ll have a bigger chunk of money to put away for your home-buying fund.
Contribute to Your RRSP
How can contributing the maximum amount to your registered retirement savings plan – your RRSP – every month help you become a homeowner? The Government of Canada offers the Home Buyers’ Plan, or HBP, which allows first-time homeowners to withdraw up to $25,000 from their RRSP to buy a home. This amount might not be enough for a home but it will cover the down payment.
Know How Much Homes Cost
Saving for a home will be easier if you know how much you need to save. Getting an idea of what homes in your area cost will help with this. There are some incredibly cheap houses for sale in Canada but they may not remain on the market for long. So, look at the real estate listings to get a ballpark figure of what the average home costs.
Consider all the Fees Involved
One of the home-buying myths you need to stop believing is that you only need enough for a down payment. There are all kinds of other costs involved in buying a home: lawyer fees, land-transfer taxes and the like. You’ll need enough money to cover these as well as the down payment.
Set a Savings Goal
If you’re going to try and save for the sake of saving, it will be easier to give up. Instead, set yourself a savings goal. Decide on an amount you need to have saved by a certain date. This will help you stay on budget.
Educate Yourself About Mortgages
Very few people in their twenties and early thirties have the cash to buy a home in one go. You’ll most likely need a mortgage to pay off your home in stages. Find out everything there is to know about mortgages: how they work, how to qualify, all the charges involved, and so on. Speak to your bank or a reputable mortgage lender about this.
Use the Available Tax Relief
The Government of Canada has a special tax credit for first-time home buyers. It’s called the First-Time Home Buyers’ or FTHB tax credit and if you qualify, you can get up to $750 in federal tax relief. Of course this isn’t much, but every bit helps.
Consider Something Modest
In your twenties and early thirties, you probably don’t need a four-bedroom house with a huge yard. In fact, one of the things to consider before buying your first home in 2021 is that it should suit your lifestyle. An apartment, a townhouse or a condo still qualifies as a home and is usually much more affordable. Once you start a family, you can upgrade to something bigger.
Find Out About HOA Fees
If you want to buy in a subdivision or planned community, for instance if you’re considering buying a condo, you need to find out if there is a homeowners’ association or HOA. HOAs usually charge monthly or annual fees and you’ll need to factor these into your monthly payments.
Look For Bargains
Scour the real estate listings in your area. Also be on the lookout for “for sale” signs, in case you can negotiate a private sale without having to pay realtor’s fees.
Consider Buying a Fixer-Upper
Real-estate agents often use phrases like “needs some TLC” to indicate that a home needs some work done. You might need to replace a bathroom floor or a roof, for instance. Buying a fixer-upper in a good neighbourhood can be a good investment to make. The asking price will be lower and if you have the time and skill to do the repairs yourself, you can greatly increase the value of the home without having to spend too much.
Think Carefully Before Buying a Fixer-Upper
A fixer-upper can be a real bargain – at least on paper. Before you’re tempted into buying a property that needs some TLC, though, be sure what exactly that entails. The cost of fixing up the home might be more than it’s worth. You also need to think about the time involved, and if you actually have the time to do those home repairs.
If you really want to buy a home, it’s worth looking at where to buy a house in Canada in 2021. Some cities have lower average house prices or lower property taxes and often they’re close enough to the major cities for you to commute. It may sound like a drastic solution but in your twenties and early thirties, you’re still young enough to relocate and start a new life in another city without too much hassle.
Be Sure Relocating is Worth it
If you’re considering relocating to a more affordable city, be sure that it will be worth it. Will you be easily able to find a well-paying job in your field? If you need to commute to another city for the better job opportunities, how much will you have to pay for transportation? Sometimes it’s better to pay more for a home in a more expensive city where you can walk or bike to work.
Think About Building Your Own Home
If you’re in no hurry to move into a new home just yet, it’s worth thinking about buying an empty plot of land and then building your own home on it. Empty lots are much more affordable and if you think creatively, you can save on building costs without skimping on quality. Building your own home can also earn you special housing rebates and grants.
Think About Buying With a Partner
If your income isn’t big enough to get you the loan for that dream home, one solution is to team up with a home-buying partner and pool your incomes. It can be a significant other, a friend or a sibling. However, be sure that your home-buying partner is someone reliable and trustworthy who won’t bail and leave you in the lurch. Ask a lawyer to draw up a watertight contract before you enter into a home-buying partnership.
Be Prepared WhenYou Go House Hunting
Once you’re ready to take the plunge, the fun part starts: house hunting. However, it’s never a good idea to venture into this unprepared. Sellers often use all kinds of staging tricks to hide flaws. Know what to look for: if you can point out those flaws and how much they will cost to repair, the seller might be willing to knock a few thousand off the asking price.
Find Ways to Earn Money From Home
If you can earn money from your new home right from the start, this will help you cover the mortgage payments every month. Maybe you can rent out an extra room on Airbnb, for example. You can even register your home as a filming location, which will not only earn you extra money but will give you bragging rights if it’s featured in a big name production.
Pilon Real Estate Group Featured Listings: Click here!
We Keep You Covered When You Buy a Home With Our 12 Month Buyer Protection Plan!
Details at: www.HomeBuyerProtectionPlan.ca
Free Home Search With Proprietary MLS Access – New Listings – Faster Updates And More Accurate Data!
Find Homes Now: www.FindOttawaHomesForSale.com
Find Out How We Get Our Sellers More: Click here!
RE/MAX Hallmark Pilon Group Realty