Is Now the Best Time to Buy? Debt Advice for MillennialsApr 30, 2019
Having trouble deciding whether to keep renting or buy a home? It is a tough decision that requires you to consider a few factors. That’s why we want to offer some advice about debt, affordability and future goals to help you determine the best option for you.
Renting vs. owning: how to know what’s most affordable
In 2018, Point2Homes rated Saskatoon number 22 on a list of 85 best Canadian cities for millennials. Rating was based on unemployment rate, life satisfaction, crime rate and population of other millennials. What also makes Saskatoon an attractive option for living is its rock-bottom home prices compared to other major Canadian cities. However, affordability looks different to everyone, which is why you should ask yourself these questions to see what’s the best fit.
How much debt do I have?
If debt is already making it difficult to meet all your monthly expenses, adding a mortgage payment into the mix probably isn’t the right fit. Since rent rates are low, take this time to put extra income toward debt repayment. You could even try adding an extra stream of income via a part time job in order to increase your payments and squash those balances faster. Check out more debt repayment options here.
Is my income enough?
More importantly, is your job stable? The last thing you want to do is default on a mortgage payment due to a lay-off or job loss. If you’re single, you may have a harder time qualifying for a mortgage, but as a dual-income couple, you can afford more options. Check out the FCAC’s Mortgage Qualifier Tool to get an estimate of what you’ll need for a down payment, and how much home you can afford.
How much do I need to save?
According to the CMHC, the minimum down payment in Canada is 5 per cent of the home’s price. So, for a home priced at $300,000, you would require a $15,000 down payment. In addition to saving up for a down payment, you need to think ahead to closing costs, moving expenses, insurance, land transfer tax and any other fees involved in buying a home — including repairs. My Money Coach suggests adding 40 per cent to what you expect your monthly mortgage will be, in order to cover these extra costs. So, if you’re renting or living at home, now is the time to put away as much money as you can to save up for these costs.
What are my goals?
Get real with yourself by sitting down and figuring out exactly what your plans are, including short, medium and long-term. You don’t need to know everything — you just need to know what’s most important to you (and your partner, if you’re a couple). Take some time to look over this tool to determine your goals and estimate how much they will cost. Will you have enough money to meet your goals if you’re carrying a mortgage? Where can you make compromises?
Do I feel ready?
This ties in with what your goals look like. If you’re the type of person that would want to spend three months immersing yourself in the culture of Nicaragua or backpacking through Europe, home ownership will be difficult to maintain. On the flip side, if you’re ready to put down roots and your finances are in line with your goals, now may be a great time to buy a home.
Are you feeling ready to buy in today’s market? Have you considered all the factors that go with it? #LeaveDebtBehind #FirstTimeBuyer #DebtAdvice