Are you financially ready to own a home in Canada?

Anyone can feel ready to own a home in Canada when they think of how much freedom they’ll have compared to renting. You can paint it whatever colour you like, own pets, and make alterations without the landlord’s permission.

However, feeling ready to own a home for these reasons is not the same as being financially prepared. You can learn whether now is the right time to step onto the property ladder by doing the following things.

Researching Lending Options

You can find a wealth of information on lending options on the internet, such as a banking website, a broker, or even a Canadian woman-owned finance blog. By researching your lending options, you can determine how much of your own money you need to save for a deposit and which lenders offer specific deals. During your research, you might even be able to see whether you’re eligible for first home buyer incentives in Canada, such as the shared-equity mortgage with the Government of Canada.

Looking At Your Expenditure

When financial institutions consider providing mortgages to people, they delve into their expenditure to see whether they’re responsible with their earnings. Look at your spending behaviour to learn if lenders would look upon it fondly.

Take note of your debt payments, expenses, and savings, and highlight unnecessary spending you might need to address if you decide to purchase real estate. When you start considering homeownership as a valid option for you, cleaning up your banking footprint can be an excellent first step.

Considering Your Maximum Monthly Spend

There can be many ‘hidden’ costs associated with homeownership, above and beyond what you repay the bank each month on your mortgage. It’s important not to compare what you pay in rent to a mortgage and believe you could afford to own a home.

You also have to factor in property taxes, water and waste bills, insurance, and utilities, some of which you may not be paying in a rental. Fortunately, you can find information about many of these expenses online, allowing you to calculate how much you can afford to pay each month.

Calculating Upfront House-Purchasing Costs

When you’ve used a mortgage calculator to work out monthly homeownership costs, you might think you now have enough money to go full steam ahead with your purchase. However, it’s essential not to forget about the upfront costs of purchasing a house. You might also need to set aside funds for your down payment, a house inspection and related fees, moving costs, any prepaid property taxes, and even land registration fees.

Checking Your Credit Score

Many people check their bank’s latest lending rates and calculate how much to save based on those. However, the advertised rates with many banks are not necessarily what you’ll be able to receive, especially if you have poor credit.

Check your credit score before applying for a home loan. By doing so, you can see if there’s room for improvement that might increase your chances of securing a more competitive home loan rate.

Purchasing a home for the first time is likely one of the most satisfying purchases you will ever make, but it can be quite an arduous process to get to that point. Consider this information above to put you in the best possible position to approach lenders.

Photo by Ian MacDonald on Unsplash

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