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 home, 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 for the down payment. A down payment is the amount of money you pay upfront when you buy a home, which is between 5% and 20%of the purchase price. Setting aside money for that large lump sum is the first step to owning real estate.
How much income do I need to make?
Once you have enough for the down payment, you will need to consider what size mortgage payments you can afford based on your income. Your annual income can also play a factor in whether you choose a fixed or variable mortgage—if you choose a variable mortgage, it’s important to realize how much your payments could increase should interest rates rise.
Am I ready to lock myself into a 5-year mortgage?
Though you can choose a short 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?
Homeownership 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 furniture purchases.
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 having a plan 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 about 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.
Saving up for home ownership can require some creativity—here are some ways you can save money now.
Get To Know Wright Sisters Group
Discover the expertise behind the team with 100+ years of combined Toronto real estate experience.
