One of the biggest decisions everyone faces in their adult life, is deciding where to live. So many factors come into play that we can’t possibly cover them all! But here is a quick approach to budgeting for your home.
Look at your after-tax income. Now multiply by 0.3 (or 30%). Can you afford somewhere to live with that amount? Here is an example, based on an income of $50,000:
Salary after deductions: $33,085
30% for home: $9,925 (or $827 a month)
Are you ready to save for your downpayment? Do you already have an account with 20% banked away? Or do you want to move-in sooner and put the minimum 5% down?
If you have 5% and think you’re ready, you should seek out a pre-approval from the bank. This can tell you whether the bank feels you are financially stable enough to take out a mortgage, or prepare your finances if you are not yet ready.
5% is the minimum downpayment in Canada (aside from creative financing options – speak with your Mortgage Specialist), but anything under 20% down is subject to CMHC tax. This can add up to 3.35% onto your home mortgage, which can still be worthwhile if you are eager to own a house.
Owning a home can have a lot of hidden costs and responsibilities. Condominiums have many conveniences similar to rentals, such as exterior maintenance and garbage removal. If you want a home, don’t forget to budget the cost of item’s you’ll need or want, such as a lawn mower, weed whacker, shovels and/or snow blower, or the cost of a landscaper if you’re unable to do these chores.
Does the house have a pool? Don’t forget to watch out for items that will add to your home maintenance. A lovely garden with shrubs and flowers still requires annual maintenance to make sure they flower each year (and don’t overtake your yard!), plus weeding and pest control.
At the end of the day, only you can decide if you’re ready! If you’re unsure or have questions, don’t hesitate to reach out. Your Buyer’s Agent is a great resource, ready to help you understand what it takes to own a home or condo.