Although buying a home might sound like a problem that you can set aside until the future, a big part of managing your finances includes planning for milestones. Simply put, it’s never too early to start thinking about buying a home.
Across Canada, it takes 13 years of full-time work for the typical Canadian between the age of 25 to 34 to save for a 20 per cent down payment on an average priced home. However, with the right strategy, home ownership is not out of reach. There are homes and areas that are more affordable than others, as well as ways to plan efficiently.
To help you get started, QuadFi has put together a few things you may want to consider when planning to buy your first home:
- Decide what type of home you want.
Buying a home doesn’t have to mean a three-story house with a picket white fence. Your ideal home could also be a detached home, a townhouse or a condo, and each of these options come with financial considerations. For example, if you intend on living in a detached house, you may want to rent out a room or your basement to help out with your mortgage. You also want to consider where it will be located, and this comes with other considerations like the amount you’re willing or able to pay for a home, how much you will need to save up to cover the cost of the down payment and closing costs.
You can also find an affordable house in a seller’s market. Once you start looking, don’t give in to the thought of buying a home outside of your price range right away. Keep in mind that a home may not be worth sacrificing other financial goals like your retirement or your child’s education fund.
- Pay off any debt.
The biggest challenge standing in the way of millennial home buyers? The student debt crisis. If you have any debt, ensure you have a budgeting plan. There are also strategies such as the debt snowball plan, and Quad-Fi’s flexible refinancing products, which includes refinancing federal loans, bank loans, credit cards and private loans.
- Save for the down payment.
97% of millenials buy their first home with a mortgage. It’s important to have a strong down payment to lower your interest rate and to help you pay off your mortgage even faster. To determine what percentage you have to pay as a down payment, take a look at the price of the home you have in mind.
Again, if you budget accordingly, it may take less time than you think.
- Invest in your career.
Saving money isn’t the only step to affording a home—you also need to maximize your income. This may mean switching jobs, employers, or industries, or even going back to school to improve your job prospects. Other strategies include taking on a new side-hustle or finding low-cost alternatives to the activities you take part in.
Whichever path you choose, it can never hurt to plan for the long term.
This is by no means an exhaustive list, but it is a good idea to start visualizing yourself as a homeowner and thinking about how you would like to proceed. There is an endless amount of accessible advice for millennial homebuyers out there and we encourage you to be proactive!