In the last five years, the number of people living alone in Canada has exceeded all other household sizes and this number continues to grow. This means that as Canada has changed and adapted around Covid and a changing real estate market, the face of the average homebuyer is now also very changed. Especially if you are considering purchasing in a hot market such as a big city, competitive prices can make buying a home by yourself an even larger challenge. If you are thinking about buying a home on your own, read ahead for my tips on how to prepare for this big step.
Prepare Yourself Financially
Being the sole contributor to a mortgage means that you need to ensure your finances are in excellent shape. There are several ways you can prepare, but the main idea is to repay as much of your debt as possible and work on improving your credit. Many companies offer free credit services now that will provide a report that you can follow up on, which might include correcting billing errors or updating information. If your credit has been damaged by past mistakes, it’s time to ensure all payments are made on time and avoid hitting the maximum on any of your cards.
Once the debt is repaid, savings need to be your second priority. You will need to have a minimum of 5% for a down payment, but the less you have, the more you will pay overtime on fees. In addition to this, you should have money saved for contingencies and other fees such as transfer costs, moving costs, or repairs.
You can use your RRSP towards a down payment and there are some government incentive plans like the home buyers plan to help you borrow more towards a down payment. You can also use a TFSA to save money tax-free. Once you have gotten everything in order, look for a pre-approval, so you can have a comprehensive idea of exactly how much you can spend. It is not recommended that you spend as much as the bank is willing to give you to factor in that you will be solely responsible for any incidentals that might arise.
Rely on Your Supports
While you may be making this purchase on your own, it doesn’t have to be lonely. Call on your friends or family to help you make the right decision. A friend can provide insight and support as you house-hunt and keep you from making any rash decisions. In particular, a friend or family member who is already a homeowner can help you ask questions you may not have considered yet. Even with a family member or friend to help, a great real estate agent is a key piece of this puzzle. Having an agent who knows you will make all the difference in your level of comfort.
Abandon any “What if I Meet Someone?” Worries
Too many people allow this concern to stop them from moving forward in life. Reluctance to purchase a home because you may meet your match next month is something we hear quite frequently. Chances are, next month will be uneventful, but of course, if you do fall in love, here are some solutions: you move into your new place together, you rent your place out and find something new together, or you sell it and buy a new place together. Don’t let a “what if” prevent you from having the life you deserve now.
Start Your Search
Think about what you need, what you want, and what you don’t. Make a clear list and show it to your realtor. They need to know your must-haves and what is negotiable. Consider the location: proximity to work, to family and friends, to your social hangouts, and amenities that are important to you. Reflect on safety in your prospective neighbourhoods during the day and night. Your realtor can help you determine an appropriate location and help you decide whether a home or condo is a better fit to meet your needs. Present your pre-approval information to your agent, so they know what your realistic budget will be.
Guard Your Investment
As a single home buyer, you need to protect yourself against things going wrong. First, start a contingency savings account. Experts agree that 3 months’ wages are a reasonable amount to set aside. As you make this purchase, you may not have it right away, but it is something you need to work on as quickly as possible. This will cover you in case of illness, or job loss, and any urgent repairs like a leaky roof or new furnace.
You may already have insurance through your work such as disability and critical illness insurance, but it could be insufficient now that you own a home. Double-check your insurance and purchase more if needed.
Ultimately homeownership is a big decision, but there are ways to prepare for this journey. Having a real estate agent, you trust is critical to help you navigate the challenges of home buying and advocate for your needs. They can identify things you may not have considered and know more about the market that your support system will. Reach out to me to learn more about how I can help you make your first single home purchase; I would enjoy guiding you through the decisions you need to make and find a new home to love for years to come.
At The Blackwell Group, we know that the purchase of a new home is an exciting time! Reach out to us today so we can help make the process as fun and easy as possible. We look forward to speaking with you soon!