The Challenges First Time Home Buyer Face with Toronto Area Real Estate
From saving the deposit to the mortgage approval and finding the right place, purchasing your first home can seem daunting.
Real estate markets in the Greater Toronto Area rapidly increase and multiple offers are common. This competitive real estate market causes first-time buyers to be discouraged. If you’re feeling this way, you’re not alone.
I recently spoke to potential clients that had an interest in owning and not paying rent anymore. They’ve just gotten engaged and are excited to start a life together in a home they can call their own. They had enough of paying somebody else’s mortgage off with each monthly rent cheque. The problem is, they feel they can’t afford to buy something and will be stuck renting forever.
I provided some advice to them and I’ll share that same advice with you;
#1 Take a look at your current financial situation; most importantly your expenses.
Where does your money go each month? How much of that is variable that can easily be cut back or eliminated? Expenses such as fast food, coffee, restaurants and drinks with friends, or unnecessary clothing. There are many ways to save on a monthly basis but you have to buckle down and commit. Ask yourself: “Do you want all the extras in life right now, or do you want to be a homeowner?” (Be sure to check out this money-saving tips guide)
#2 Temper expectations and get your feet wet
Your wish-list of having a detached, 3 bedroom home with a large backyard might be a stretch for your budget right now, but what’s wrong with owning a two-bedroom townhouse or a condo, for now? Use that to build equity and then upgrading in a few years to a home that suits you better. Nobody buys their first home and says that it’s their forever home (and if they do, they’re usually still moving five years later).
#3 You have to make sacrifices
Much like settling on a different type of home than you envisioned, you need to keep an open mind on the way the home looks and the location. While a newly renovated home near downtown, walking distance to the lake sounds like a dream, it’s unrealistic for most. A home that’s a bit outdated and a reasonable driving distance to your ideal location might give you an opportunity to get your foot in the door, do some updates and upgrades over time.
#4 Live where you rent and rent where you own
Lastly, If you absolutely don’t agree with the above, then stay where you are and keep renting. This doesn’t stop you from investing in real estate elsewhere. See what options are available within your budget elsewhere. Whether it’s your primary residence or a property you rent out, having your foot in the market is a good idea.
Yes, you’re still paying rent where you live, but you now have someone paying YOU rent too. This means you have a mortgage paid down monthly, incrementally building equity in a property that you own. Over time, you can leverage this property to buy your dream home. In this scenario, you don’t have to worry so much about what city or town the property is in and you don’t have to worry about the features, upgrades, or amenities, it’s all about the numbers. This is a surefire way to build your personal wealth and get in the market without breaking the bank.
Ready to get planning and saving to buy your first property? Whether for your personal use or rental purposes, there are some awesome apps to help you save and earn more money.