Getting on the property ladder isn’t quite as straightforward as it once was.
The rising cost of real estate and the engulfing cycle of ‘Generation Rent’ has all but priced out many young Canadians from picking up either the home of their dreams or a smart investment opportunity. Couple that with the present housing boom we’re seeing across the country, and it seems unlikely most Millenials and younger will be able to get themselves on the property ladder any time soon.
That being said, it’s not a lost cause. With the right money and a good plan behind you, you can find yourself climbing the ladder towards sustainable homeownership. In this article, we’ll outline some of these steps specifically for younger prospective buyers across Canada.
Consult experts for advice
First and foremost, you’re not alone when it comes to getting a foot on the property ladder.
While many rely on the bank of Mom and Dad for not just funding but advice, other young Canadians find themselves swimming upstream to their first property, fighting against a tide of confusing terms and expensive consultations.
What’s important to know is you shouldn’t let this put you off. There is advice out there and it’s absolutely crucial for making a smart decision when it comes to putting money on the table.
Before you start to look for properties to actually buy, consult the help of experts in the local area on everything from emerging neighborhoods to mortgage advice. They might be able to point you in the direction of a smart investment or the perfect spot to raise a family. From finances to commuter links, leaning into local help immediately gives you a competitive edge against other buyers who jumped right in.
This is particularly important when it comes to the financial side of getting on the property ladder. Understanding mortgages, loans and insurance is an important step in budgeting, as these costs will determine your buying scope.
Once again, aim to lean into the advice of local experts over national companies. For example, young Canadians buying in Ontario may want to look for mortgage brokers in Brantford. Online services such as Breezeful can point you in the right direction for Brantford brokers who will be able to provide a more tailored quote for the area. The savings may be negligible, but they’ll come with priceless local insight.
Advice is out there, you just need to be smart in how you approach and consider it.
Save in creative ways
Everyone knows saving is an important part of preparing to invest in property.
Chances are you don’t just have the cash lying around to put down on a house. You need to skrimp and save for months to get in a position to earn a loan to make up the rest. However, there are smart and stupid ways to save, such as:
- Budgeting based on your salary
- Looking for cheaper alternatives to your hobbies and lifestyle (going to the library for books, downgrade to one instead of two cars)
- Taking staycations instead of vacations
- Using a tax-free savings account
- Checking for a first-time buyers program in your province
Before you start saving, make sure you are free of any debt hanging over your head. Not only will this dry up your funds, but it can affect your credit score, which can significantly diminish your ability to earn a mortgage. Give yourself a few months to build up this score.
Many younger buyers make the mistake of being overzealous when it comes to saving and plucking a random number out of the sky for a goal. Keep your plan rooted in reality and you’ll find it much easier to save for that down payment.
Establish a (realistic) plan of action
Before you can start viewing houses and putting in offers, it’s vital to have a realistic plan of action in place to approach buying.
While we’ll outline the core process below, it’s important to tailor a plan towards yourself and your own aims. Are you looking to buy to rent or to buy for yourself? Are you ready to move in straight away or should you pay less for a place that might need some additional development work.
Establishing a plan of action does not mean knowing how the process is going to play out. Real estate is so quick-moving and full of pitfalls that that is essentially impossible. Instead, you should plan for the things you can control, such as whether you’re buying with someone or not.
This might scupper your plans and mean you have to wait another year to buy, but it’ll be worth it. Sometimes, a bad investment with the promise of poor returns can be much worse than no investment at all.
Understand the process
Of course, preparing yourself to buy a house for the first time requires understanding the process of actually buying property.
It’s all well and good to have a dream home, but do you know how to get there?
In very simple terms, the steps of purchasing a property in Canada can be broken down into:
- Finding a realtor
- Getting pre-qualified for a mortgage
- Finding an affordable property
- Acquiring a mortgage
- Putting in an offer and negotiating said offer
Of course, the process is more complicated than this, but these are the basic steps in the process you need to prepare yourself for. Having an understanding of what comes next will help you keep your funds in line and your potential move-in date steady.
It’s not easy to get on the property ladder, especially at a young age. House prices are rising and the market continues to put up barriers in the form of competitiveness that restrict young buyers from making competitive offers. Take your time and understand the process fully before diving in. You’ll find a better home and a better footing on the ladder for it.