Hot real estate markets can be hard no matter which stage you’re at – buyers compete against each other, and they are tempted to spend more than they really want, to avoid subjects or conditions that ultimately protect them with one of the biggest purchases they’ll ever make.
While the market has cooled, in many regions it’s still quite active. Home ownership is a big commitment that will affect your whole family’s lifestyle, so there is a lot to consider. Costs that start with the purchase include real estate fees, property transfer tax, legal costs and insurance premiums. Once you become a homeowner, there is the mortgage payment, insurance, property taxes, strata fees if necessary, and repairs and maintenance.
Take the time to rethink what owning a home means to you. There could be alternative options you haven’t fully considered. Here are some to think about, that could make owning a home a reality:
- A shared ownership arrangement
Although a big mortgage might not be within reach, half a big mortgage may work for your budget. Consider shopping for a home with a friend or family member who also would like half of this mortgage. Then search for homes that have functional floor plans, or separate suites, so that you have the option of separate living areas to give each of you some privacy. You can even factor in the cost of renovations to create boundaries. Definitely talk about expectations beforehand, for this type of arrangement to work – it would be advised for each party to have legal advice as well, and an agreement drawn up to outline responsibilities and timeline for when the house may be sold.
- Help from parents
More established family members may be able to help the next generation of their family enter the real estate market. Due to the quickly increasing costs of buying a first home, many buyers are relying on help from their parents. Some parents are able to help, while others aren’t in a position to gift a large down payment. However instead, would your parents consider investing in a home with you? Then formalizing any agreement legally would be an important step to take, to ensure everyone is protected.
- Use a section of your home to help pay your mortgage
The common way of getting some help with your mortgage is to rent out a suite in your home. Rental suites are even called “mortgage helpers” and the income from them can even help with your qualification for a mortgage. Many municipalities also have areas that allow a “coach house”, or a detached suite on your property. Some of these are free-standing, while others are above a detached garage. These are viewed by lenders in a very similar way as the in-house suites mentioned earlier. It is important to get familiar with any regulations along with your responsibilities as a landlord. Consider contracting a service to help screen possible tenants or check for landlord resources and associations in your province.
- Home ownership doesn’t mean you need to live in the home
If you are able to rent a home that suits your needs, consider staying where you currently are for the time-being, and become a landlord for the home you just bought. At some point your situation could change, and you could end up moving into the home you own and have been renting out. Or, you could simply sell that home at a later date to buy a different home you may want to move into more. This decision gives you flexibility and options.
Overall, be flexible with your vision to own a home and be open to new opportunities. If you end up renting for longer than you’d like, use that time to live as if you already have a mortgage. Save the difference and use it to add to your down payment savings, or pay off any debts.