Are you a renter interested in making the switch to homeownership? Here are four signs you’re ready to join the Homeowners Club.
It’s no secret that renting is extremely popular! I can understand how it seems like the simplest option, especially if you’re young and not yet ready to settle down. But as we’ve discussed previously, renting has its drawbacks if you’re thinking long term.
Let’s say you’ve been exploring purchasing your own home for some time now. How do you know you’re actually ready? Here are a few signs to look out for.
When you pay rent each month, that amount goes into your landlord’s pocket, not yours. If you decide to move, that money is gone.
Ally and I recently helped a teacher make the switch to becoming a homeowner. Her decision to purchase came from seeing those around her build substantial wealth in real estate, and realizing that renting and paying someone else's mortgage wasn't going to set her up for financial success in later years.
If that sounds like you, it’s a sign you might be ready to make the leap yourself, and purchase your own home.
Living in a city as stunning as Vancouver means that properties tend to be expensive. If you’re a first-time prospective homeowner with 5% of purchasing funds on-hand for a mortgage down payment, it’s definitely a sign you may be ready for ‘the switch’.
If you have 10% available, even better! After all, the higher your down payment, the less your monthly mortgage fee will be.
With mortgage rules being on the tighter side, you want to make sure you have full-time work with at least 2 years of T4A income in the bank. That’s what a bank or lender will look at when qualifying you for a mortgage. We talk more about how to save money in preparation for buying a home here.
If you feel you’re nearly able to afford a down payment but want to save, here are some simple saving tips:
You’d be shocked how much those little purchases can add up each month. Next time you want to spend that extra $5 on a Pumpkin Spice Latte or a $14 salad, think about your future down payment!
Let’s say you still want to rent for the time being, but are eager for a second revenue stream. Investing is the way to go.
Real Estate is one of the greatest avenues of investing and turning a profit. There is constant demand, and it’s a GREAT way to become a millionaire (just ask Andrew Carnegie!).
If you’re interested in investing, make sure you have access to 20% of the purchasing price on an investment property. You may consider joining forces with a family member or friend to make this 20% go down to 10% each for example.
Remember the young teacher I mentioned earlier? She’s the perfect, real-world example of why joining the homeowners club is actually the best decision you can make long term. Here’s the scoop:
Our client was making good money from her teaching job, and qualified for a mortgage with the bank because she had more than 2 years of steady income.
After we crunched the numbers on a property she was looking at, we found that her monthly mortgage + strata fee would be LESS than her current monthly rent.
That was what made her pull the trigger. Now, she lives in a gorgeous penthouse in Burnaby! If you ask her today if she regrets anything or if she would do anything differently, she’ll tell you, "Why didn't I do this sooner? And when can I buy the next one?"
Here’s the breakdown of her numbers:
Monthly Rent: $2,000
Monthly Mortgage Payment: $1500 rent + $250 condo strata fees
Total: $1750There you have it! There are countless reasons why joining the homeowners club is the better decision in the long run. If any of these signs sound like you, our team at Amy & Ally are available to help you get the ball rolling and become a homeowner. We’d love to get in touch with you!