Always a lot of back and forth with this topic. You get people from both sides with their stance on the matter, however here’s mine! Which I feel I make a good case!

Either way you have your cost of housing, may it be through rent or a mortgage. When you rent you are at the mercy of the market. Rental rates can increase when you are no longer locked into a lease, often fluctuation with the inflating cost of living. There are rules you must follow and you have the landlord to worry about! Hopefully they are good, hopefully they will keep up the property and as things break or need maintenance, they are on it. Hopefully they are satisfied with the amount your paying and wont increase at renewal. Hopefully they don’t want to sell, hopefully they give you your damage deposit back, hopefully, hopefully. Lots can change and is out of your control, when the one behind the wheel is not you! 

Now lets look ahead 25 years down the road. 25 years of paying $2,000 monthly rent = $600,000. After 25 years as a tenant nothing will have changed, your still going to have to pay rent. What about in 50 years, still rent! With how inflation is right now, at what rent was 10 - 15 years ago. You really think that your $2,000 rent will stay $2,000 for your decades to come? If you leave or want to move, there is no refund. You literally are paying into someone else’s investment! Why not pay into your own? Really ask yourself why? Even if you think you might want to move in couple years, then move. Sell it or rent it out! I have many clients whom purchased locally and now live abroad but have their properties rented out.

Where after 25 years of home ownership, your mortgage is now completely paid off. The amount you purchased the home for most likely has grown due to inflation, so now you have even more equity. Once you got to your 2nd or 3rd mortgage renewal you start to notice the monthly cost lowering. Which there’s also many ways to pay off your mortgage faster (biweekly payment, extra payments per year). Yes with ownership comes extra expenses. The cost of property insurance, property taxes, maintenance and repairs. Which even if you only got half the money you spent back all those years, or even 25%. It will always be far more the what you get as a renter. As renting is a return of $0. It’s also way easier to retire and live life when your rent is already paid off! 

You can even get savvy and become the landlord and have others pay towards your mortgage. I have many clients and friends whom live in their homes for free with income coming from their properties in some form. Now these days we see basement suites, garden suites, garage suites, room rentals, garage/shop rentals, land etc. Which the Canadian government in 2024 has even made 2 steps towards helping Canadians get funding with turning their properties into investment suites! If you can get onboard with rental income in some form on your property, your setting yourself up for something amazing! 

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Been thinking about homeownership but just don’t know where to start? 

First step, reach out to a mortgage broker or lender to understand what budget your income can potentially acquire and get your pre-approval reviewed/started! Employed & self employed are viewed completely differently. Factors like credit score, amount of debt and its ratio to what you make against the qualifying rates (stress test). All are keys to determining where your scenario stands. You may be ready to buy now or not just yet. However finding this out needs to be your first step. This sets your baseline of expectations and what you will be able to buy. As well makes sure you are ready to go, when you want to be. Nothing worst then waiting a year to buy and you don’t qualify because you never checked. Or you qualify but with the terms that are less than ideal due to things on your credit.

Mortgage brokers over lenders, who do I use? I prefer the broker route when it comes to lending, as often they go to bat for you harder and are also a bit more flexible to deal with. They don’t get paid until you get your mortgage. So I find they just work a bit harder for your business. As well, they often can acquire more competitive offers. They shop multiple lenders instead of 1. They have access to both A lenders and B lenders, and are free to use! A good broker / lender (when needed) will provide you the steps in order for you to qualify for what you want. So remember that when prequalifying yourself! If your not ready to buy just yet, your broker/lender should be giving you a “to do list” in the meantime to get you ready and help you achieve your approval. 

Next are actual funds needed to buy your home. You have to qualify for the mortgage and you need to have your downpayment. Which depending your scenario downpayment can be anywhere from 5% - 25% of the purchase price. Factors like self-employment, credit score/debts, type of property, value over $500,000, value over $1,000,0000… all are deciding factors of your downpayment. Which your mortgage broker/lender will let you know the details of this. You don’t pay the downpayment until you buy a place. However, you will need to show where the downpayment is coming from and that you have it. Once you do find a property and are locked into a pending offer. You’ll pay a deposit with your offer to purchase. Which is refundable if you decide to not waive conditions. Often this is due within 2 business days of your offer being accepted. This is part of the down payment and not on top of, so you will pull the money form that. You will also have your property inspections cost, which is normally $500 - $1,000 + depending what you are buying/inspecting (condo, house, acreage, outbuildings, wood fire place, size, etc…).You will also need funds for your lawyer which will include the land transfer cost. Which this often will range from $2,000 $3,000 give or take.

“First Time Home Buyers Program”. You will want to be aware of the government program allowing you to withdraw up to $60,000 from your RRSP without any tax implications! You then have 15 years to pay that amount back into your RRSP or you’re taxed on it. Repayment starts the second year from the year you withdrew. Which each year your contributing back to your RRSP, it’s counted towards your repayment. You actually save for a home much quicker this route, as the money being saved is not tax yet! Easily (whatever your tax bracket is) 35% faster using an RSP then using after tax dollars (regular savings, cash, TFSA). You also get a tax credit when you contribute to your RSP. I’ve had many clients take advantage of that and deposit their downpayment into their RSP. Creating the tax credit/refund next tax season. Then withdrawing it through the program. 

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