With prices going up and down, and mortgage rules getting increasingly tight, it can be difficult to know when it is the right time to buy, especially if you’re buying for the first time. Here are some signs that it’s time for you to jump into the market:
- You have a reliable source of income. If you still aren’t sure where your next paycheque is coming from, or how much it will be for, it’s not the right time, unless you have enough saved to not need a mortgage.
- You have saved at minimum 5% of the purchase price, plus extra for closing costs and unexpected repairs in the first six months of home ownership. The closer to 20% down payment you get, the less you have to pay in default insurance, so having a healthy down payment can actually save you money. Having at least your down payment means you aren’t borrowing even more toward the purchase, and you will need to cover your own closing costs, which will likely include at least some land transfer tax. The more you have saved, the more you will save. Don’t rush in until you’re ready.
- You don’t have significant other debts. You don’t want to be house poor – and if you have a lot of other debts, you will be. If you have a lot of debt, you may want to wait until you’re in better financial shape.
- You’ve spoken to a professional (mortgage broker or agent) and have a sense of all of your monthly expenses for the house you’re looking at, as well as all of your closing costs. You need to be prepared before taking this leap.
- If you need to have someone co-sign the mortgage, you have an exit plan to get them off within five years. With mortgage rules tightening up daily, expecting all first-time buyers to be able to buy alone may be unrealistic. However, you don’t want to leave your parent or other co-signer on title forever. If you need help, have a good plan in place to be able to qualify for a mortgage on your own by your first renewal.