Over the past year, we’ve seen mortgage rates hit record lows and a limited supply of homes for sale. Back in February, the Canadian Real Estate Association (CREA) expressed that home prices were likely going to remain high throughout 2021. However, over the month of June, Google received an overwhelming number of searches from Canadian home buyers asking, “Should I buy a home now?” As competition and home prices are increasing, it’s normal for buyers to feel overwhelmed and a little hesitant about entering the market. If you’re planning to buy a home during this time, here are some ways you can better prepare for this purchase.
Review your expenses and budget accordingly
In a hot market, it’s common for buyers to put in a higher offer than they initially budgeted for. Before doing this, we recommend getting a clear picture of your financial situation. You can start by breaking down your monthly expenses to determine if you can afford your monthly mortgage payments. Additionally, many home buyers often overlook the costs associated with owning a home, such as closing costs and monthly carrying costs, which should also be considered in your initial budget. These expenses should be factored in right from the start to ensure you’re buying a home you can afford in the long run.
Get pre-approved for a mortgage to determine your affordability
A mortgage pre-approval is a great way to get insight on your home affordability and can save a great deal of time and stress upon starting your home search. It not only makes the buying experience more enjoyable, but it allows you to shop for homes that are clearly within your budget. Not to mention, pre-approval can also give you more negotiating power during a bidding war, where multiple offers are made on the same property. It reinforces your financial stability and shows that you’re a credible buyer with real interest in making a deal.
Explore your down payment options
Coming up with a down payment isn’t always easy, especially when prices are on the rise like they are now. Over the past year, many Canadians have been taking advantage of the many options available to help them gather the necessary funds to make a down payment. In July, 15% of Canadian first-time home buyers said they were able to grow their savings during the pandemic and plan to use that money for a down payment on a home in the next year. There are also many programs available to first-time buyers that offer assistance with their down payments, countering some of the costs associated with buying a home. These include the First-Time Home Buyers Incentive Program, Home Buyers’ Plan and Land Transfer Tax Rebate.
Although prices are increasing, there are many opportunities for prospective home buyers to adequately prepare and enter the current market. At Homewise, we make this process even more simple for home buyers by helping them get pre-approved in just five minutes and guiding them at every step of the process to find the best mortgage that’s within their budget.
Looking to buy a home soon? Check out our mortgage affordability calculator to give you a high-level view of your maximum mortgage and home affordability.
