July 23, 2018
5 Tips for Getting Into Today’s Housing Market
The real estate in cities like New York and London is so precious, most residents will never own their own home. Some believe Toronto and Vancouver will eventually be the same. All the more reason to get in now, while you (hopefully) still can. If you need to get a little creative, these five tips might help:
1: Tap your RRSP
If you’ve never owned a home before, you have written proof that you plan to build or buy a new home, and you have money in your RRSP, you may be able to use the RRSP Home Buyer’s Plan to get your hands on a tax-free down payment. Alternatively, if you are helping a related person with a disability through this process, you also qualify.
The Home Buyer’s Plan allows each spouse to withdraw $25,000 to purchase a home. The only snag is you need to pay the money back to your RRSP in annual instalments within 15 years. Any amount you don’t repay within that timeframe will be subject to income tax.
Being able to jump-start your homeownership using tax-free money is pretty attractive. Depending on your tax bracket, it’s like having twice as much money at your disposal. Just don’t forget to put those annual repayments in your new budget.
2: Go In With a Partner
Sharing the cost of housing probably shouldn’t be the main reason to shack up with someone, but it certainly doesn’t hurt. Heck, these days, it’s even becoming more common for couples to find themselves coupling with other couples.
Whether it’s a pair of siblings sharing a condo, close friends going halfsies on a bungalow, or couples with kids dividing a big ol’ house into separate living quarters, you get the idea. You might be able to share the burden of a down payment and monthly bills with someone else.
To make this work, you’re going to need a few things, like a well-chosen partner, a lawyer to draft up a co-ownership agreement that spells out all the rules, and some type of system for regular communication to make sure all the housemates are cooperating and cohabitating happily.
Another option to lessen the weight on your shoulders is to consider co-op or co-ownership opportunities, which allow you to buy shares of a company that owns the property, or buy a small ownership percentage of the building. This then grants you specific rights to a unit.
3: Become a Landlord
When you buy a home that contains a rental unit, the income from that unit can help you qualify and pay for a mortgage.
A common scenario is to buy a home with a basement apartment, which you can rent out. If building an investment is more important to you than living in palatial conditions, you can even do it the other way around: live in the basement yourself and rent the upstairs for maximum income potential.
Rental units are a tried-and-true way to get onto the property ladder and definitely worth exploring. You can run the numbers on purchasing a property that already comes with an apartment and tenant or doing the rental renovations yourself, which can be less expensive but obviously quite a bit more effort.
You might be worried about annoying tenants, or dealing with regulations that come with renting out a separate unit. These concerns can be dealt with by screening tenants before renting your property out, and checking the Government Canada site for any regulations that need to be followed, which are actually quite straightforward.
4: Make More Money
If you find that home prices are soaring but your income is not, one possible solution is to make more money. It may sound easier said than done, but there are a few approaches you can take.
The first and quickest approach is asking for a raise. It may seem like a daunting task, but it doesn’t have to be. You could start by telling your boss that you’re trying to purchase a home, what income level you’re aiming for, and how you might be able to work your way there.
At the end of the day, asking for a raise is a sales pitch. You sell yourself by developing rapport, asking questions, understanding how to leverage your strengths, and ultimately asking for the raise. Employers are people, and most people like to be helpful. Personal stories always have a measure of relatability to them, and they often work better than pure logic.
On the other hand, if you’re willing to open yourself up to new opportunities, there’s no harm in shopping around. Leverage your network, speak to recruiters and you may just land a job that boosts your income.
5: Try Meditating
You want to own a home. Your friend recently moved into a beautiful one. And, let’s be honest, you’re not getting any younger here. The whole thing can be a bit anxiety-inducing.
If you’ve looked at all your options and the truth is you’re simply not ready yet, it’s OK. As the saying goes, “Rome wasn’t built in a day.”
Home ownership is a desirable thing, but it’s not the only thing. We live in a real estate-obsessed culture, but the relationships you build with your family, friends and partners will be the real key to your happiness in the long run.
So write out your plan for home ownership and stick to it. In the meanwhile, take a deep breath and relax. You will get there!
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