August 19, 2019
Buying Property Among Most Important Dating Considerations in 2019
When people are in search of that special someone, they’re likely looking for a person who’s attractive, kind, and has a sense of humour, right?
Not necessarily. While these are certainly important traits when considering dating someone, they’re actually lower on the list than you might think. Instead, millennials are placing more weight on shared financial and property goals than on looks when it comes to dating. When millennial daters consider a potential partner for the future, these aspirations trump physical appeal.
But placing such importance on these features has a downside for these millennial daters and is putting them under more stress compared to daters in older demographics.
The truth is, such financial burdens don’t have to be as stressful as they might be.
Property and Financial Goals More Important to Younger People Now
According to an HSBC-sponsored global survey called Beyond the Bricks, 39% of respondents claim that financial aspirations are more important than physical appearance when it comes to choosing a future partner. And 33% of those polled said that shared property goals hold more weight.
These are much different numbers compared to those associated with baby boomers, for instance, who are more likely to be more financially settled and have had their hand in the real estate market. It also paints a different picture for the dating world among millennials, who seem to be looking for someone who can share the financial burden of owning a home.
Buying a Home is a Huge Stress in Many Canadians’ Lives
While many end up finding that perfect partner and experiencing the excitement of a home purchase and ownership together, the stress doesn’t necessarily end.
Many Canadians depend on shared financial responsibilities and sharing a home so much that they may even remain in a bad relationship as a result. More specifically, 16% of those surveyed claim that they’ve stayed in a bad relationship because of property, compared to 6% for the average Canadian.
Nearly 63% of Canadian millennials said financial considerations triggered their last house move, mainly because they were seeking a lower cost of living or were looking to get more for their money.
The truth is, however, buying a home doesn’t have to be this stressful. In fact, there are certain steps that can be taken toease the financial burden and emotional stress of buying a home and making your dreams of homeownership a reality.
How to Make Purchasing a House in Canada a Reality
While sharing the same aspirations when it comes to buying a home and managing finances is a good thing, daters don’t necessarily have to be so focused on finding someone who can take on half of the financial burden of making a home purchase.
Here are a few things you can do to make the process of buying a home much less stressful on yourself and your wallet.
Save For a Down Payment
Of course, a mortgage will likely be a requirement before you can sign a real estate contract to purchase a property. And with a mortgage also comes a down payment.
While you can leverage a huge chunk of the purchase price through a high-ratio mortgage, you can lessen the financial burden of a home purchase and a mortgage by putting as much toward the down payment as possible.
In Canada, a 5% down payment is typically the minimum required to get approved for a mortgage, though some lenders might require a higher amount if other aspects of your financial life are not up to snuff.
That said, you would be better off putting down even more than 5% in order to reduce the amount you owe and cut down on the amount you would have to pay in interest over the life of the loan.
Further, a higher down payment amount can also eliminate the need to pay mortgage default insurance, which is a necessity with down payments that are less than 20% of the purchase price of the home. If you can manage to muster up 20% of the home’s price, you can avoid this added charge.
Keep in mind that a down payment will amount to tens of thousands of dollars. That’s why saving up well in advance of a home purchase is crucial. To help make saving for a down payment easier, consider the following:
- Open a savings account dedicated to your down payment
- Dedicate a certain amount of your paycheck to deposit into this account
- Set up automatic payments to the savings account
- Consider borrowing from your RRSP account and take advantage of the Home Buyer’s Plan available to first-time buyers
Educate Yourself About Additional Costs
Unfortunately, the purchase price of the home isn’t the only thing that you have to pay for.There areadditional costs that you will have to cover, most of which will have to be paid upfront and in full. Others are costs associated with homeownership that you will be responsible for paying as long as you remain a homeowner.
Generally speaking, you can expect to pay anywhere between 2% to 5% of the purchase price of the home in closing costs, which can include the following:
- Appraisal fees
- Lawyer fees
- Title insurance
- Home inspection
- Underwriting fees
- Mortgage broker fees
- Mortgage default insurance
- Moving costs
- HST (for new construction)
- Land transfer taxes
- Real estate agent commissions
- Property taxes
The list can go on and on. The bottom line is that you should budget appropriately to cover these costs when closing day comes.
Learn About the Real Estate Market In Your Area
Do you have an idea of exactly where you want to live when you buy a home? If so, have you done any research on the market in that area? You don’t want to be unpleasantly surprised to find out that the neighbourhood you want to live in is way out of your financial reach.
Instead, you should do a little research on the market in your area – as well asothers – to find out how much homes are going for. You should also consider different housing types in case your budget doesn’t allow for your first option. For instance, you may have an affinity for a specific neighbourhood, but can only afford a condo as opposed to a single-family detached home.
Understand Your Mortgage Options
There are so many different mortgage varieties, and the one you choose should be based on your particular situation.
For instance, there are fixed-rate versus variable-rate mortgages, which differ based on the fluctuations of interest rates. If you prefer your rate to remain the same, then a fixed-rate mortgage may be best. But if you can stand a little risk while taking advantage of a lower rate during the introductory period of your mortgage, then a variable-rate mortgage might work.
There is also the conventional versus the high-ratio mortgage, which differ based on the down payment amount you put down. A high-ratio mortgage is one that comes with less than a 20% down payment (but at least 5%) and requires mortgage default insurance to be paid. A conventional mortgage, on the other hand, does not require this additional insurance premium in exchange for a minimum 20% down payment.
Work with a seasoned mortgage broker to help you navigate the world of home loans to make sure you choose a product that is best suited for you.
Research First-Time Homebuyer Incentives
If you’re buying a home for the first time – and your partner is as well- there are incentives available that you may be able to take advantage of. For instance, the Canadian government offers a First-Time Home Buyer Incentive that is designed to help Canadians purchase their first homes without overwhelming them with financial burdens.
The Home Buyer’s Plan (HBP)is also available to first-time buyers and allows qualified participants to withdraw up to $35,000 (which was just increased in 2019 from $25,000) from an RRSP account to buy a qualifying property. The amount borrowed would have to be paid back within 15 years of withdrawing these funds.
Speak with a tax professional or mortgage broker to find out more about the incentives that you may qualify for to make buying a home much less financially stressful.
While finding a partner who shares the same financial and homeownership aspirations as you is important. Taking the time to learn about how to make purchasing a house in Canada more attainable can help reduce the stress often felt by first-time home buyers.