What are the benefits of home ownership?
Pride of Ownership
Pride of ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make improvements knowing that any appreciation that results, will be to your benefit. Home ownership gives you and your family a sense of stability and security. It’s making an investment in your future.
In Canada, especially over the past years, homes have appreciated considerably and in doing so have added substantially to owners net worth. Unlike stocks and bonds, you get to live in your investment. Also, in Canada your principal residence is exempt from capital gains taxes.
Mortgage Reduction Builds Equity
Each month, part of your monthly payment is applied to the principal balance of your loan, which builds your equity. You can borrow against a home’s equity for a variety of reasons such as home improvement, sending your children to university or college, or starting a new business. Why pay-off the debt on your landlord’s property when you can own your own?
Homeowners accumulate wealth for the future while enjoying the benefits of a shelter that they have, can use, improve and sell. Over the medium or long term, a home is a safe haven for investment.
Are You Ready to Buy a Home?
First – do you have the financial resources? You should have a minimum of five % (preferably 10%) of the purchase price of a home for the down payment; ideally even more. Are there other priorities in your life e.g. starting a new business, which require your savings? If not, buying a home should be on your radar.
Second – do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before having to relocate. Your job and home life should be stable.
What Can You Afford?
If you haven’t already gone through the mortgage pre-qualification process, you will need to meet with a lender or mortgage broker. They will establish how much of a mortgage you will qualify for. Mortgage rates vary considerably and it is paramount that you shop around for the best rate, terms and options.
Your financial advisor’s mortgage calculator will help you determine what monthly payment and debt you can manage. Note: if you are buying a condo, the amount of your monthly maintenance fee has a direct impact on how much you can afford to spend on servicing your mortgage.
First time home buyers may want to take advantage of the federal government’s Home Buyers’ Plan. Under this plan, you may use up to $20,000 of your RRSP towards the purchase of a home. The money is tax-free as long as you pay it back in the next 15 years. Ask your RE/MAX Sales Associate/mortgage advisor for details.
Good Questions When Assessing Home Features
Do you need several bedrooms, more than one bathroom, a home office, a two-car garage?
Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
Do you plan to have children? Downtown or suburbs? Close to recreation or work.
Do you need a substantial backyard? Pets? Is there adequate storage space?
Will any remodeling be required to make the home move-in ready for you?
What service providers (cable, Internet, telephone, Satelite) are available in the area, and is the house wired for these? How good is the cell phone reception?
How much are the yearly property taxes?
How much will utilities cost each month? Does the house have a gas or electric furnace, water heater, and appliances? How old are the major appliances, and which are included?
Have there been any major repairs to the house, and if so, when were they completed? For example, how old is the roof? Has water ever damaged the basement or foundation?
Any previous problems with insects, such as termites and spiders, or rodents?
Older homes need to be carefully examined – Windows may need caulking or new sashes, bathroom tiles may need grouting, home may need rewiring (planning on a hot tub or sauna?), a new hot water heater, or a new furnace.
How far will you be commuting and what is the traffic like? Factor in your cost of fuel.
Where will your children attend school and how will they commute?
Are there recreational facilities and parks close by? Are you close to family and friends?
Is safety or high crime an issue?
Is the property close to an obstacle or negative influence? (eg.an apartment building, shopping centre, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project).
Access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals
Adjacent undeveloped land – what is proposed for this or other green space?
Heavy traffic can be a noise nuisance and hazard for children
Distance from the unit to amenities, parking, walkways, cycle paths, roads, public transit
Does the neighborhood reflect positively on the value of the condo and your lifestyle choice?
Does this neighborhood, for any reason, have a poor reputation?
Is the future economic climate for the area good? Are businesses moving in? Significant municipal/government investment?
Are people moving in or out of the neighborhood? What is their average ages, income level, family size?
Are there plans for this neighborhood that you may be unaware of (i.e. a future highway, a commercial development or a new housing development) that may provide resale competition?
A good tip! Visit at various times (day/weekends) to check traffic, noise levels and activity.