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As rental rates increase across Canada, it’s hard not to ask yourself the question, “Am I ready to buy a house?” While there are a lot of reasons to dive into homeownership, there are also reasons to avoid it if you’re not ready. Often, you’ll hear people comparing mortgage rates to monthly rental fees and arguing that you’re better off investing in something than paying into nothing. But in reality, homeownership involves a lot more than just paying your mortgage on time.
Signs You Should Buy A House
Curious about exploring your homeownership options but aren’t sure you’re ready to dive in just yet? Check for these positive signs:
Your Credit Score Is Increasing
Managing and being aware of your credit score is such a vital step when it comes to homeownership because your credit score is the determining factor for a lot of buyers when it comes to qualifying for a mortgage.
Your Debt Is Under Control
While many Canadians carry some form of debt (credit card debt, student loans, etc.), having it under control by means of a solid financial plan is a step in the right direction toward homeownership. The less money you have to pay toward debt, the more you have available to save for a down payment or mortgage.
You’ve Got Money Saved For A Down Payment
You don’t need to have a massive amount of money saved up for a down payment, but the more you have, the better off you’ll be when it comes to insurance rates and paying off your mortgage principal faster.
You Feel Like You Need More From Your Space
Often the first sign of being ready to buy a home that isn’t related to finances, is noticing that your current space or location isn’t meeting your needs like it used to. Whether it’s craving more physical space, a desire to reduce your commute time, wanting to customize certain areas/elements or needing to access different amenities, it may be time to consider other options beyond renting.
You Have A Reliable Source Of Income
While no job is ever 100% secure, the longer you’re established at a certain job, the longer you’ve been practicing within a specific career, or the more years of entrepreneurship you have under your belt, the more likely your job will be seen as “steady enough” to back up homeownership. It’s all about providing confidence to the bank/lender that you’re able to hold down a steady job and will, in turn, be able to make your payments on time every month.
Signs You Shouldn’t Buy A House
Knowing when NOT to buy a house is just as crucial as knowing when to invest. If any of the following points apply to you, you may want to consider sticking to rentals for now:
Are You Carrying A Lot Of Debt?
As most Canadians do carry debt, it’s important to note that you don’t have to be debt free to buy a home. But, as debt directly impacts your credit score, which in turn impacts your available interest rates, it’s advisable to create a plan to pay down your debt before you move toward homeownership.
Do You Have An Emergency Savings Fund?
Paying for a home goes well beyond just making your mortgage payment every month. As a homeowner you’re responsible for fixing anything and everything that may break down. If you don’t have an emergency savings fund, you may end up putting yourself in debt paying for repairs or issues around the house that need to be dealt with immediately. As a general rule, it’s advised to have 3 months’ worth of your living expenses saved in case any emergency costs come up.
Is Your Income Considered Stable?
Career stability gives you the advantage of anticipating how much money you’ll have coming in every month. It’ll give you a more accurate idea of what you can actually afford. If you’ve recently changed jobs or are considering switching careers, you might not be ready to buy a home at this exact moment as putting yourself in a more stable position in regard to your income can have a positive impact on your home buying experience.
Having this information (whether positive or negative), will help you determine where you stand personally and as a result, will remove some of the emotional aspects you’ll encounter when considering homeownership. If you’ve found yourself answering “yes” to all five signs that you should buy a house, then it may be time to move on to the next step of getting prequalified, finding a REALTOR®, and looking at homes for sale in your area. If you’re ready to start the conversation, get in touch with us today!