Renter to owner: Taking the plunge into home ownership

New home owners will tell you that you can’t beat the feeling of having a place to call your own: the kitchen you’ve always wanted, a garage to putter in, the flower garden that reminds you of your grandmother, or a cozy window seat that looks out on your own view.

There is a small group of Canadians who, for various reasons, prefer to rent. But a majority of Canadians dream of owning their own home. With interest rates lower than our grandparents enjoyed – combined with innovative new no-downpayment mortgages – there has never been a better time to take the plunge into home ownership.

Not sure where to begin on the home buying adventure? Set aside the issue of downpayment for a moment and consider your monthly cash flow. How much can you budget for? Consider what you are currently paying in rent and other housing fees. Look at your spending habits and ask yourself if you could comfortably pay more per month. You may, for example, look forward to cooking meals in your own home rather than dining in restaurants as often. A house purchase often entails some lifestyle changes. What about transportation, for instance: will you be moving next to the subway stop or out of town? Remember to factor in these changes as you calculate how much money will be available monthly. Finally, remember that not all that money can be spent on your mortgage payment, since you will need to allow for other costs such as utilities and property taxes. But with the historically low mortgage rates now available, your monthly mortgage dollars can go farther than ever before.

Now, let’s tackle the biggest hurdle for most would-be homeowners: the downpayment. Traditionally, Canadians have expected to save up 10% of their purchase price as a downpayment on a home – in addition to some extra savings to cover closing costs and other fees. But with today’s mortgage options, the downpayment doesn’t necessarily need to stand in the way of your home-buying dreams. If you have an RRSP, for example, you may be able to take advantage of the government’s Home Buyers Plan to come up with your downpayment. Or you may want to explore one of the innovative new mortgages that effectively eliminates the need for any downpayment at all. The newest mortgages, in fact, not only offer 100% financing, but also 3% cash back – a real bonus if you’re purchasing appliances, or buying a car to get to work from your new home. While these mortgages come with a higher fee, that cost is covered by the additional mortgage amount and you can get into your own home sooner than you dreamed.

And don’t forget to get advice. An independent mortgage broker can provide you with information on mortgage options from the widest spectrum of banks and other lenders. Especially if you are looking for one of the innovative new mortgages, this is the place to begin. A mortgage professional can make a realistic assessment of your financial situation and your options.