With Valentine’s Day just around the corner, the idea of someday settling down with that perfect person may not be far from the front of your mind, even if you don’t have someone to spend the day with right now.
But when it comes to buying your own home, waiting around for someone to do it with isn’t necessary.
So if you’re currently living the single life and are hoping to lockdown a place of your very own some time soon, here’s everything you’ll need to know to confidently buy a home on your own, courtesy of Strata.ca.
First of all, it’s important to note that there are a few significant upsides to buying a home by yourself. You won’t have to compromise on a location or budget, and even more importantly, you won’t have to worry about whether there’s enough closet space for two. And as a sole owner, you’ll never have to worry about things going south with a partner and then having to sell.
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If you’ve started browsing some listings and have found a few places you think you might like to buy, the first step is making sure you can solely afford all of the costs that come with purchasing and owning a property.
Strata agent Larry Medina recommends that you speak to a financial expert to make sure you know exactly what you can afford and how much you’ll need to have saved up.
“The best advice I have for clients is to connect with a mortgage specialist,” Medina said. “This person can walk you through how much you can afford, plus all the costs associated with a home purchase. That includes land transfer taxes, down payment requirements, and even lawyer fees.”
Making sure your debt-to-income ratio is good is extremely important in securing a mortgage loan, so you’ll want to make sure you’re paying down any debt you have, whether that be credit cards or student loans, before thinking about applying for a mortgage.
When it comes to putting down a downpayment, buyers in Canada have a few options. If you’re looking to pay the smallest amount possible, the minimum you can put down is 5% if the home you are buying is under $500,000. If it’s above that, you can put down 5% on the first $500,000 and 10% for the portion of the purchase price between $500,000 and $1,000,000. If the price of the home is over $1,000,000, you’ll have to put down 20% on the amount over that threshold.
But there is one important catch to remember if you choose to pay a downpayment that’s less than 20% of the entire purchase price: you’ll have to get mortgage insurance. This insurance, which protects the mortgage lender in case you can’t make your payments, will typically cost you anywhere from 1.8% to 4% of your total mortgage price, depending on how small your downpayment is.
With that in mind, Strata agent Jenn Costigan always recommends you put down 20% if you’re able to.
“I understand that not everyone has the means to do this,” Costigan said. “But it’s still of benefit as you’ll avoid insurance premiums and pay less interest on your overall mortgage.”
And just because you’re handling the finances on your own doesn’t mean you can’t get some help. Strata recommends bringing a friend or family member along with you to view properties and get their opinion.
Now that you know everything you need to know about securing a home as a single, all we have to say is happy house hunting!