The decision of entering homeownership looms large for most people, as the purchase of a home is likely to be the largest financial investment you will ever make. Knowing when the time is right to buy is both a personal and financial decision. Once you are comfortable with the idea of home ownership, it's time to ensure that you're also financially ready to take the leap.
Weighing up your yearly rental costs vs cost of ownership:
There are times when it can remain advantageous to continue renting, for example when the market is a Seller's Market and prices are inflated. If the market conditions are right, you will start by doing a basic comparison of costs.
- Current rental costs per year
- What will be the ongoing ownership costs of buying a property.
Once you have calculated both, if you find the cost to own is about the same as renting, then you're in a good position to move to the next step.
Can i afford the initial down payment?
The down payment for a property is generally 5% of the purchase price. To be safe, we recommend that you ensure you're saving around 7.5% of the predicted purchase price, 2.5% which accounts for Hidden Costs and other Final Costs.
- Example: If you're looking at a $300,000 condo, account for ~$22,500 of your own funds to complete the purchase.
If you can't yet afford the down payment for your first place, it's time to create a budget and start saving to reach your goal. If you're buying with a partner who also earns an income, a down payment can be achieved in less time if you both budget to the same goal.
The faster you can save for your down payment, the less chance there is that property prices will rise before you can make your purchase.
Contact Us if you have any questions or need some general advise about moving out of the rental cycle and how you can legally break a lease in Quebec. If you've already decided to move out of the rental cycle, accelerate your property search by setting up a Property Alert to start receiving notifications about properties you're actually interested in.