Buying a house may seem daunting at first, since it’s a long-term investment that requires preparation. This doesn’t just include physical, mental, and emotional readiness, but more importantly, financial stability. Without adequate resources, it can be difficult to make this dream happen.
Are you buying for yourself or for investment?
Investing in property is one of the biggest financial commitments you’ll ever make, so you have to thoroughly think it through and weigh your options. Whether you’re buying a home for yourself or using it as an investment, the thought-process that goes into your decision-making is still the same.
Having a home that you can call your own is a dream come true, but it comes with its drawbacks. You’ll have to shoulder the expenses that go along with buying a property, such as out-of-pocket costs, taxes, fees and insurances and of course the often exciting but equally expensive costs prior to moving in. Indeed, you must have the financial stability to pay these costs.
Another reason for purchasing property is for an additional investment stream. Rent it out or flip it and sell it at a higher price. As they say, real estate is always a good investment!
The Canadian Real Estate Association (CREA) states that the average Canadian house will set you back more than $450,000. If you’re not prepared to take on a long-term investment or expense that‘ll set you back at least half a million dollars, then you might want to rethink your options.
As home buyers and property investors, you must compare what types of housing are suitable for your preference and budget. If you’re aiming for a home that can accommodate a large group of people, then a detached house may be well suited for you. Usually, they may be more expensive and may require more of your time and effort, since it’s larger.
If you’re aiming for the lower end of the budget, but at the same time, are aiming for a more cozy, family-oriented feel, a semi-detached house may be perfect for you. These homes are built on the same property, sharing the same walls and still accommodates for space and privacy.
Whichever type of house you choose, it’s essential that you plan and prepare. Planning can be stressful when you lack the resources and the right information. Since it’s crucial for you to have a good start, knowing the income you need to save in your quest to buy a home is essential. When you have devised a plan, everything else will follow, for as long as you stick with it.
Once you have made up your mind, you now need to prepare your finances for securing a mortgage or other forms of funding you may be considering. The last thing you’d want is to be excited about a home you’re not financially ready for. Before getting your hopes up, you have to check your savings and if you’re capable of qualifying for a mortgage.
Comparing cities in Canada, what income is needed to buy a home?
Every city has a different standard of living which dictates their cost of living as well. The busier urban cities that are usually located at the center of commerce and business activities are usually more costly cities to buy a home in.
The same goes for cities that have a steady stream of tourists or offer easy access to colleges and universities. On the other hand, provinces that have a more laid-back way of life, often offer real estate properties that are slightly lower in value.
There’s always something for everybody. Whatever type of property you’re looking for, depending on what your purpose for buying is, you’ll definitely find a house or condominium that suits you.
Now, the question is: how much do you actually need to prepare for you to purchase your own property?
If you’re looking at buying a property in Vancouver or Toronto, you have to be earning at least $100,000 annually and be able to afford a monthly mortgage of anywhere between $3,000 to $3,500. These cities are bustling with activity and offer a lot more opportunities, so it’s natural that people migrate to these areas, so that they’re closer to their place of work. This kind of demand drives up prices, which explains why their income requirement is almost twice as much, as compared to other Canadian cities.
If you’re searching for a city with a lower cost of living, yet great opportunities, Calgary or Edmonton in Alberta might be ideal for you. These places are home to commercial establishments with over a million in population. The average monthly mortgage in these cities range from $1,500 to $2,000 with a mean housing cost between $390,000 and $470,000. Thus, you need to have an income of not less than $70,000.
If you’re into smaller towns with a bit of urban lifestyle, mixed with the ambiance of living in the countryside, Ottawa and Montreal are your great options. For you to afford a property in these cities, an average earning between $75,000 to $80,000 is needed, since housing prices are around $350,000. This comes with an average mortgage of $1,500.
Get your financial affairs in order
Buying a home isn’t only a commitment but also a responsibility. This includes being responsible enough to manage and balance your money, so as to be able to pay the expenses incurred.
It doesn’t take much time and effort for you to be knowledgeable about the overall housing expenditures. Gaining perspective can help you plan for your future and knowing the income needed to buy a house will definitely eliminate the majority of your concerns.
To help you map out your steps towards buying your ideal home or property investment, we have dedicated mortgage brokers to help. They’ll provide guidance on your journey and help to alleviate any confusion or fears you may have when it comes to the home buying process.
With over 30 years of experience, Daisy Raouph has worked as a mortgage broker, a financial security and insurance advisor. Having the means to provide the best competitive mortgage rates and products, they cater to your individual needs and offer options for both long-term and short-term goals. In addition, they specialize in mortgage purchases, renewals, refinancing as, estate planning, insurance and investment services.