So, you’ve settled down, found a steady job and now you are thinking about home ownership. Here are a few things to pay attention to when planning the purchase of your first home.
People in their late 20’s and early 30’s rarely have enough savings to buy a new house with cash, so mortgage loans are basically the only way for them to purchase real estate. On the other hand, taking on too much debt can be detrimental for career building, as it ties up the precious resources in a contract that can’t be easily altered. With this in mind, we will discuss a few important principles that come into play when you are applying for your first mortgage loan:
Pick a smaller property
In all likelihood, younger people won’t have to worry about a very large family in the house. That’s why a smaller home will probably be a good choice for most of them. With the current prices in Canada it can be really costly to buy a full-size family house in a good neighborhood, it makes a lot of sense to accept less comfortable accommodations for the time being. It is a common tactic to trade space for location and purchase an apartment in a central urban zone, before relocating to the suburbs when the family starts growing and demanding more room.
Extend the payback time as much as possible
While more affluent citizens may sometimes prefer shorter loan agreements, younger homeowners rarely have this privilege. They should almost automatically accept the longest amortization period possible and reduce current monthly obligations to a minimum. It is reasonable to expect your income to stabilize as you grow older, so it’s only logical to push the bulk of your debt to the time when you will be better equipped to handle it. If you are so lucky to get your money quicker than expected, you probably won’t stay in the same house anyway.
Maintain good credit rating
Inexperienced borrowers have the tendency to dive into debt too fast, limiting their future options. Instead, it is recommended to keep some flexibility in case a better loan becomes available down the road. For this to be realistic, it is necessary to pay monthly dues on your mortgage regularly and ensure that your credit rating remains at a high level. It may take some training to learn how to do this, but 30’s are the perfect time to start developing financial discipline and sacrificing temporary comfort for the greater good.
Look for governmental support
First-time buyers might qualify for one of the assistance programs run by the Canadian government, significantly reducing the total amount owed to the banks and securing better loan conditions. Certain programs might be open only to specific groups of citizens, i.e. low-income workers or minority members, so it is necessary to conduct due diligence and find out whether any of the existing financing options applies to mortgages in Guelph and your demographic cluster.