5 New Year's Resolutions To Adopt In 2023 To Help You Finally Buy A House In Canada
What's your New Year's resolution? Some Canadians may be resolving to save more money this year in pursuit of seemingly impossible financial goals, like buying a house.
If that's you, real estate platform Zoocasa has shared a number of New Year's resolutions that those looking to buy a home can adopt this year to help make it happen.
This year could be the perfect opportunity for new buyers as prices could hit a low point in early 2023, an expert tells Global News.
The period could also coincide with the end of the Bank of Canada's rate hikes, creating a point where affordability is at its best.
With that being said, here are five resolutions to help you on your way to house ownership.
"Planning is one of the most critical things when budgeting for a house," says Zoocasa.
The company recommends creating a plan at the beginning of the year (perfect timing!) outlining what steps you'll need to take to purchase a house as well as when you'll need to do them.According to the National Bank of Canada, steps you'll need to take when buying a home include:
- assessing your borrowing capacity
- determining your down payment
- requesting mortgage pre-approval
- planning for additional costs, like legal fees
- finding your home
- making your offer
- taking out a mortgage loan
Set a budget
Before you even start looking for a home, you should have an idea of how much you can afford to spend each month.
Zoocasa recommends taking stock of your living expenses, such as food, car payments, insurance and student loans.
Once you know how much you can afford, you can plan a budget.
"Budgeting will help ensure that once you find your dream home, it won’t become a financial burden," Zoocasa says.
Work on your credit
"Your credit score is one of the most important factors when getting approved for a mortgage loan—the higher your score, the better the chance lenders will approve the amount of money you need to buy the house," says Zoocasa.
According to Angela Iermieri, a financial planner and spokesperson for Desjardins, your credit score is calculated according to the credit that you're given and that lenders give you.
If you have no credit, you won't have a credit score. However, getting a credit card is an easy way to start.
If you do have credit and want to see where you stand, you can easily check your credit score for free in Canada through Equifax or TransUnion.
Simple ways to improve your credit score include paying your bills on time and keeping the balance you owe low.
Reduce your debt
How much debt you have plays a big part in purchasing a home.
"The amount of debt you have can affect whether or not you qualify for certain mortgages or if lenders will even approve your loan application," Zoocasa says.
So, reducing what you owe should be part of your plan when buying a home.
You can do this by consolidating what you owe into one lower monthly payment, reviewing your bills and cutting out useless subscriptions and services.
Get that down payment ready
Saving a down payment may well be the hardest part of planning to buy a house, but it's a great way to show potential lenders that you're serious about purchasing a home.
In Canada, the minimum down payment required for a home is based on the purchase price of the house.
If the home is $500,000 or less, the minimum down payment needed is 5% of the price.
However, if the purchase price of the home is $500,000-$999,999, the minimum down payment is 5% of the first $500,000 and 10% for the portion of the purchase price above $500,000.
If the home is $1 million or higher, the down payment needed is 20% of the price.
Before you start saving, it's recommended that you put aside enough money to cover at least three months' worth of living expenses in an emergency fund.
"As soon as possible, try to save up at least 5% – 20% of the total cost for your down payment," says Zoocasa.