When considering buying a new home, it’s natural to ask yourself “How much can I afford?” But before you ask this question, it’s important to consider what factors go into pricing a home:
Your intended location. Are you set on a specific area? Downtown? The suburbs? A specific neighbourhood? In such a large and diverse city like Toronto, there’s a perfect neighbourhood for almost anyone. It’s time you begin thinking about which area would be a good fit for your family and your budget.
Your preferred type of home. Detached? Semi? Duplex? Townhome? High-rise condo? New or resale? There are a variety of home styles you’ll want to explore.
Your income. Buying a home can be expensive; not only must you consider a mortgage, but there are property taxes, utilities, and in some cases condo or strata fees. As a general rule, your monthly home-carrying cost should not exceed 30-35% of your income.
Market conditions? Is it a buyers’, sellers’ or balanced market? How competitive is the real estate landscape in the GTA?
There are also additional costs to keep in mind. It’s always a good idea to sit down and organize your expenses. Give yourself an idea of what you want and what you can afford before your begin your home search. After all, you don’t want to suddenly come to the realization that your dream home has come with a long list of bills and expenses. Create a budget for the move and stick to looking at houses in your price range. The more thorough you are with your expenses, the easier it will be for your sales representative to meet your needs. Click here for a more detailed breakdown of the costs of buying a home.
An important part of this planning process is arranging for a mortgage. Meeting with your bank or a mortgage broker to discuss and negotiate a pre-approved mortgage will give you more insight on what you can afford. In today’s competitive mortgage market, there are many types of mortgages and many different terms. Research all your options and find the best fit for you. Planning ahead will ensure that there are no surprises once you’re ready to make an offer.
Only once you’ve figured out your monthly expense and what you can afford, you can start your home search. Some people find their dream home in a few showings, others search for months with little luck. Rest assured, the home you’re looking for is out there. You’re already well prepared to make an offer, keep looking and pounce once you see it!
At the time it may feel like an insurmountable task, but purchasing a home is not nearly as challenging once you’ve got a plan in place.