I speak with people all the time who want to buy a house but can’t seem to quite make it happen. With interest rates at an all-time low right now, there has never been a better time to get your foot in the market. For most people, buying is actually less expensive than renting. For instance, a mortgage on a $400,000 home with a 5% downpayment will cost about $1,600 per month. For some people, buying a house may require a more creative approach, especially if most of your income is tied up by paying rent. Here are just a few suggestions of how you can buy right now.
1. Buy with a friend
You’ll be able to combine your downpayment and increase your buying power. When applying for a mortgage, your bank will take into account both incomes rather than just your own, and you’ll be able to afford more. Consider as well that if you’re buying with a friend, you will split the mortgage payments. Also, after just a couple of years you will likely have enough equity in the house that you can sell and use the proceeds to each buy your own place.
2. Consider a fixer-upper
It may not look like a home from HGTV or out of the pages of a magazine, but there is real money to be made with fixer-uppers, and you’ll probably encounter less competition and a more flexible purchase price. Best of all, you’re investing in yourself rather than paying someone else rent. It may not be your “perfect home” but no home is ever quite “perfect”, even with an unlimited budget. Live in the property and make improvements over time until you love it, or build enough equity to cash out and get into something closer to your version of “perfect”.
3. Consider other areas
What is the maximum distance you are willing to commute to work? Determine what you’re comfortable with, then draw a radius out on the map to consider all areas within that zone.
4. Property with Income – Have someone else pay your mortgage
Live in one portion and rent the other. Not only will this help pay your mortgage, your bank (lender) may be able to come up with a creative mortgage solution that takes into account the income from the property, as well as your job, to extend the amount that you can get (you may be able to quality for a substantially larger mortgage if there is income generated from the property).
5. Simcoe Housing Grant
If you can quality for a mortgage but can’t come up with the necessary downpayment, The County of Simcoe may help with up to 10% for your downpayment. If you live in the house for 20 or more years, you don’t have to pay it back.
If you want to get into the market but aren’t sure where to start, reach out and I’ll be happy to go over some suggestions for you based on your circumstances. Interest rates are as low as they’ve ever been, so don’t wait until they go up again! Start paying yourself rather than paying rent.