Have you recently bought your first condo (or your first house in the country, thank you the pandemic!) And are now wondering how to keep your finances on track with the long-awaited return to “normal” life? You are not alone!
Several new buyers have embarked on the adventure head first and took advantage of the slowdown imposed by COVID-19 to boost their savings and acquire a first home.
“All things considered, most of them are between 30 and 60 years old,” says Alexandre Demets, financial security advisor and group savings representative, partner of Sun Life.
Now, these new buyers are apprehensive about the possible cohabitation of the responsibilities associated with their new title of owner and the expenses that are likely to resurface. Here are some tips to keep your finances balanced and avoid overflows.
The importance of a budget
To get there, we must first establish a budget: “It’s not sexy, but it’s necessary, admits Alexandre Demets.
The budget will show all entries and exits: property transfer taxes, notary and condo fees (if applicable), school and municipal taxes, etc. If it can just show that you are out of balance, that’s already won. ”
“The costs for housing you should not exceed 25% of your salary,” he continues. Also, setting aside 10% of your income usually helps you manage the unexpected. Find out about the performance of your investments: it may be more advantageous to put your money in them than to put them on your mortgage! ”
An emergency fund doesn’t hurt either: “I advise my clients who plan to buy a home to have a reserve of $ 5,000 to $ 10,000,” says Demets. As a new owner, the first six months, we have the impression that there are holes in our pockets: mower, shovel, lights … too many people put their money in their mortgage and have nothing left for the rest.”
For Sophie, 30, the pandemic has allowed her to accumulate enough money to buy her first duplex in LaSalle with her lover. “Before COVID, I had zero aside and my credit cards were full; now my cards are paid and I have $ 10,000 in savings! ”she explains.
Fortunately, she now has an emergency fund, since as soon as she moved in, a tree to be cut and water damage quickly brought her back to reality.
Savings: your best ally
–
–
Whether it’s to increase your down payment, pay future acquisition costs, renovate, or simply put you on the safe side, savings are your best ally in the wonderful world of real estate.
Use automatic savings: “It’s the safest way to make sure you’re putting in the money you want. There will always be time to reduce the amount of the transfer, ”recalls the financial security advisor.
The day you find the property of your dreams, do not hesitate to resort to the Home Buyers’ Plan (HBP), which Sophie took advantage of. This allows you to withdraw up to $ 35,000 from your registered retirement savings plan (RRSP) for the purchase or construction of a first home.
Respect your pace
If you can’t find what you’re looking for, there’s nothing stopping you from putting off your project. For her part, Julie, 24, had no choice but to review her project: while she and her boyfriend wanted to move into a house in Estrie, both had to put this plan back in the future. and turn to a condo in the Mercier district in Montreal.
“A property had just been posted and we didn’t even have time to request a visit that it was already sold,” she recalls. We were really tired. We ended up postponing the project to look for a new condo. It was simpler and it fit better in our budget. ”
The burden on housing has also increased significantly: for the first time in at least 30 years, an average home in the metropolitan area has seen its price surpass that of its Calgary counterpart.
“I have already told clients not to buy, because currently, they are guaranteed to pay much more than the market,” relates the financial security advisor.
The volume of real estate transactions reached the highest level in the last six years. According to the Professional Association of Real Estate Brokers of Quebec (APCIQ), more than 35,000 mortgages were registered in May (an increase of 33%). Cumulatively, since January, this increase has amounted to 49.8%.
Keep an open mind
We don’t know what the future holds: will the market stagnate or collapse? In any case, continue to save, since each passing month solidifies your situation and gives you more chances of finding something that suits you!
To stay on track with your finances, seek professional help. A financial security advisor will help you on your return to “normal” life.
