4 questions to ask yourself when buying a home

If you’re looking to buy a home, you’ll want to consider these four things before taking the plunge:

Couple sitting on floor thinking about buying a home1. What can you realistically afford?

It’s important to know how much you can afford to spend before you start looking for a home.

Ask yourself: do you have room for a new mortgage payment and other shelter costs? If you’re not sure how to answer these questions, crunch the numbers with these two calculators:

2. Are you willing to make trade-offs?

You may be able to afford the purchase of your dream home on paper, but how will this purchase impact your other financial goals, such as retirement, travel, and education? For example, are you willing to defer retirement in order to own a more expensive home?

For example, borrowing an additional $150,000 comes at a cost of $649 monthly. If you were to purchase a less expensive house, you’d be able to invest that $649 monthly in an RRSP.

After just five years, you’ll have:

  • invested $44,320 in your RRSP, assuming a return of 5%
  • saved $15,095 in interest expenses

Plus, you’ll receive a tax deduction every year thanks to your RRSP contributions! Use that annual refund to pay off your mortgage faster, send your children to university, or take that trip to Australia you’ve always wanted to do in the thick of our Saskatchewan winter!

See for yourself the difference a smaller mortgage could have on your savings!

  Scenario 1 Scenario 2
Mortgage Amount $350,000 $500,000
Amortization Period 25 years 25 years
Payment Frequency Monthly Monthly
Mortgage Term 5 years fixed 5 years fixed
Interest Rate 2.19% 2.19%
Mortgage Payment $1,514.37 $2,163.38
Total Interest $104,309.16 $149,013.51
Balance owing at term $294,362.30 $420,517.91
Interest over term $35,224.50 $50,320.71
Source: Affinity Credit Union - Mortgage Calculator (calculators.affinitycu.ca)

3. How will you finance the purchase?

Once you’ve gathered your financial information and determined your priorities, it’s time to meet with your mortgage lender to discuss your financing options and see if you’re ready to buy a home. With a mortgage pre-approval, you can shop with confidence!

4. How do you protect your investment?

Once you’re all moved into your dream home, you’ll want to protect your investment and maximize the life span of your home. To do this, you’ll want to:

  • make your mortgage payments on time
  • plan for operating costs and emergencies

I'm ready to talk. Book an appointment.Purchasing a home is a huge life decision! There’s a lot to consider – your budget, your priorities, your finance options and more. Thankfully, there are tools and resources to help guide you so you can feel confident in your decision – and your financial future.

We’re here to help you through your entire home buying journey! Just give us a call at 1.866.863.6237.