Buying a house in Canada will likely be one of the biggest financial decisions of your life. Home ownership can help secure your financial future, which is why you need to make wise decisions for today, and for the long term.
In this article we point out some common and costly mistakes first-time home buyers make. We also offer some home buying tips and show you why signing a mortgage can be the best time to look at term life insurance.
Thinking ahead is the key.
The dream of moving into your very own home, a place where you will raise your family and make memories, is an appealing plan. Buying a new home can be emotional and when you find a place with ‘curb appeal’ that ‘shows well’ it is completely natural to want to jump in with both feet. But quick decisions can often lead to mistakes.
Here are some of the most common mistakes made by first-time Canadian home buyers:
- Not having a financial plan for what you want, need, and can afford in a new home. Taking a full and honest look at your finances before scouting out new homes is critical. This helps you to better weigh your needs against your wants. If you take the time to crunch numbers ahead of time, the boundaries will be in place to help you make safe and clear decisions.
- Not having a back-up plan if the sale falls through for any reason. House sales usually have conditions attached, conditions which are often beyond your control. A sale can fall apart even on the move in date.
- Not accounting for reasonable and unforeseen costs. It’s tempting to buy a home for the full amount the bank approves you for, but this is often a mistake. There are many additional costs associated with buying a house: repairs, property taxes, condo fees, insurance, maintenance, and utilities. Use this Real Estate Board of Greater Vancouver link to review costs associated with buying a home. That 100 year-old maple tree is stately, but have you taken into account the removal cost when it needs to be taken down? Save money in the long term by ensuring you have considered all the costs of home ownership ahead of time and planning your finances accordingly.
- Not thinking long-term. What size home will you need 5, 10 or 20 years from now? If you plan to raise a family, you will want to find a neighborhood that is conducive to children. Where are the nearest parks, schools, grocery stores, hospitals, auto repair shops, etc.? Is the community a place you want to be for the long term?
- Not reading the fine print. Closely examine every document you sign. Make sure you understand what you are signing. Ask questions if you are unsure and be prepared to say ‘no’ you’d like to consider an issue further. Make sure you know the Canadian mortgage rules and whether or not you have to sign everything put in front of you.
- Buying mortgage insurance from the bank may be convenient, but it could cost more. Term life insurance can be a low-cost alternative to mortgage insurance that allows your beneficiaries, rather than the bank, to receive the payouts should you pass away. You can save up to 41% with Term life insurance from Empire Life*. It doesn’t decrease in value with your mortgage or need to be renewed at the end of each mortgage term and you do not have to re-apply for coverage if you move or need to re-finance.