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Home ownership. Two words that many millennials have been told are out of their reach. Mortgage rules designed to protect Canadians from becoming house poor make the process seem both expensive (it is) and overwhelming (it doesn’t have to be). But there is hope: 39% of adults aged 18–34 say they plan to purchase a property within the next two years—that’s more than other age groups. And while, yes, the process towards finally calling a home your own may take you longer to achieve than previous generations, it’s not impossible.
And there are some millennials who’ve made it happen relatively seamlessly. Take Toronto-based public relations executive Alexa M., 30, who was able to find her dream home. She recently purchased a one-bedroom-plus-den condo in the city using a real estate representative she trusted—the same woman who helped her find her rental condo. “She even helped me keep tabs on the market and buildings I was interested in for the two years that I was renting,” she says.
Here’s how to go from long-time renter to first-time homeowner.
Step 1: Save those pennies
Saving for a down payment is the first step, and there are several ways to do it (without shaming your beloved avo toast!). First, talk to your bank about setting up a high-interest savings account or Tax-Free Savings Account (TFSA) with automatic deposits every paycheque—even a small amount adds up. If you come into an inheritance, your bank can help you navigate investments to grow that windfall. And, if available, there’s parental or partner help: While one third of adults aged 18–34 own a home, two thirds of them had financial help from their family. In Toronto, 47% of adults aged 20–34 live with at least one parent, another huge money-saver.
Step 2: Determine a mortgage plan
The next step is figuring out what exactly are you saving for, and how much you need to save. While the minimum down payment required in Canada on a property under $500,000 is 5%, those buyers are required to pay a mortgage insurance fee to the Canadian Housing and Mortgage Corporation (CHMC), since the down payment is less than 20 per cent of the purchase price. All buyers must also take a mortgage “stress test,” where the bank determines your financial stability against the Bank of Canada’s five-year interest rate forecast, to be sure you can still afford payments if rates suddenly skyrocket. Twenty percent down means no CHMC fees, but keep in mind that there are more costs beyond the down payment. Be prepared to have an additional $10,000–$15,000 on hand for lawyer fees, a mortgage broker, moving costs and more.
Step 3: Start looking
Once you’re financially prepared, the thrill of the house hunt begins—and that means it’s time to find a real estate representative to guide you through the process. They’ll seek out properties in your budget that fit your wish list, help you discover new neighbourhoods, explain the paperwork and real estate jargon and, eventually, put in the offer on the property of your dreams.
If you don’t have a trusted real estate representative in your contact list, don’t fret! The Real Estate Council of Ontario (RECO) exists to provide first-time buyers with tools and information to aid your search. Every real estate representative, broker and brokerage must be registered with RECO, which upholds the rules and code of ethics they must follow. Asking friends and family for a recommendation is a great place to start, but once you have some names, it’s important to still do your research and shop around.
Step 4: Be patient
The real estate market fluctuates from city to city; how long it will take to find a home, put in an offer and have it accepted depends on supply, demand and timing. “I was very, very lucky,” says Alexa, “I only saw one other property, and then this unit came up in a building that I’d been monitoring with my real estate representative’s help for quite a while. They hadn’t had a listing in a while, so we jumped on it! It was perfect because it checked all the boxes in terms of location and size, and is also one of the few buildings in [Toronto] with low condo fees, which was huge for me.”
Buying a home is a complicated process and there’s plenty of lingo, people and paperwork to understand, such as closing costs, mortgage brokers and the aforementioned CHMC. Your real estate representative is there to explain everything—but buyers aren’t without responsibilities. The onus is on you to make sure you understand every step and signature. If you do run into issues with a real estate representative, know your rights.
And once you’ve navigated all that, it’s finally time to pop some bubbly and enjoy that home sweet home. “It still hasn’t completely sunk in that I’m a home owner since I rented for so long,” says Alexa. “But there’s something so lovely about knowing I have control of my space and what I do with it. It already feels more like me than any other place I’ve lived in.”