It’s hard to say “goodbye” to your dream home. But if you fall for a house that’s out of your budget, that’s exactly what you should do. Don’t ask your mortgage broker to get you approved for a larger mortgage, and don’t stew over the one that got away.
Responsible homeownership includes knowing what you can comfortably afford (our affordability calculator can help), setting a budget, and buying within it. If you take on a budget-hammering mortgage, you’ll be left with little discretionary income or emergency funds.
Exercising self-control is crucial. Shopping for your first home? Use our top 3 tips to stay budget-focused:
1. Avoid a multiple offer situation
If a great house is priced low for its neighbourhood, chances are the sellers want to generate a lot of interest and ultimately create a bidding war. If the list price is near the top of your budget, save yourself the anxiety – and probable disappointment – of bidding.
If it’s well under your budget, put in your one best offer. If the seller comes back inviting another offer, don’t bite. Move on.
2. Shop with your head, not your heart
A common mistake first-timers make is getting too emotionally invested in the home-buying process. Avoid that!
- Don’t fall in love with a house that’s not yours.
- Don’t let your ego push you into a bidding war because you “are in it to win it.”
- Do go house hunting when you’re rested, fed and level-headed, not tired, stressed out or “hungry” (so hungry you’re borderline angry).
3. Finally, remember it’s a starter home
According to Genworth Canada research, 50% of first-time homebuyers view their first home as a starter home and plan on moving within the decade. Those years go by quickly when you’re living your life, raising a family, and completing home improvement projects that increase the enjoyment of your home.
Buy conservatively (a good-enough home you can comfortably afford), build equity over the next decade, and hit the market when you’ve got the means to hunt for your blue-sky-perfect forever home.
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