DailyXY’s MoneyGuy blog is sponsored by RBC
If you’re like most Canadians, the question of home ownership is when, not if. The positives of home ownership are deeply ingrained in our minds: the barbecues, the driveway ball hockey, the preferential tax treatment, the security. Likely, you’ll buy a house as soon as you can afford it.
When might that be? Check for yourself using this Canada Mortgage and Housing Corporation calculator, or go see a mortgage broker. He or she will use time-honoured ratios to determine how much money you can borrow to put towards a house. Then you’ll have a budget. Off to the races!
Another key point: Once you’ve got a whack of cash saved up, a house is unlikely to be the wisest investment. “A house is essentially a fridge,” says Moshe Milevsky, a finance professor at York University and author of Your Money Milestones. In other words: You use your fridge, devaluing it in the process, so you don’t expect to get a better price when you sell it years later. “In Arizona, they think of houses as fridges,” he continues. “In Canada, we’re not quite there yet.”
As such, Milevsky says guys should wait till they’ve got a hearty nest egg before taking a plunge: He recommends waiting till you’re in your 40s. Young people “value flexibility” he says. “Buying a house when you’re young can tie you down, and it changes your way of thinking.”
But as Milevsky’s comment indicates, no academic or financial planner (or financial columnist) can tell you when to buy. It’s not merely a financial commitment, but also a lifestyle choice which ranks somewhere not far behind getting married and having children as one of the biggest game-changing moments in your life. No pressure!
Image courtesy of Carnotzet.