Are you being held back from a buying myth? I often hear, or read comments on social media along the lines of “I wish I could buy in this market” or “I’ll never be able to buy a house in this market. EVER.” When I read or hear comments like that I wonder how many people see the news and read stories in the media and think that the Lower Mainland real estate market is unattainable for them when in fact it might not be? In this blog I will discuss how to overcome some popular buying myths. Real estate can be an excellent investment, and if you can put your money into paying down a mortgage, as opposed to renting, and paying someone else’s mortgage, then you can consider it as a savings for your future.
Myth #1: I can’t afford to buy in this market.
Unless you have already gone and spoke with a professional do not let this potential myth become your reality. I strongly encourage anyone that wants to get into this market to first speak with a professional to find out what you could be pre-approved for. In fact, don’t limit yourself to speaking with only one mortgage broker, or going to only one bank, go to a few and see who can get you the best rate, and to see what you could be pre-approved to borrow.
Myth #2: I’ll never be able to save for a down payment.
For first time home buyers, there are options and incentives you can take advantage of, such as borrowing against your RRSPs. Individuals can borrow-up to $25,000 against their RRSPs and you typically have 15 years to repay. For more information on this incentive, read here: http://www.cra-arc.gc.ca/hbp/
You may also want to consider taking advantage of the newly introduced BC Home Owner Mortgage and Equity Partnership. This government incentive allows eligible home buyers to borrow 5% of the purchase price, up to $750,000, as long as the home buyer makes the same contribution. As this is a newer incentive, be sure to do your homework, and ensure that it makes sense for you to borrow this way. For more information, check out: https://housingaction.gov.bc.ca/tile/home-owner-mortgage-and-equity-partnership/
Depending on the price of the home you are buying, you may also be able to save money on property transfer taxes (this can be a huge savings!). For more information, on whether you would be eligible for this, read here: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/first-time-home-buyers
Myth #3: I will get into a bidding war.
The myth here is that if you get into a multiple offer situation that you are required to be in a bidding war. The truth is, if you don’t want to be in a bidding war, then don’t. It’s as simple as that. You are free to put an offer in on a place and if it does go into a bidding war and your offer is not initially accepted then you are not obligated to put in a higher offer. Even if you don’t have the highest offer, financially, and the rest of the terms of your contract are better (dates, subjects, etc.) you could still win in a multiple offer situation. It all depends on the other variables and each situation is different.
Myth #4: I can’t afford a single family, detached home in the Lower Mainland.
If you currently own a condo or townhouse in the Lower Mainland and you have owned for a couple of years, or longer, you likely have a decent amount of equity at this point. With the equity you have built up, and the money you currently pay towards strata fees you could put that towards a larger mortgage. In addition, there are other money saving tricks such as buying a home with a suite and renting that out, or even just renting out a room, and/or buying a fixer upper. Another option is to explore living in other areas of the Lower Mainland temporarily, with a goal to move to your desired area later on down the road.
I fully understand the challenges of buying real estate in the Lower Mainland, however, don’t discredit yourself simply based on what you read or hear in the media. Be sure to do your homework, speak to professionals, and find out what you in fact really are capable of before allowing a buying myth to be your truth.
Fiona White – REALTOR® with Sutton Group – West Coast Realty