By Claire Zimmerman

Halifax realtor Rosie Porter (BEd’91) sees a lot of first-time buyers. Usually they are ready to invest in buying a home, but don’t know much about real estate. “It’s one of the reasons I really enjoy working with first-time buyers. I feel like I’m actually helping them because they self-admittedly don’t know what they’re doing,” she says.

Whether you’re getting tired of renting or have a down payment ready to go, here are some things to consider when deciding if you should take the leap into home ownership.

Know the market

We often hear about how expensive real estate has become in Toronto and Vancouver. “The thing about real estate is it all depends on your location,” says Porter.

Right now, for instance, Nova Scotia is a buyer’s market. The average house in the Halifax area, Porter says, costs between $270,000 and $300,000. A down payment on a house of that value will be around $15,000 minimum. It could be more or less, depending on the city, or even the neighbourhood.

“The absolute best thing someone can do if they’re thinking of buying a house is to put money in an RRSP,” Porter says. In Canada, those planning to buy a home may be able to use RRSP savings as a down payment under the Home Buyer’s plan. This allows you to benefit from tax-sheltered savings until you’re ready to make a down payment. Then you can borrow the down payment from your RRSP, under the condition that you pay it back within 15 years.

Think in five-year increments

Porter talks about real estate in five-year increments: “If you’re in it for five years, then certainly it’s worth it to buy.” Generally, within that time, she says, a property will have appreciated enough to make it a profitable investment.

Canada currently has some of the lowest mortgage rates in its history, at less than 3% in many cases. If you get a mortgage with a fixed rate over five years, you don’t have to worry about your monthly payments changing until the end of that term, when they might go up or you want to sell.

If you can’t see yourself living in one place for five years you may not be ready for the commitment. “A lot of younger people are not quite sure where their career is going,” Porter says, and “might not want to be in the same place for five years and are more wary of tying themselves to something.”

Make renting work for you

If you buy a home and realize you want to move or travel after a couple of years, it’s not the end of the world. If you can find someone to rent, Porter says it’s fairly likely you’ll break even, but unlikely you’re going to make a profit from renting.

If you strategize, it is still possible to make money from your property. “One model that first time buyers will use is to buy a duplex, because you can pay off a lot of your mortgage from the rental,” and live in the other half, Porter explains.

Balance control and security

 “For most people the reason to buy a house is security,” Porter says. Renters face the uncertainty of a rent increase at the end of every lease. But buying a house comes with uncertainty too.

“If you’re renting you don’t have to worry about the maintenance of the property,” Porter says, whereas with owning a house, “if you don’t maintain it then it’s not going to be a good investment.”

Porter’s advice is to factor in repairs before you make the purchase. “If you look at the average years that a furnace, or windows or a roof lasts, you should have a good understanding of how much maintaining a house costs. And if you maintain a house well the value will increase.”

Meanwhile, with renting, you probably have more control than you think. Most provinces put limits on how much rent can increase per year. Provincial tenancy laws are usually available online, so read up to know what your rights are.

Build a good credit history

Whether you want to buy a property now or in 15 years, you’ll need to have existing credit to get the mortgage. “I bought my first house in 2001. I wanted to buy my first house in 1997,” Porter says. “But I didn’t have any credit. I’d always paid cash for things and I thought that was a good thing. But lenders didn’t.”

The hard but convenient news is most young grads already have substantial credit—in the form of student loans. As long as you make regular payments (or defer payment until you have a steady job), it’s likely your credit score will work in your favour. You can request your credit score with a report from Equifax or Transunion, to see how you’re doing and if you need to clean anything up.

Know thyself

 No matter the pros and cons of renting or buying, the decision comes down to you. Are you committed to a job? A partner? A city? Or do you want the freedom to take off on an indefinite adventure at a moment’s notice? Even if you are financially ready to buy property, it may not be your ideal. Yes, it could be a solid investment—but, Porter says, usually only if you mean to call that investment home.

Photo Credit: www.rosiep.ca.