About 66 percent of Canadians are homeowners. With so many people owning homes, it’s understandable that you also want to join the group. After all, homeownership is an ideal way to build wealth and has a host of other significant benefits.
However, buying a home is often easier said than done. With the average price of a Canadian home hitting 800,000 CAD, many prospective buyers are wondering how they’re going to afford it.
Thankfully, there are many paths to owning a home. Keep reading and you’ll certainly find a path that’s suitable for you.
Getting a Mortgage
Taking out a mortgage is the go-to option for the vast majority of Canadians who’re looking to buy a home. In fact, about 60 percent of current homeowners have an active mortgage.
Banks, credit unions, and other lenders offer a wide range of credit facilities designed to help people afford homes. In most instances, you’ll need to put down a deposit (at least 5% of the home’s cash price) and the lender will pay the balance. After the deal is closed, you’ll start to make monthly payments until the loan is fully paid off.
The first step to getting a mortgage is to identify a suitable lender. They’ll assess your credit history and other factors to determine whether you qualify for a mortgage. With pre-qualification, you’ll have a good idea of how much money the bank is willing to lend you.
You can also approach a mortgage broker. This professional will help you determine the best type of mortgage for your situation, as well as the best lender for your needs.
If you’re unable to secure a mortgage or the idea of going into debt to purchase a house doesn’t please you, there’s another path you can pursue: rent-to-own.
You’re certainly already familiar with renting a house. You pay rent to your landlord every month, and you can vacate the house at your will or when the lease expires. Rent-to-own follows a similar model, only that you’ll end up owning the house after a certain period.
Rent-to-own programs are typically offered by property developers. They know there’s a huge market for people who’d like to own homes but aren’t able to get mortgages. Rent-to-own contracts vary from company to company, so ensure you have a lawyer to help you understand what you’re getting into.
If you’re in Ottawa, click here for a rent-to-own program that might excite you.
Of course, you can purchase a home in a straight-up cash deal. This is the quickest and most convenient way to become a homeowner. Just identify the house you’d like to buy, agree on the price with the seller, make the payment, and the property is yours.
So, how can you afford to buy a house in cash? If you have a high-income job or run a profitable business, it’s possible to save up enough money to buy a house in cash in a considerably short amount of time.
Some people also tend to buy homes in cash after inheriting a chunk of wealth, winning a jackpot, or getting another form of windfall.
Owning a Home: Know Your Options
Owning a home is a dream come true for almost everyone. Although homes are big-ticket items, there are a couple of homeownership paths. Getting a mortgage is the most popular option, but you can also get a rent-to-own deal or even make a cash purchase if you have the means.
Browse our blog for more real estate and homeownership advice.