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Debt Relief: Why You Need to Make a Home Buyer’s Budget

Thinking about getting your feet wet in the housing market? Here is some good debt advice: before you buy, take some time to create a homeowner’s budget so you are sure you have accounted for all the costs of home ownership. There is a lot more to affording a home than being able to make that monthly mortgage payment.

As millennials spread outward from the GTA in search of affordable homes, cities like St. Catherine’s have seen steady increases to home and rent prices. Rental website, PadMapper found that between 2017 and 2018, rent prices spiked by 15 per cent and according to, home prices have jumped 68 per cent since last year. While it may be tempting to jump in fast for fear of missing out, it’s better to pump the brakes, take a breath and weigh your options.

5 things to consider before buying a home

You see the prices climbing and you feel like you need to act fast. Instead of making an impulse decision, ask yourself these questions before you apply for a mortgage.

Should we pay off personal debt before taking on a mortgage?

It depends on your debt level and how you’re managing it. If you are coming up short each month, skipping bills or living paycheque to paycheque, buying a home will only add to your financial stress. The good news is that you may be able to find debt relief by transferring high-interest balances onto a lower-interest line of credit, consolidating your debt through a bank loan or speaking to a debt professional who will guide you through your debt relief options.

Plug your debt amount(s) into our repayment options calculator to see how each solution would work for you.

What will our budget look like when we own a home?

With your partner, go over your current monthly expenses, including debt payments, bills, groceries and housing costs. Then, take a look at this Ongoing Housing Expenses Worksheet from the FCAC to get a glimpse of what your budget will look like as a homeowner. Will your income accommodate new expenses such as home repairs, insurance, property taxes and utilities?

What are our future goals?

Think a few years down the line. Do you still expect to be earning the same income? Will you want to start a family? How will you incorporate those extra costs such as parental leave, baby supplies, childcare and extra-curricular activities? Even though you are not a homeowner yet, you should also consider whether you might want to renovate in the future. Now is the time to plan ahead for these expenses.

This financial goal calculator from the Financial Consumer Agency of Canada can help you budget for your future plans.

Can we afford major milestones?

Our Affordability Index Poll from last year found that eight-in-10 homeowners struggled to save money for retirement, especially while raising a family. How will you handle those major milestones such as your children’s education costs, retirement and travel?

Can we handle the unexpected?

A flooded basement, a broken furnace – these are real situations that require a homeowner to come up with emergency funds fast. With mortgage payments and monthly bills, will you have enough money to put aside money for a rainy day? Adding to debt when the unexpected happens is never a good idea. Use this handy online calculator to help you plan ahead and start an emergency fund now.

Check out what Dee from Color Me Frugal has to say about renting vs. buying.

Have you thought ahead to all the costs associated with becoming a homeowner? Can you handle these expenses without becoming house poor? #LeaveDebtBehind #Housing #Millennials

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