One of the largest purchases you make will no doubt be buying a house. Before you embark on this journey, it is important to know that your finances are in order.
A good place to start is with reviewing your bank account history to learn more about your spending habits to see where you money is currently going. Also you can see how much, after deductions (if applicable) is entering your account with each pay.
Also, if you are planning on buying a house with someone else, it’s important that they review their finances as well.
Once you have reviewed your accounts, you can ask yourself:
- Do you have any money set aside for emergencies? Typically it’s recommended to have three months of income set aside.
- Do you have a plan in place to pay off any debts? If buying a house, you also want to make sure that your other financial obligations can be managed as well.
- Do you have savings for a down payment as well as the closing costs? When buying a home in Canada, the typical minimum down payment is 5% of the price of the home. However, there are also closing costs such as your lawyer’s fee that you need to budget for.
- Do you have a stable job or income?
- Will you still be able to save money for retirement and other goals once you have a house?
- Are you relying too much on credit cards each month to get by or do you carry large amounts on loans and credit cards? The less debt you have the larger home price you will be able to qualify for.