First-time homebuyers should behave like investors because that’s how they’ll save money and ultimately live a happier life, says Don Campbell, a Vancouver real estate expert.
“If you prefer not to save money, then think like a homebuyer,” says Campbell, an investor who analyzes and writes about the Canadian real estate industry.
And while it’s tough to approach your first home with your brain instead of your heart, Campbell recommends looking for certain criteria in the area you like that will encourage you to make a wise decision.
“You fall in love with a house in a neighbourhood that has a future and not a past,” he says. “Buy in an area where the property values will go up.”
Buying close to a train or LRT station is a good idea because those properties are predicted to rise in value 15 per cent more than similar properties that aren’t near a station, he says.
It’s also smart to work your mortgage like an investor, says Campbell. So on a $300,000 variable-rate mortgage, choose to pay back the higher monthly payment of a five-year locked-in mortgage.
Yes, the payment is more than you’re required to pay, but 100 per cent of the extra payment goes off the principal. After five years, you’ll have paid the same total as a locked-in mortgage, but with this method a lot more comes off your principal and you’ve paid a lot less in interest payments.
Determining a few key factors before hitting the bricks is a good idea for first-time homebuyers, says Rob Faulkner, president of the Nova Scotia Association of Realtors.
Faulkner says it is vital that buyers determine what they can afford, choose a few locations that work for their lifestyle and buy a home based on lifestyle and the ability to maintain it.