After eight years of living in her apartment, Karyn began having the same feeling many renters experience. She loved her neighbourhood, a vibrant area close to shops, restaurants and parks. She never bothered driving because it was easier to walk. But her rent cheque was paying for someone else’s future, and it was weighing on her.
It was a neighbourhood feel that I really enjoyed and so I stayed there a really long time but then it was time to grow up,” Karyn says about her decision to buy a home. “I was getting older and I was still renting and I started to realize that this isn’t going towards anything. It’s not securing my future, I’m not building wealth. It started to weigh on me more and more. And it was just time, so I took the leap and got pre-approved for a mortgage.”
“I needed to know what my cap was when I was looking.”
As a practical buyer looking as much for an investment as a place to call home, Karyn did her research and set out ground rules for herself. One of her most important rules was that she had to make a down payment of at least 20%. Doing this meant she would avoid paying for CMHC insurance – a mandatory purchase for any homebuyer with a down payment of less than 20% – and would qualify for a 30-year amortization, thus lowering her monthly mortgage payments.
When speaking to her mortgage broker, Karyn made sure to only get pre-approved within her own, self-imposed limits.
“I was really clear about that because I needed to know what my cap was when I was looking,” she explains. “Not what I could potentially be pre-approved for because that could be higher, but what I could actually spend and still have my 20% down. And that’s what I worked with when I started looking [for homes].”
How much can you afford to spend?
To get that 20% down payment, Karyn went to a few different sources. It’s not that uncommon for first-time homebuyers to source their down payment from more than one source. According to Mortgage Professionals Canada, personal savings make up the biggest source of down payment funds, followed by loans from financial institutions, gifts from family members, and RRSP withdrawals.
For Karyn, a withdrawal from her RRSP using the home buyer’s plan made up the majority of her down payment. Under the home buyer’s plan first-time homebuyers can withdraw up to $35,000 from their RRSP tax-free to buy a home, on the condition they pay themselves back over 15 years.
- See also: Resources for first-time homebuyers
Karyn also took advantage of another program for first-time homebuyers, the land transfer tax rebate. In Toronto, where she bought, there’s both a municipal and provincial land transfer tax.
“When I saw how much of a rebate I got I was like, ‘wow that’s a really great incentive for first-time homebuyers,’” she says, musing about the amount of the tax. “I can’t imagine how much I’m going to have to pay the next time.”
“Your realtor can really make or break the experience.”
Armed with a pre-approval and a realtor Karyn began her home search. Used to the freedom from responsibility that comes along with being a renter, she set out to find a condo in her neighbourhood.
“I didn’t want a house because I don’t have any interest in shoveling snow, cutting grass, learning how to be a plumber,” she says. “Those things are just – I’d just rather call somebody.”
But after a seeing a few condos in the neighbourhood she was renting in, Karyn quickly realized she would have to look elsewhere to find what she was looking for without going over her budget.
“I found my money didn’t go as far in that area,” she explains. “The properties were much smaller. They were much more awkward in terms of layout.”
With the help of her realtor, Karyn widened her search radius, and started getting pickier about the types of units she viewed. After that, it didn’t take her long to find the right place. The layout worked, the colours were right and the location, while not her first choice, was a fair trade-off.
“I think people get really stuck in the area they want to live in,” she says. “If you’re not open you might miss out on a lot of other great properties that really aren’t that far from where you really wanted to be in the first place.”
Karyn also credits her success in finding what she wanted to having help from a good realtor.
“I think that your realtor can really make or break the experience for you especially as a first-time homebuyer, so make sure that you really like them and really trust them.”
From there, Karyn made an offer, which was accepted after a few rounds of sign-backs between her and the sellers. Condos are far less often the subjects of bidding wars compared to single-family houses, so the process went smoothly. Karyn got rid of most of the things she’d collected over 8 years of renting, and started fresh in her new home.
“I really wanted to make sure that I was at the table.”
Karyn described the feeling of becoming a homeowner.
“There’s a sense of pride that you have, because it’s yours,” she says. “And there’s also a sense of responsibility because you care about everything. Like if you scratch the floor you care because it’s not somebody else’s place, it’s your place. You care about what colour you put on the wall. You care about the wallpaper. You take a lot of pride in it.”
Karyn took so much pride in her new home that she joined the condo board.
“Now I know how the building is managed so that my investment is protected,” she explains. “I really wanted to make sure that I was at the table.”
Karyn compares running a condo building to running a city, just on a small piece of land. The board of directors makes decisions about how things are maintained and improved, plans for the future, and makes sure the building remains financially healthy. She described the difficult decisions she has to make as a board member, the toughest of which is setting maintenance fees.
“Every time we talk about increasing maintenance fees. Every single time. Every year we do,” she says. “But once you understand how the building has to build its reserve fund, and in 20-30 years when we have to change the roof or the boilers, all of those things matter when prospective buyers are coming. They want to know that there’s a healthy reserve fund. So every time we have to raise maintenance fees. It’s always an uncomfortable conversation because I’m making decisions that are going to affect me personally financially, but I also have to understand what it means for the long term and what It means for the health of the building and the community.”
Karyn doesn’t just see her home as an investment, however. She takes great pride in it as a place to live.
“I really do love where I live. I love my unit. I really like the building. I love the amenities here. And the area is great as well,” she gushes. “I’ve been extremely happy here.”