BUYING A HOME: WHERE DO YOU SEE YOURSELF?
Look 25 years down the road.
Buying a first home is overwhelming. Much like the transition from single to married, becoming a homeowner just seems so huge. It’s about commitment.
It’s the same with buying a property. Tenants look at one-year leases, or month-to-month rental agreements, while owners have five-year terms and 25-year amortization schedules. Renters can think in the short-term; ownership is more about where you see yourself in the future.
The metaphor isn’t perfect — in many ways, selling and moving house is a lot easier than getting a divorce and retreading the singles scene — but it fits in many ways. So that’s what we’re going to talk about today… Where do you see yourself in five years?
Some people wait until they’re ready to buy a house to look at their finances. We recommend taking a more proactive approach. As we’ve said before, it’s never too early to start saving. As we’ll talk about in a future post, anyone looking to buy a home should spend some time planning.
Sit down with a blank piece of paper and sketch out your live for the next five years. You don’t have to get into minute details. Just honestly and realistically set some rough goals for yourself, remembering that you can always adjust or change them as time goes on.
The key is to imagine yourself one, two, five or ten years into the future. What things can current you do now that will assist future you in that endeavour? Are there gadgets or high-end personal objects you don’t need to buy? Are there expensive nights out with friends that could become potlucks or other equally entertaining social events at home?
And don’t get us started on ordering out. We love pizza as much as the next person — but $30-40 every time you want a slice delivered to your front door adds up faster than Usain Bolt in the 100-metres. You don’t have to become a hermit, by any means, but spending a few more nights in with a few more home-cooked meals can build a hefty nest egg in a surprisingly short time.
If you’re already on your way to saving that down payment, start thinking about what your housing needs will be in five years.
Will you need spare rooms? Now that you’re buying a home, you might have more out-of-town guests coming to stay, or perhaps (more) kids are in your future. You may also want to use an extra bedroom as an office, playroom or den, to suggest three examples. Some people take in homestay students, or buy property with a rental suite to offset costs.
One exercise that’s fun from a wouldn’t-it-be-great kind of perspective is floor planning. Get yourself some graph paper, and draw your current floor plan. Include sofas, bookshelves, beds, etc. so you can see how you’re currently using the available floor space. (One of our clients printed out pictures of these things to scale, then moved them around the graph paper to maximize her space.) Once you’ve got your present living space visualized, start talking to friends, family and partners about what you’d love to change if you could.
A for instance: if you enjoy cooking, make a wishlist for your future kitchen. A cozy one might be okay for now, but as you get comfortable in your new home will you want something larger? Dream big — put your ideal kitchen beside the current one. Then, once you’ve had your fun, think of compromises you’re willing to make in your first purchase.
All of these are great exercises to do before you chat with a mortgage broker. If you have an idea of what you want now, and what you might need in the future, you’ll have more success satisfying those goals in your first home.
