Here’s what you should know as a single homebuyer
The structure of the Canadian family is constantly evolving. Fifty years ago, large families in rural areas made up a large percentage of Canadian homeowners. Today the single homebuyer is increasingly common in real estate; in 2016, one-person households made up an all-time high of 28.2% of all private Canadian households. If you are looking to buy as a single person, here’s what you need to know.
Pros of being a single homebuyer
There are some obvious benefits to being a single homebuyer. The clarity you have as a single homebuyer can make decisions simpler and increase your options. With only one set of needs and personal preferences to consider, you won’t have to make compromises to suit someone else’s interests, needs or aesthetic preferences. You can be clear on your budget and your goals. When it’s time to make a big decision in the midst of a bidding war, you can make a wise, intuitive choice without considering what someone else is looking for.
Being a single homebuyer can also give you more flexibility with move-in dates, which could be appealing to a seller looking for an offer with fewer conditions. If a school district or a partner’s job in a specific location isn’t factoring into your decision, you may also be able to choose a more affordable home in a less expensive neighbourhood or select from a wider range of property types. Studios, lofts and open-concept homes with fewer walls can be appealing to single buyers but aren’t options for multiple people needing personal space.
Challenges for single homebuyers
Financial challenges are the most common obstacle for single homebuyers. If you’re purchasing property with a partner, you have two income streams and more potential savings to pool together. This can make it easier to put down a bigger down payment or to afford a bigger home. If you’re buying solo, you don’t have the security of another income in case you lose your job or get sick. But if you’re a solo buyer with a good credit score, steady income and the savings you need to put down a reasonable down payment, buying a home alone might make sense for you. Some individual buyers might choose to have a family member or close friend cosign a loan. But this isn’t a small ask; if you default on your payments, the co-borrower is equally responsible for your debt and could also face consequences.
Tips for single homebuyers
A key thing to remember if you’re buying alone is that you don’t have another person to fall back on. Make sure you talk about backup plans with your financial advisor. Can you afford this home if you lose your job? What costs should you be anticipating in case of a renovation or remodel? Aside from professional help, consider bringing a close friend or family member to viewings for another set of eyes and ears. You can also ask loved ones if they have professionals they’ve worked with; a referral goes a long way. Set yourself up for success with these tips:
Hire professionals you trust
Since you’re making all of the decisions on your own, it’s helpful to have a trusted friend, a real estate professional, a lawyer or a financial advisor who can offer professional and personal advice. This is especially useful when you need to make a quick offer or are emotionally invested in a home.
Real estate professional: Hire a real estate professional who understands your goals, your budget and your lifestyle so you can find a property and a neighbourhood that suits your goals. Ask your agent if they have experience with homes in your ideal neighbourhood and price range. You should feel comfortable asking questions and spending time around this person.
Real estate attorney: Your legal advisor ensures that your agreements and contracts protect you. If you’ve already found an agent you trust, they can help refer you to a lawyer they’d recommend. A financial advisor: Enlisting a financial expert to budget, save and plan wisely can save you time and money. A financial expert can help you with each stage of the process, from pre-approval to closing. If you’re not quite ready to buy, find an advisor now to start working on your game plan.
Do your research
Use online resources. Our blog offers a wealth of real estate knowledge, from homebuying checklists and financial planning to staging a home and understanding market trends. Know what you’re looking for and avoid common mistakes.
Learn about different kinds of mortgages and loans so you can ask the right questions when you’re hiring an agent or applying for a loan.
Monitor your credit score before you’re ready to buy.
What is happening in your local market? Track trends before you’re ready to buy so you know what to expect. Your real estate professional can help you understand housing prices and trends in the areas you’re considering.
Explore Canadian homebuying incentives, especially if you’re a first-time homebuyer. You might be eligible for tax cuts or government support.
Get organized well in advance
Before you dive into a search or fall in love with a property, get financially prepared.
Get a pre-approval so sellers know you’re serious and so you can show your agent what you can realistically afford. Pay off debts and avoid other big purchases to improve your credit score before preapproval.
What will your potential closing costs be? Consider attorney fees, pest inspection and appraisal fees. Put aside 2 to 5% of your total loan cost to go toward closing costs.
Make a list of your must-haves and another one of the features you’re willing to compromise on. Maybe you want a yard but a nearby park would do the trick. Perhaps you’re looking for a garage but if you buy downtown instead, you can use transit and you won’t need a car. Get clear on your priorities so that your agent knows exactly what you’ll consider. Once your financial planner has helped you anticipate what your costs might be and calculate your down payment, practise a monthly budget to make sure your financial plan is realistic and matches your lifestyle.
Plan ahead and consider the future
You might be someone who loves living alone and plans to do so in the long-term, but life is full of surprises. Consider what would happen if you were offered a job in another province or met a partner. Is your property suitable for a joint living arrangement, rental unit or caring for an older family member at some point? Consider all the potential outcomes your future might bring.
Is there rental potential? Consider whether the home you’re buying is reasonable to rent out in the future; renting out all or part of the property can be a great way to supplement income or keep your options open.
Ask about the zoning restrictions of your property if you may want to expand, since some properties don’t allow for expansions.
Look for multiple uses in a home: an office could easily transition into a future kid’s room, or an extra bedroom or art studio could be constructed above the garage. Consider multiple uses and outcomes beyond what you need right now.