How to Buy a Home and Pay Down DebtApr 24, 2019
Have you given up on finding an affordable home in Kitchener? For millennials who want to pay down student or consumer debt, buying a home might seem unrealistic. But what if you’re willing to take an unconventional route to home ownership?
Kitchener has seen a 10 per cent hike in one-bedroom rentals since December 2017. And as the cost of renting continues to rise, it’s natural to consider the prospect of buying instead of renting.
Kitchener/Waterloo home prices look pretty good compared to the GTA, which is why so many Toronto millennials are relocating. However, millennials just starting out might not be earning enough to afford the average detached home price of $490,000, which would require an income of $100,000 and 20 per cent down. So what options do prospective first home buyers have when buying and renting are equally unaffordable? They can get a little creative…
Relocation due to inflation may help you pay off debt
Earning an average $50,000 income won’t get you a whole lot of house these days. According to the FCAC’s mortgage qualifier tool, you’d only be approved for $160,000 if you put 10 per cent down. That also depends on how much debt you’re carrying.
Although it’s not the right choice for everyone, moving to a more affordable city or town might be just the ticket. It could mean the difference between being house poor and being able to comfortably cover all your monthly expenses, pay off your debt and save a little money too.
Share the debt load
Whether you’re single or you’ve got a growing family, some millennials have had luck combining their resources. Of course being a dual-income couple can afford you more options than a single income. However, some millennials are saying “No thanks” to carrying the burden alone and decide to embark on a shared venture in home ownership.
According to a RE/MAX survey, one-in-three Canadians say they’d consider co-ownership. A Capital One study found nearly half would consider buying with family and friends. If you’re open to this type of creative solution, be sure to carefully weigh the pros and cons before committing.
Shrink your expectations
If you’ve driven through any Canadian city, you’ve likely noticed a sea of condos and townhomes residing where farm fields used to be. A condo can be a great, affordable entry-level option for a first time home buyer. But, what if you think smaller? Much smaller! Debt relief, affordable living and a tiny mortgage all in one package, the tiny house movement has enticed a growing number of younger Canadians who want to embrace the minimalist lifestyle in exchange for a portable home they can call their own.
Driven by debt relief?
Let’s face it, student loans + consumer debt = stress. If you’re not quite ready to go the unconventional route, it’s still important to have a plan pay down your debt. If you’re plugging away at minimum payments, you can make some real progress by comparing your debt relief options using our calculator. Or, speak to a debt professional who can make debt repayment recommendations based on your unique financial needs.
Are you ready to own a home even though you still need to pay down debt? A creative solution just might be the answer.
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