We live in a world today where many people are getting a mortgage on the dream house as their first property! There is no stepping stone house anymore. It used to be: you buy the house that is a piece of crap, fix it up with some sweat equity over time, sell it and purchase one that is better. Repeat process 2 to 3 times and BAM!! you have your dream house! Not the case in our instant gratification world!
- STRESS ? When you get the big mortgage without having the equity or even really knowing what your expenses are you will be STRESSED! The #1 medical diagnosis today is anxiety, and a high mortgage that stresses you out can be one of the major causes of this.
- MOVING IS EXPENSIVE ? When you start with the house you need, which is the mortgage you need:), it will reduce the costs when you go to sell. Real Estate Costs, Land Transfer taxes are all relative costs, the higher your selling price, the higher these costs are! When you sell a house for $500,000 and move to one that is $600,000 you are looking at approx. $40,000 in costs before you have even hired a mover! When you are making big jumps in the house you want to live in such as buying the first one for $300,000, THAN selling for $400,000 and Purchasing for $600,000 the cost starts to make more sense.
- YOU MOVE MORE OFTEN THAN YOU THINK ? 30% of Canadians will move every 5 years, with the average Canadian owning up to 6 different primary residences in their lifetime. If you are purchasing the house you NEED, WELL within your budget, the chances of you losing money will be far smaller, not to mention if you happen to be in a down-market your recovery time will be much quicker.
- YOU WILL MAKE MORE MONEY ? I have seen it time and time again in my industry. The people that end up buying within their means, will take more chances in their career. When you are living paycheque to paycheque, you are tied to security, and less likely to take chances to further your earning potential. By staying well within budget you are even likely to start your own business, OR pursue a secondary passion whatever it may be. Less stress means that your creative juices are flowing more! A duplex is a great option for a first house!
- EARLY RETIREMENT ? With a smaller house, smaller expenses, you will have more money in your budget for retirement savings, OR another property like a rental. All of these small savings add up to years of your working career.
Making a tougher choice today, a little sacrifice OR delayed gratification, can pay huge dividends later in life. Picking a mortgage that is well within your budget can truly offer you more freedom in your life, and although it may not seem like it at first, it will translate to more happiness in the long run. Redefine your goals and you can redefine your retirement! Mission35.