Home is the Best Investment You'll Ever Make
Everyone needs a place to live. You should make
it a priority to buy a home as soon as possible.
Otherwise, you are paying rent and contributing to your
landlord's financial freedom.
Buying a home will probably be the largest investment you will ever make.
Carefully consider your current and future needs before you buy, and
pick a home that can grow with your family. Every time you sell one
home and buy another, there are significant costs such
as moving and commissions, and inconveniences such as
changing addresses and phone numbers, switching schools,
etc. So, do yourself a favour and do your homework. This will
save you future hassles and costs.
If possible, it
is a good idea to purchase a home within a reasonable
distance of where you work, in order to avoid high travel
costs and exhausting commutes.
If you have or plan to have children, the proximity
to and quality of nearby schools should be taken into consideration.
try to ensure that the mortgage on your home will
be paid off before your children enter
university. This will free up funds for
Everyone needs a debt-free home to
live in when they retire. If you retire
with no debt and a paid-off home, it is possible to live
fairly well even if you have little savings. At age 60, you can start
collecting Canada Pension Plan (CPP).
Once you are 65, you can start collecting Old Age Security
(OAS), and possibly Guaranteed Income Supplement (GIS).
There are many other federal, provincial and municipal
benefits that are available to seniors which depend on
your income level. See our Government
Benefits, Programs and Services page.
If you still have to pay mortgage payments after you
retire, you may have problems because the mortgage
payment will be a large percentage of your monthly
If you do not own a home when
you retire, a large percentage of your monthly
income will be used to pay rent, which may leave
very little for other living expenses.
If, instead of buying a home, you invested in RRSPs,
once you retire you will have to withdraw money from
your RRSPs to pay your rent and other living expenses. This money will be taxable income. Your
OAS may be clawed back, and you may not be eligible for GIS
and many other government benefits. You would be
better off to own a home rather than the RRSPs,
because the government benefits are based on
income, not on assets owned.
Real estate values normally increase over the
long term, and this increase is tax-free for your principal residence (see
residence exemption). Keep in mind that land
grows in value more than the building, so it is best to
buy the largest parcel of land you can afford, in a
location that you think will appreciate in value.
Determine what you can comfortably afford for a mortgage payment,
and this will determine how much you can spend on a home.
See our loan
calculator to determine what your mortgage payments
will be. Don't
forget to factor in other costs of owning a home, such as strata fees,
maintenance costs, house insurance (save money by having a high
deductible), property taxes, and heat and utility costs.
There are other costs to buying a home besides the purchase price,
including inspection fees, appraisals, moving costs, to name a few.
See the Financial Consumer Agency of Canada article on Buying
When choosing a type of mortgage, keep in mind that historically,
open mortgages with a floating rate based on prime have been the
cheapest mortgages to have. The rates are lower than fixed rate
closed mortgages, and you can make extra payments whenever you can
Be sure you know the condition of the home you are
planning to purchase. A professional home inspection is
Buy a home, and pay it off before your children enter university.
Tax Tip: Nobody plans to fail - they
just fail to plan!
Your financial plan should include the following steps: