Published on April 2, 2014 | by Kate Schreiter Photography by Kate Schreiter0
To rent or to buy?
“I’ll be living at my parent’s house until they kick me out,” laughed Amy Hicks, a second-year Humber College student.
To rent or to buy? That is usually not the question for students.
“To be honest, I don’t see myself having enough money to buy a place for a long time. I’m still paying off my student debt,” said Stephanie McMaster, a recent Guelph-Humber graduate.
While the idea of buying a house isn’t on the radar of some students, it’s not as daunting and impossible as it may seem.
The first thing is to not stress out about the large price tag.
“The homebuyer needs to look at the house as a month to month purchase, not a large lump sum purchase,” said Lily Grant, a Real Estate Agent at Royal LePage.
“It’s easy to stress about the total cost, but you have to remember that that’s generally over a 25 year span,” she said.
Buying a $300,000 house all at once would scare anybody, especially a student who has just graduated.
“If you buy the right property for your income, many people can actually afford a monthly mortgage payment and they don’t even know it,” said Grant. “The difference between buying or renting, for the most part, is the down payment.”
The Federal Government requires homebuyers to initially purchase at least 10 per cent of their house. With a $300,000 house for example, that would be $30,000 up front.
“I would be so happy to see five digits in my bank account. Just that seems like a long way off, let alone spending all that money as soon as I got it,” said Hicks. “It would be so scary to spend that much at once.”
Grant said typically people don’t buy on their own. “Buying a place by yourself is difficult at any age. Over 80 percent of my clients buy their home with another person, whether it is a spouse or a family member.”
“The key is to have a steady income and a small savings buffer once the down payment has been made. Some people even rent out a room in their house for some extra income each month, so there are always ways to make it work.”
Grant said that many people automatically assume they have to move out and rent after school, but she said saving enough money for a down payment does not take as long as people might think.
“If you can stay at home for a year with your parents while you work a steady job, you’d be surprised how much you can save. Make a budget, stick to it, and set goals for yourself.”
For even more incentive, Grant said that once the down payment is taken care of monthly mortgage bills could be the same as renting month to month.
“It’s hard work saving up the initial money, but when monthly payments can be on par with renting, it’s much better to put that money into your own mortgage, as opposed to helping someone else pay off theirs.”