Wanting to buy a condo in your 20’s may sound impossible but it could be one of the best decisions you make. I bought my first condo when I was 18 years old and was able to invest in more properties by the time I turned 23. I’ve been able to use Real Estate as a means of building my wealth and financial independence. Wanting to get into Real Estate is a great start, and one of the reasons I have been successful in Real Estate is because I started so young. Buying a condo in your 20’s can take a lot of sacrifice and budgeting, but it will be worth it in the end.
At 18, I found a property that I liked and because it was a pre-construction condominium, the deposit structure was spread over a 6 month period. I developed a plan and a goal within the 6 month timeline to make sure I could make it happen. Being a first-time homebuyer, especially at a young age, is a lot of responsibility. Being prepared for the monthly payments and miscellaneous expenses in advance will help the process. When you buy a home in your 20’s it is a great long-term investment and is building you equity.
Before you buy a condo make sure to carefully consider your financial situation, your employment, the local housing market, and your future goals. The value of everyone’s equity is in Real Estate, so starting younger and being able to build that up will help you be successful.
If you are wondering how to buy a condo in your 20’s, here are some of our tips:
Create a plan
First, you should start with a plan and a certain goal in mind. This will help you discover what you need financially and a timeline along with it. This can include finding your budget and saving for a down payment. Creating a plan to know how much money you need within what time frame is key. You can’t reach a goal unless you have one.
Buying a condo in your 20’s can be a great long-term investment. It is important to be aware of all things that are involved with buying and owning a condo such as a mortgage, maintenance, property taxes, and home insurance. A mortgage is a long-term commitment, typically spread out over 25-30 years. There will also be extra costs affiliated with the condo that you need to prepare for, including closing costs.
Once you have a price range of what you’re able to afford for your first condo, it can narrow down your options. When you buy a condo in your 20’s, you don’t need the most expensive unit in a building – you just need to get into the market. There are options in the 400’s and 500’s that are possible for you to buy if you have a good plan put in place. You have to do your research and figure out what you want and what you need to make that happen.
Proof of income
When you make the decision to buy a condo in your 20’s it means being responsible for all of the monthly payments, including mortgage and utilities. Your bank will also want to validate that you have had a steady income for at least two years. If you’ve had any significant gaps in employment or demonstrate job instability, it could be a lot harder to get approved for a mortgage.
Saving at a young age can be difficult, especially if you have an entry-level job or have student loan debt. It can be helpful to set a monthly budget, determine what you can comfortably afford to set aside. Making a financial goal for yourself can help, you might want to designate a certain amount of each paycheque to dedicate towards a down payment.
Buying a condo for the first time you will have to show proof of having stable employment, solid income, and the funds to cover the mortgage payments. They may ask for previous taxes or pay stubs to confirm before moving forward. Also making sure that your taxes are done is important since you can’t buy a property in Canada without being up to date on your taxes.
Check your credit score
When buying a condo in your 20’s, you will need is a decent credit score. This is what a lot of banks will look at to determine your approval for a mortgage amount. Your bank wants to know that you can make your payments responsibly and on time.
This will play a role when considering what amount your bank will pre-approve you for as well as your interest rate. Maintaining a healthy credit history will provide credibility and show your ability to obtain a loan.
As a first-time buyer, there is always the option of having your parents cosign on your mortgage or help with your down payment as well. In your 20’s, it may be difficult to have credit, or a good credit score.
Before you buy any property you need to have a pre-approval in place. A pre-approval provides you with an amount that your bank has approved you to borrow to finance your home.
When you are buying a condo for the first time, speaking with your bank and getting their approval on how much money they will lend you is necessary.
If your local housing market is particularly expensive or competitive, you’ll need to move fast when a home you like is listed. You can save a lot of time when you have a pre-approval in place, seeing only homes you can afford. You’ll have a better idea of your monthly payment amounts, as well as how much your down payment will be. To calculate your monthly down payments you can use our mortgage calculator.
In Canada, you need to put down a minimum of 5% of the home purchase price if you qualify as a down payment. For homes between $500,000 and $1 million, you’ll need 5% of the first $500,000 and 10% of the rest of the price. For homes valued at $1 million or more, the minimum down payment is 20%. You will need your down payment ready to go when you are ready to put an offer in for a property, so having it the earlier is the better. As a first-time homebuyer, there are many perks available that can help you buy a condo.
When going over your financials and ensuring that you are ready it’s important to remember all miscellaneous costs. Closing costs can include land transfer tax and legal expenses. You can use our Land Transfer Tax calculator and legal expenses usually cost around $1,000-2,000.
Buying a condo in your 20’s can be one of the best decisions you make. You are creating equity and paying off your own home. It can be a lengthy and expensive process but worth it in the end. The sooner you get into the market the better, and building equity from a young age. The benefits of homeownership are huge, especially when you’re younger. Buying a condo in your 20’s is a long-term investment, and if you stay long enough, it can mean building serious wealth over time. Book a call with us today and we can help you find the perfect first home for you. For more information, download our FREE First Time Home Buyers guide.