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Finance: How to Help Millennials Buy Their First Condo

Original Post: https://myhomepage.ca/finance-help-millennials-buy-first-condo-nov2017/
Author: Rubina ahmed-haq

Millennials are so financially strapped that many can’t find the funds to move out of their parents’ home. These are the findings of a new report by the University of Waterloo called Gen Y at home. It finds 47.4 per cent of millennials (also known as Gen Y) in the GTA live with their parents.

The reasons, the study says, is the high cost of housing, debt and job instability.

For young people moving out, your parents’ home can be the first step into adulthood. If you have a young person living at home with you, or you yourself are a millennial that wants to get out on their own, here are some tips to make that happen.

Focus on Student Debt

First One of the roadblocks in saving for a home is having large amounts of student debt. According to the Canadian Federation of Students, the average student graduates with $28,000 in debt after four years of study. That can make it hard to save. After graduation the number one priority should be to get student debt paid. Buying a house when you are still making payments on a student loan makes you financially more vulnerable.

Lower Your Expectations

Millennials struggling to move out should be realistic about what they can afford. Your first home, especially in a city like Toronto, most likely won’t be a detached four-bedroom. Consider smaller places to live. Condo townhomes are a great option to give a house feel, with a driveway and backyard, without the price tag. If your dream is to live in the core of the city, look for new condo projects happening now that fit your budget. By putting down a deposit, usually a fraction of the price of the condo, you can buy time to plan your big move, while the building is being built.

Buy with Friends

Consider buying a larger home with a group of friends. Banks are now offering products that are tailored to those wanting to buy a home in groups of three or more. Before making this decision make sure you talk to the other buyers about what their long-term vision is about the property. If the plan is to sell in five years time and use the profits to buy your individual homes, you can plan accordingly. Or maybe the plan is to hold on to the property and use the profits from any rent collected to supplement your income. Make sure the plan is clear up front.

Check Your Credit Score

It’s never a bad idea to take a peek at your credit score and get a copy of your report. You won’t ruin your credit, as some believe, if you are simply asking for information on yourself. If your score is lower than you expected, take steps now to improve it. Pay your bills on time, don’t carry large amount of debt, and don’t constantly apply to obtain credit, unless you really need it. All this proactive work means it will be easier to get a loan when the time arrives.

Focus on Walking Neighbourhoods

When it comes time to buy, focus on areas where you could survive without a car every day. By ditching it you will save close to $10,000 a year. That’s according to the CAA, and that extra money will help qualify you for a larger mortgage, and give you the ability to make more lump sum payments.

According to the report attitudes about living at home vary. For some, according to the report, co-residence is just about sharing physical space, while for others living with parents means actively being part of a close intergenerational family, sharing domestic work and spending time together.