Affording your home when money’s tight

Affording your home when money’s tight

Affording your home when money’s tight comes with challenges that most Canadians don’t expect to face when they decide to purchase.


Financial institutions have started to restrict or lessen mortgage lending amounts to new buyers with new stress tests. Homeowners looking at refinancing or second-home property investment options can no longer access mortgage default insurance.


High-equity property owners are choosing to renovate and rent their homes rather than sell due to high property taxes and closing costs.


No matter what your housing situation is, you’re likely feeling the financial loss/crunch in your wallet. And guess what? A national average $1.67 owed/$1 owned debt ratio reflects a growing reality of more people having less disposable income.


So how can you continue affording your home when money’s tight?


If you’re renting:

Consider living with roommates or a significant other while you set aside money for a down payment. While having a roommate for longer might not sound personally pleasing, renting a place alone usually costs more than sharing. Rents in Toronto cost upwards of $1,300+ a month vs. sharing with roommates at $800-900 a month. Funneling the extra hundreds of dollars you save into a TFSA builds up a down payment fund in two-three years.


If you’re saving for a down payment or want to pay off your mortgage quickly:

Consider cutting back on recreational activities/expenses. Buying daily cups of coffee, (unused) gym memberships and dinners quickly add up.  By trimming your budget, you can save you several thousands of dollars within the course of a year.


If you want to rent out your home for extra income:

Make sure that your property is in tip-top shape, meets rental, health and safety, and tenancy regulatory standards, and gets appraised by a licensed professional.  If your home has positive equity, you can use the proceeds to pay property taxes, renovating costs and other fees well in advance. You may also consider forwarding the costs of property taxes in installments via your tenants’ rental costs.


If you plan on selling your home:

Assuming that your mortgage is paid off and your home appreciated in value and equity, you may wish to use cash from your home equity to finance a modest housing downgrade. Doing this will free you from higher property tax costs. Selling your home and taking advantage of high equity allows you to redirect any disposable income you have to your investment or retirement funds.


Overall, though Canadians face a low dollar and decreasing disposable incomes for the foreseeable future, the tips above can help you spend less and save more. See how Loanerr can show you that affording your home when money’s tight is not impossible.


Check out our Mortgage Affordability calculator below to find our more! 



A Maryland native and Toronto-area transplant/graduate of the University of Toronto, Christine is a content writer at Loanerr. When not writing articles, she's an avid swimmer, cat lover, violinist in a indie band, and a humble food aficionada.