3 Questions all newlyweds should answer before buying a home

Getting married is one of the most exciting times in one's life. Typically once newlyweds have arrived back home from their honeymoon, the next question is "should we buy a house?".


In most cases, purchasing a home and getting out of the cycle of renting is so amazing for helping young people build wealth.  That being said, most newly married couples are still fairly young and should consider/discuss a few things before beginning their house hunt.

Question #1

HOW SOON DO WE INTEND ON HAVING CHILDREN?

It can be a difficult question to tackle if both parties aren't 100% ready to broach the subject, but it is essential. With the market in Victoria, BC being as hot as it is, many newlyweds are finding that their money will only buy them a condo.  In this case, it is important to discuss whether or not you intend on having children within the next 4-5 years. If you want to start your family a couple years down the road, you will want to purchase something with the space to accommodate a nursery and play space. Purchasing a property only to have to sell it 2 years down the road will likely lose you money on realtor fees and property transfer tax. When buying, always try to plan on staying in one spot for 5-10 years to maximize your return.

QUESTION #2

CAN WE AFFORD THIS PROPERTY IF ONE OF US LOSES OUR JOB?

This question is important because it ties into question #1.  In the event of a maternity leave or extended injury, are you going to be able to make the monthly payments? The point is not to limit yourself to buying something that one income can support. What you need to look at is how much give is there in your budget. If you buy something at the top of your range when you are both well and working, it will be disastrous when one of those income temporarily disappears. You want to try to keep your housing costs (including hydro, water, mortgage, strata, property taxes) under 40% of your income. The lower the number the better. When you start going higher than this, you should be looking to reduce this.

QUESTION #3

HOW MUCH DO WE HAVE SAVED FOR A DOWNPAYMENT? DO WE HAVE GOOD CREDIT?

It goes without saying that by the time you walk down the aisle, you should have had a talk about what personal debt/finance history is being married as well. Once you are married, you are bound together financially whether you like it or not. Have you both been well behaved financially? Obtaining a mortgage requires good credit. Do you both know where your credit scores stand? (there are online services/apps that can provide this). How much debt do you have VS savings? On a purchase of $300,000 for example, you need to have a minimum of 5% down.  That is $15,000. On anything above $500,000 you need 10% cash down. This does not include closing costs such as legal fees, property transfer taxes, etc... 

Sit down and have an honest conversation about where you stand financially. If you think you have enough saved up, speak with a mortgage broker. They can tell you what you are approved for and at what rate. This is an essential step before you even begin to look on realtor.ca.

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