As the largest demographic cohort in Canada, millennials are quickly becoming a major player in our economy. Unfortunately, the Millennial Pause is migrating from videos to their feelings toward real estate. Many millennials are looking to enter the real estate game in 2023 and beyond, and with a bit of planning and strategy, it’s possible to make this dream a reality.
For all the Ottawa millennials out there thinking about entering the real estate market, this blog is for you!
- Saving for that Down Payment
One of the biggest obstacles to entering the real estate market is saving for a down payment. We understand that this can be particularly challenging for millennials due to student loan debt and other financial obligations. However, saving as soon as possible is crucial to building up a healthy down payment. There are many programs and incentives available to help first-time homebuyers, such as the Home Buyer’s Plan, which allows you to withdraw up to $35,000 from your RRSP tax-free to put towards a down payment or the new First Home Savings Account, which allows you to make tax-deductible contributions and tax-free withdrawals from the account to purchase a home.
We’re sure you’ve been told that saving for a home is almost pointless at the rate prices have been increasing and that you’ll never be able to do it, but as prices level off and the market cools, it’s definitely possible to catch up and get in on the action.
- Consider a Co-Ownership Arrangement
Co-ownership arrangements are becoming increasingly popular among millennials looking to enter the real estate market. This involves buying a property with one or more other people, and no, this isn’t just for romantic couples! We’ve seen a trend that includes buying homes with friends and family to make qualifying for a mortgage a little bit easier. This can help to reduce the financial burden of owning a home while also allowing you to build equity in the property.
However, it’s important to carefully consider the legal and financial implications of co-ownership before entering into such an arrangement. You need to work with an experienced mortgage advisor and a lawyer that you trust and develop an agreement that suits all parties involved.
- Explore Alternative Financing Options
Traditional bank financing may not always be the best option for millennials looking to enter the real estate market. Many alternative financing options are available, such as private lending, seller financing, and rent-to-own arrangements. These options can provide greater flexibility and affordability than traditional financing, but it’s important to carefully review the terms and conditions before signing any agreements.
Qualifying for a mortgage in the current market can feel impossible, especially if you have debts tied to your finances. Again, working with a trusted mortgage broker will help you navigate various lending options. In many cases, your broker can help you build a plan to get from an initial mortgage with a C lender to a B and A lender.
Side Note: If you think your student debt stops you from qualifying, don’t be so sure. Student debt is one of the best debts to have when applying, and if you’re paying it down can increase your credit score significantly. Bad debts are car loans, credit cards, and other lines of credit.
- Start Small
Buying a small, affordable property can be a great way for millennials to enter the real estate market. This could mean buying a condo or a small single-family home rather than a larger, more expensive property. It could also include looking outside of some of the most popular neighborhoods and investing in up-and-coming areas with lower prices.
Starting small allows you to build equity and establish a good credit history, which can help you to qualify for larger loans in the future. And, hey, it’s better to be in the market than waiting on the sidelines.
- Work with a Knowledgeable Realtor
Working with a knowledgeable realtor who is familiar with the Ottawa area can be invaluable when trying to enter the real estate market. A good realtor can provide advice and guidance on the best neighborhoods, properties, and local mortgage brokers and help you navigate the home-buying process from start to finish.
So, millennials, stop thinking that entering the market is impossible and get off the sidelines! By considering the above options, you’re already on your way to entering the market. All you have to do next is find a realtor you trust.
If you’re considering buying a home in the Ottawa market this year, reach out to us on our socials or through our contact us form! We’d be happy to help.