Buying a home is a very large investment, so most people wait for the right time to make this purchase. Saving for a bigger down payment makes sense because the more you put down, the less interest you will end up paying over the life of your loan, so many people wait and keep renting while they save. While this may sound like a good idea, the reality is that this situation could be costing you a lot more in the long run, so you need to weigh your options.
The only way to make the right choice is to run the numbers to see where you stand and how much money you are actually saving. You need to compare the cost of your monthly rental fee with the cost of ownership. The reason most people decide to wait is because a small down payment would require them to pay additional fees for mortgage loan insurance, which is mandatory if you are putting less than a certain percentage. As this amounts to a pretty large sum, most people choose to keep saving for a bigger down payment instead of having to double down on their down payment. This is not always a good idea because if you look closely at the numbers, you will see that waiting could actually end up costing you more in the long-term.
Wait And Save
There are two options you can consider. The first is to wait and save, or you can buy now with a smaller deposit. If you decide to wait, you have to remember that the real estate market is unpredictable and that prices go up every year, so the amount you save may not be enough for the property you want to buy in a few years from now. The prices of homes appreciate every year, so your savings may not be able to guide you through the 20% threshold that is required for a down payment. It’s also important to remember that when you are paying monthly rental fees, saving money can be hard because you will still be spending most of your pay on rent.
Buy now with a smaller deposit
If you buy a property now with a smaller deposit, you would have to pay the insurance fee that comes with the smaller deposit and more interest over the life of your mortgage, but you would be saving a hefty amount of money by not waiting until the home or condo is worth more, and in just a few years, you will have put down quite a bit of money in principle while avoiding paying all that money for rent.
If you want to buy a property, you should not always wait, and Cherry Yeung Real Estate can help. Our realtors will help you buy a condo and have access to all the houses for sale in the Richmond, Burnaby, and Vancouver areas. If you want to work with reputable real estate agents, give our office a call today!