Mark Walker is a real estate agent and the broker/owner of Kelowna’s Walker Real Estate.

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OPINION

Whether you’re buying your first home in Kelowna or looking to downsize, buying a property is a big deal and there are a lot of factors to consider. Your first step should be setting your budget and deciding what you can comfortably afford. Here’s my advice on setting your home-buying budget.

Start improving your credit rating immediately.

The stronger your credit score, the more money you will qualify for when you’re applying for your mortgage approval. A strong credit rating can also help your mortgage broker negotiate a lower interest rate. Pay to get your credit report from a company like Equifax and see if there is anything that may adversely affect your credit score. Just because you paid off that loan years ago doesn’t mean that the credit is closed! Make sure you’re making your payments on time and stay well below your credit limits. Whatever you do, do NOT apply for new credit!

Determine what your lifestyle can afford and what you’re happy to give up.

If you’re purchasing your first home or upsizing, you can anticipate taking on higher monthly payments. Calculate the difference between what your new payments would be and what you’re currently spending on housing, then put the difference each month into your savings account. Don’t forget additional expenses like property taxes, strata fees and a maintenance fund. If you can’t save that difference, you may need to lower your budget - and your expectations.

Anticipate big life changes and buy accordingly.

If you’ve just landed a new job and a bigger paycheck, it can be tempting to splash the cash and buy a more expensive home. But what if the job doesn’t work out and you need to make a change that pays you ten percent less? Will you still be able to afford your home? Are you planning on kids in the next few years? Can you afford the kids and the extra bedrooms they’ll need?

Will there ever be a scenario where you are renting your home?

If you need to move before you’ve built enough equity in your home, you may want to consider renting it. Take a look at the rental market and determine what a reasonable monthly rental rate might be for your home. Is it enough to cover the mortgage, strata, and property taxes?

Don’t forget about the closing costs.

If you’re buying your first home, it can be easy to overlook the up-front costs of buying a home in Kelowna. Your closing fees will need to be paid at the end of the transaction and the mortgage lender will require that you have at least 1.5% of the purchase price set aside for closing costs. This includes things like property transfer tax and lawyer’s fees, but don’t forget added expenses from setting up things like your utilities or having mail forwarded. These little things add up fast!

Now that you’ve saved up your down payment and closing costs, it’s time to talk to a few mortgage brokers. Their job is to work on your behalf to secure the best terms and rates for a mortgage. They can also give you an idea of what budget you may be approved for, but keep in mind that you don’t have to spend the whole amount. Depending on your lifestyle, you may want to spend significantly less than what the lender is prepared to give you.

If you have any questions about the Kelowna real estate market, please contact me directly. It would be my pleasure to chat with you and answer your questions. I can be reached at 250-764-4344 or Mark@KelownaProperties.com.

Mark Walker is a real estate agent and the broker/owner of Kelowna’s Walker Real Estate. His company runs the website KelownaProperties.com - Kelowna’s most comprehensive real estate search tool.

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