Going through the homebuying process for the first time can be intimidating. There are many steps, a lot of paperwork, lawyers get involved, and you’re making deals with hundreds of thousands of dollars.
To get a better feel for the fear, anxiety, and nervousness experienced by a first-time buyer, we interviewed one!
Jason (named changed for privacy) is 31, he bought a preconstruction condo unit in Toronto’s east end at the end of 2016. He and his partner put 20% down on a $374,000 one-bedroom. His closing is scheduled for summer 2019.
Newinhomes.com (NIH): How long did it take to save the 20%? Did you have any help from family members?
Jason: My entire life? I’m not entirely sure, I’ve just been saving ever since I started working as a teenager. I was fortunate to not be in debt after I finished university. I wouldn’t have been able to do put 20% down without my partner. We didn’t receive any financial help from family members – not because they wouldn’t have helped us – we just wanted to do it on our own.
NIH: How did it feel spending that much money all at once?
Jason: It was definitely nerve-racking. Our deposit was split up into four payments, so writing four big cheques was a new experience. We actually didn’t even have money in the bank for the final 5% payment at the time, but that payment was a year and a half away from the time of purchase. Based on our income and saving trends, we knew we’d have enough saved up by the time the cheque was deposited. Still scary though, writing a cheque for money you don’t have.
NIH: Before you actually purchased, did anything make you nervous about buying preconstruction?
Jason: Picking from a floor plan was tough because you never know what you’re going to get, but the preconstruction route was the best option for us because at the time we weren’t ready to put down 20% in the resale market and move right away. We’re also nervous about delays because now that we’re close to a year from closing, we’re eager to move, but we’ve already received one notice that construction has been delayed.
NIH: What else is causing you some anxiety now that you’re playing the waiting game?
Jason: Timing the ending of our lease with our closing is pretty stressful. We’re not in a position where we can afford payments on two properties. The rising interest rates and the stress test are also kind of scary. When we got pre-approved before the purchase, it was at a rate of 4%. We’re worried about affording the payments when we move in and whether we’re going to have to qualify at an even higher rate.
NIH: What else makes you nervous about moving?
Jason: Nothing else really. We love the neighbourhood, so we’re looking forward to living there. This is our first home and we’re planning on living there for at least five years. A lot can happen in that time. Ideally, we’d be able to sell and move-up somewhere around 2024 or 2025.
NIH: The latest new home stats from BILD showed that new condo prices dropped a bit compared to March 2018. Does that make you nervous at all when it comes to selling and moving up?
Jason: We bought at the end of 2016, then prices shot up in 2017. We were happy we got in when we did because we wouldn’t have been able to afford it in 2017. Prices seem like they’re still high compared to last year. I know prices fluctuate and we’re in it for the long-term, so I’m not super nervous about fluctuating prices.
We thank Jason for taking the time to share his thoughts and fears about being a first-time buyer in the GTA housing market!