For Sam Rees, the dream of homeownership began the day he married his wife, Jennifer.
Now, almost three years later, the two millennials are preparing to move into their first home in Ottawa.
“We were tired of renting and paying off someone else’s mortgage,” Rees said, adding the couple wanted to buy right away, however, financially it wasn’t feasible.
Rees was a junior graphic designer and his wife was still in school, forcing them to live on a tight budget.
Years later, Rees now works as a graphic designer at the Canadian Real Estate Association (CREA) and Jennifer found a job as an esthetician after graduating. Although they improved their careers, they continued to live the same lifestyle.
“We didn’t buy a car, we didn’t move to a bigger apartment, we kept the same lifestyle all in the hopes of saving,” said Rees.
He added the sacrifices — walking to buy groceries, taking public transit to work and doing freelance design work on the side — were well worth it.
After scouring online, and getting an understanding of what they could afford, Rees turned to the Homebuyers’ Road Map, which walked the young couple through the buying process.
“The next thing we did was go to a mortgage broker to confirm it was financially possible,” Rees said.
Beginning January 1 of this year, Canadians getting, renewing or refinancing a mortgage must undergo a stress test, proving they would be OK financially even if interest rates were to rise substantially above their actual mortgage rate.
While this affects all home buyers, millennials and first-time home buyers have been hit the hardest.
According to a recent report in the National Post, the average millennial home-buying budget fell to $203,246 under a 5.14% mortgage rate, a drop of $40,103.
For Rees, it was a completely unnerving process, but something they had to deal with if they wanted to become homeowners.
Once pre-approved for a mortgage, Rees turned to colleagues for a recommendation on working with a Realtor.
“We weren’t experienced, we were first-time home buyers and didn’t know a lot,” said Rees, who had more questions than answers.
However, thanks to working at CREA, Rees did know about the Home Buyers’ Plan (HBP). As a first-time home buyer, Rees and his wife were able to withdraw up to $25,000 from their Registered Retirement Savings Plans (RRSPs) to use towards the purchase of a home. As long as they repay the full amount within 15 years, there is no tax and no interest.
When it came to putting an offer on a house, Rees credits his Realtor for not only walking him through the buying process, but more importantly, saving him money on the purchase price.
“My Realtor looked at the zoning plans for the area and actually realized our house was a little smaller than our neighbours’. She then used this to leverage a lower price.”
From the initial contract to the conditional offer, Rees felt overwhelmed by the mountain of paperwork. Thankfully, he and his wife had an expert in their corner.
“Our Realtor and her team made sure we always felt confident, walking us through each page of each document and answering every question we had,” he said.
When asked if he would recommend using a Realtor, Rees was pretty clear on his answer: “From a first-time home buyer’s perspective, why wouldn’t you use a Realtor?”