If you’re looking to purchase your first home but aren’t looking to buy a five-bedroom palace, you could benefit from a starter home.
A starter home is a smaller dwelling (like a two-bedroom house or condo) that is better suited to newlyweds and people just starting out. It is ideal for young people who are purchasing their first home because the smaller size of the home makes it less expensive to buy than a house with a many storeys, front and backyard, and two-car garage.
The term “starter home” comes from the period following the Second World War where younger couples were looking to purchase a home to live in for a few years before they became parents and needed to move to somewhere that could accommodate their growing family. Additionally, people found it was cheaper to buy a small home than continue to rent their current apartment.
In today’s economic climate, people often stay in their starter homes for over 10 years. Families are getting smaller – generally 1-2 children – and people want to remain in bigger cities close to where they work. By staying in your starter home for many years, you are also able to save more money for your nest egg. The more capital you put away in the present, the better prepared you are for the future.
If you’re looking for a starter home there are some factors you should consider before you purchase:
- Work with a broker
Being a first-time homebuyer can be tough. Where do you look for funding? How much down payment do you need? What are closing costs? A mortgage broker can not only answer all those questions, but also help you find the best package to suit your needs.
- Consider the kids
You may not have children now, but do you plan on having kids in the future? How many kids are you planning to have? A starter home can probably accommodate one or two new additions to your family, but eventually babies become children and children become teenagers who want their own rooms. If you plan on staying in your starter home for a long time, make sure you have enough space for your kids to grow up.
- Condo vs. house
In Southern Ontario, condos are quickly becoming the norm for housing. In fact, many first-time buyers prefer to have a condo as a starter home instead of a house because you don’t have to worry about maintenance and there are amenities in the building like gyms and laundry rooms. You do, however, have to pay condo fees, which may not adhere to your budget.
Starter homes help you dip your toes into the mortgage water. For more information, contact our team today!