The traditional school of thought when it comes to homeownership is saving up for a down payment, but for prospective homebuyers in B.C., that may be an outdated qualifier.
While the down payment itself is still an important step in buying a home, a B.C. credit union says it isn’t the be-all and end-all, and that it could, in some cases, be a slippery slope.
We spoke with Brian Harris, President and CEO of Beem Credit Union.
And Beem is suggesting that the down payment is an “outdated test” to see who’s ready to own a home.
Beem says that according to new Statistics Canada data, 85.5 per cent of renters aged 25 to 39 say becoming a homeowner in the next five to 10 years is important to them.
“The median savings they hold in registered accounts that could go toward a down payment (FHSA, TFSA and RRSP combined) is about $20,000 for couples and $15,000 for singles,” Beem says.
Harris says that the down payment is a “fairly blunt instrument,” adding that there are other tools to consider. But that doesn’t mean getting rid of the down payment entirely.
What Harris suggests instead, which might seem like common sense, is a more holistic approach: an understanding of your finances and even looking at how you’re managing rent.
We also asked Harris about the trend of people moving from more expensive markets like B.C. to cheaper spots like Alberta.
Harris said folks should focus on finding communities they want to live in.
He went on to say, “Is that a community that we want to grow up in? Maybe raise a family in? Is it a community that affords me the types of career flexibility that I may want, or optionality that I may want?”
“You really want to make sure that where you’re going is where you want to live,” he added.
We actually spoke to someone last year who moved to Alberta, and even though she was saving less money living in B.C., she still preferred life in this province.
She also suggested that ideas about life in a province like Alberta being more affordable aren’t always so black-and-white.
“Food is expensive. Everything is privatized. Insurance is not cheap there anymore, and I don’t know why people think it is,” she said.
If you are looking at getting into the market, Harris explained how the experts at Beem would assist you.
“Our jobs are really to help our members navigate what’s good for them today, but what’s also good for them in five years, in 10 years, in 20 years.”
He added that it sometimes includes probing into uncomfortable things.
“You really got to be able to have open, honest, candid dialog about that because doing that before you buy sure saves a heck of a lot of frustration and angst down the road if it ends up not being what you thought it was,” Harris said.
Finally, Harris said that even if your financial situation doesn’t look like it could support homeownership, it’s still never a bad time to start thinking about a path to that goal.