Trying to buy your first home in Ottawa? Here are some tips

Debt loads have increased for Canadians, and the cost of living continues to deter young Canadians from buying their first homes.

For many Ottawans, homeownership may seem out of reach, but one mortgage expert says there are steps young people can take to make breaking into the housing market a little bit easier.

“Take advantage of every little tip that’s available for you, because it’s difficult getting into that first home,” Frank Napolitano, from Mortgage Brokers Ottawa, told CTV Your Morning Ottawa on Tuesday.

Part of the reason young people have difficulty becoming first-time homebuyers is the rising cost of housing, says Napolitano.

According to Napolitano, 10 years ago, the average cost of housing was between $350,000 and $400,000. By comparison, the average cost of a house in Ottawa in September was $690,397, according to the Ottawa Real Estate Board. That means making a downpayment on a house is much harder today than it was ten years ago, says Napolitano.

“As much as real estate prices have calmed down over the last couple of years, unfortunately during COVID-19, we saw them go up tremendously and the salaries haven’t gone up as much. That’s the struggle,” Napolitano said.

“The average age for a young Canadian to buy a home used to be in the mid-to-late-20s, now you’re looking mid-30s for the average first-time home buyer.”

To save up for the large downpayment, Napolitano recommends setting aside a portion of each paycheck.

“Try to say ‘OK, every paycheck I’ll take 10 per cent, 15 per cent and automatically transfer it,’” Napolitano said.

Napolitano suggests putting those savings in a First Home Savings Account (FHSA), a Tax Free Savings Account (TFSA) or even a Registered Retirement Savings Plan (RRSP).

“You’re allowed to take money out of an RRSP for your first home, and then you’ll get some tax refund hopefully at the end of the year,” he said.

Extra expenses

Napolitano says it can be hard to put away savings given the high cost of living, but one problem aspiring home buyers encounter frequently is excessive “outside expenditures.”

For instance, having to pay a large monthly amount on car payments could disqualify someone from a mortgage.

“If you’re going to buy a vehicle, and I know you need a good working vehicle, try to keep those monthly payments as low as possible because it does hinder you from qualifying moving forward,” he said.

Stay at home

For those young aspiring homeowners still living with their parents, Napolitano has simple advice: stay put.

“The advice I give to a lot of young Canadians is to stay home as long as you can with your parents,” he said.

“Take that money that you would put into rent, and put that into a first-time homebuyers savings plan, put it into a TFSA so that you’ve got your downpayment set aside.”

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