Of course we would love it if more people relocated to the beautiful town of Port Alberni in the heart of Vancouver Island to experience the amazing majesty of life on the island, but to make the transition to living the spectacular island life, plenty of financial planning must happen to ensure a smooth and satisfying move.
A home is a real investment and a physical asset that can be difficult to unload for cash if you fall on hard times, so you shouldn’t buy a home and put all your money into one without doing your homework first. We want you to be happy for a long time to come with your new Port Alberni home, so below we have outlined the steps to success for what it takes to really Start Living in Port Alberni!
You Have Weighed the Cost of Renting versus Buying
Some people mistakenly believe that when renting a living space, they are simply throwing their money away. While on some level it is true that your monthly payments are helping to pay someone else’s mortgage, for many, renting is actually more beneficial than having a mortgage of their own.
Renting from someone else comes with perks like not having to be prepared to do any major work on the place, should an emergency arise. It is impossible to compare the cost of renting to just the mortgage payments that you would have on a house, because the mortgage payments do not take into account amenities, utilities, maintenance, taxes, fees etc. will cost you. Don’t just assume that if your mortgage payments are lower than what it costs to rent, that you’re in a good spot. The extra expenditures for owning a home can come in many varieties, such as the cost of heating an entire home versus an apartment.
To prevent regrets after buying a home, it is imperative that you calculate the actual cost of owning and maintaining a home versus the relatively up-front cost of renting. If there is any chance that your purse-strings will be too tight if you were to buy a home in the near future, it is advisable that you consider renting until you have enough money saved to comfortably afford your new Port Alberni home.
You Have A Contingency Plan
Hard times are not exactly the most fun thing to think about, especially when you’re on the exciting journey of finding a home, we know. However you will benefit greatly from having a plan in place just in case you lose your job or can no longer work for one reason or another.
How would things play out if you were unable to make the income you are making right now for 3 months, 6 months or a year? If there are two incomes in your house, could you temporarily living off of only one income and banking the other for your mortgage payments? Maybe you already have a nest-egg of savings to cushion you financially.
If, in the case of emergency you would have a hard time making your continued mortgage payments, it might be wise to wait a while before diving into homeownership in Port Alberni.
You Have 20% Saved as a Down Payment
If you are going to buy a home with anything less than 20% of the home’s cost, you may be asking for trouble. Having 20% saved is the going rate for what is required by mortgage lenders before they will offer you financial assistance.
This large chunk of money not only helps ensure the successful purchase of your home, it also proves that you are able to save that kind of money and that you are financially ready to take on the extra cost of a home.
You Have Additional Savings Set Aside
It’s well-known that your entire net worth should not be placed in a single asset. You do not want all of your money tied up a house. So once that down payment is paid, will you still have any savings?
We have already touched on the extra costs of owning a home, but there can be unexpected repairs that cannot be post-poned and will require great amounts of money to fix, such as a roof leak or broken water heater needing replacement. You will need to fork over that cash and still pay for the mortgage, so having a decent cushion is imperative to living life stress-free in your new Port Alberni home.
You Aren’t Depending on Anyone Else
If when you are doing your calculations, you are factoring in that you will have tenants who pay rent to help cover your monthly mortgage, you are not ready to buy a home.
It is unwise to rely on anyone to pay your mortgage except yourself. If you happen to have tenants, consider their rental income a bonus to put towards the mortgage, but not a necessary income to owning a home. With the possibility of tenants needing to move for any reason, you will have to maintain the payments regardless, so be sure that you can afford the cost of your home all on your own.
A good rule of thumb is your home should cost no more than 2X your income. It could go up to 3X your income, but if you are a first-time homebuyer or your income is anything less-than-stable, the 2X ratio is used so that you can comfortably afford your home.
The bottom line is that owning a home is a big investment of money, time and energy, and we want to ensure that each of our clients are well-prepared for the gravity of this kind of a purchase. If buying a single-family home in Port Alberni is not yet in your reach, perhaps the more affordable cost of owning a Port Alberni condo might be more your style at this time.
Feel free to contact us if you are looking to make the move to Start Living in Port Alberni – we are always happy to help.