Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Runner-up for no medical
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for universal life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for decreasing term coverage
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best life insurance for the self-employed
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Blue Cross is a great option if you want both life and disability insurance under one policy: their tangible hybrid plan. Health insurance is their specialty, though; not life insurance.
Pros and Cons
Pros
Get up to $1M in coverage, plus the plan converts to a permanent one at age 56.
Option to add riders like health, dental and disability to your life insurance policy.
Cons
The only term lengths available are 10, 20 or 25 years.
Whole life insurance coverage only available up to $500,000 for ages 18 to 70.
No standalone critical illness insurance, it must be added as a rider to your life insurance policy.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for cancer survivors
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for credit union members
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
With preferred rates for eligible Canadians, CUMIS life insurance could be a good choice if you're a credit union member, but there are better options otherwise.
Pros and Cons
Pros
Variety of add-ons and riders available (for an extra fee).
Large variety of policy types from term, to whole, to universal, and children's coverage.
Cons
Only available through credit unions and cooperatives.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for participating life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for seniors and no medical life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Top pick for seniors, especially for those with health issues that would get them declined or charged sky-high rates elsewhere. Most plans let you skip medical exam.
Pros and Cons
Pros
No health exam for simplified issue & guaranteed acceptance plans.
Known for fast processing times, some get approved within 24 hours.
Established player in the no medical life insurance space.
Cons
More expensive than traditional term life insurance.
Some plans are deferred by 2 years, meaning no death benefit if you pass before then.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for short-term life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for whole life insurance for children
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Desjardins offers one of the most affordable whole life policies for kids. Unique offering of 5 Pay which is the ability to pay the policy in full within 5 years.
Pros and Cons
Pros
Number of riders like children’s accidental fracture and guaranteed insurability.
Strong brick-and-mortar presence in Ontario and Quebec.
Cash value options available, with a dividend scale of 6.2%.
Cons
Presence outside of Ontario and Quebec is limited.
Children’s Life Protection policy can be converted to permanent, but coverage only goes to $20K.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best life insurance for smokers
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for wealth transfer to children
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Runner up for life insurance for children
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best life/disability insurance for the hard-to-insure
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Humania's Insurance Without Medical Exam asks only 6 questions and is issued immediately. Get disability & critical illness insurance with no extra questions.
Pros and Cons
Pros
Insurance Without Medical exam includes life, critical illness, and disability insurance.
Get $5K-$300K in coverage.
Cons
Will not pay out death benefit for a pre-existing condition for 1-2 years (depends on the policy)
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for business owners life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for permanent life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for parents & homeowners
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Runner-up for best term life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for existing customers
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for whole life insurance with cash value
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Policies are pricier, but Sun Life has the highest dividend scale for whole life insurance in Canada. Good option for high-net-worth individuals and has perks like succession planning.
Pros and Cons
Pros
Very experienced advisors, some with 30+ years of experience.
Range of options for cash value life insurance.
Single & joint policies available.
Cons
Premiums are higher than competitors
Funds are expensive and investment options limited to their available funds.
Check their MERs (management fees) against other companies.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Best for simplified & guaranteed issue life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Known for its variety of no medical, simplified issue and guaranteed accepted life insurance products. But make sure to compare premiums with other no medical providers.
Pros and Cons
Pros
Multi-contract discount, refunds up to $100 if a referral buys UV within 1 year.
No health exam needed for up to $500,000 in term & $150,000 in permanent coverage.
Cons
Only available in Quebec, Ontario and New Brunswick
Prices for their simplified whole life policies look higher than CPP and Beneva.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Second runner-up for best term life
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Rated between 1-5 stars for cost, trustworthiness, policy options, customer reviews, and financial stability. Pulling from sources including but not limited to AM Best, Better Business Bureau, Fitch Ratings, InsurEye, TrustPilot, Google Reviews, etc.
Runner-up for smokers life insurance
Cost
Based on monthly premiums, pulling from publicly available rates. $ - most affordable rates $$ - average rates $$$ - most expensive rates
Rated between $, $$, $$$ in relation to comparable life insurance products on the market in Canada. Based on publicly available rates pulled from WinQuote and other external sources.
Laura McKay is the co-founder and COO of PolicyMe, Canada's fastest-growing digital life insurance company. In 2021, she was named one of the Women of the Year by Bay Street Bull. Laura has a Bachelor of Mathematics from the University of Waterloo. Her degree focused on Actuarial Science, which included learning about mortality risk, the basis of life insurance pricing and valuation. After her degree, she was employed by Manulife and Munich Re in Actuarial Science. Laura then worked at famed management consulting company Oliver Wyman in New York from 2013-2018. In this position, she worked with many Fortune 500 life insurance companies and helped them develop growth strategies and solve operational problems and regulatory issues.
February 23, 2021
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14 minutes
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PolicyMe content follows strict guidelines for editorial accuracy and integrity. Learn more about our editorial guidelines.
It’s the kind of milestone that brings chills. On the one hand, it’s a life-changing event—a venture into a long-term commitment. In fact, 39 per cent of Canadians are looking to purchase a home in the next five years, despite rising housing prices. On the other hand, buying a house in Canada is a weighty, daunting responsibility. There’s a lot involved and plenty at stake financially. Where does one start?
Indeed, buying a house for the first time is a big step in any individual’s life. The process is long and arduous, but with a little guidance and insights from experts, you’ll be well on your way to homeownership with confidence.
But first: how do you know for sure if you’re ready to buy a house?
Renting: Pros and Cons
There are financial costs and obligations to both renting and buying, and each route has its downsides and benefits depending on your personal circumstances, lifestyle preferences, and long-term goals.
Assuming you’re renting, let’s take a look at the pros you’re currently enjoying, alongside the cons:
Pros of Renting
1. Flexibility
As a renter, you’re typically locked in with a property for a year – or less, depending on your lease agreements. Then you’re free to move. Want a bigger space? Thinking of moving to a new city? Considering a move abroad? Go for it! Nothing’s tying you to a place, as a renter.
2. Financial Freedom
Because rent is often less expensive than a monthly mortgage, you have more room for investments, travel and lifestyle purchases, or even professional development expenses, like returning to school. This type of financial freedom isn’t as readily available when you have a real estate mortgage to pay down for the next 30 years.
3. …Even More Financial Freedom
On top of mortgages, homeowners are also responsible for maintenance costs – which you, as a renter, can simply entrust to your landlord. Broken dishwasher? Call your landlord.
Cons of Renting
1. You’re Not Building Equity
By making monthly rental payments, you’re paying off the property owner’s mortgage rather than your own. At the end of the day, you’re borrowing your space instead of owning a piece of real estate for yourself.
2. Instability
Landlords can hike your rent or, worse, serve an eviction notice for whatever reason—from selling the property, renovating the building, or even clearing space for family members they intend to house. It doesn’t happen often but it’s always a possibility.
3. Speaking of Landlords…
If you’re lucky, you’ll have a landlord that leaves you alone for the most part. If not, well, that’s one more person to deal with when it comes to your living situation.
Now, these don’t automatically suggest that buying a house is the right solution—but in some circumstances, it might be better by comparison.
Buying: Pros and Cons
Pros of Buying
1. You’re Building Equity
The monthly payments you’re making will ultimately go toward your ownership of a piece of real estate—an investment that appreciates over time. Property ownership also gives you leverage when applying for bigger loans in the future.
2. Flexibility
As owner of the house, you’re free to customize it to your liking, whether that’s replacing old-fashioned bathroom tiles or breaking down walls for an open-plan layout.
3. Stability
If you intend to live in a place for a while, home ownership presents a more stable option. With a fixed-rate mortgage, you’ll be making the same monthly payment every month for your new home—no landlords to hike up your rent!—meaning more financial predictability where your accommodation is concerned.
Of course, these pros come at a cost, too:
Cons of Buying
1. Commitment:
There’s value to making commitments, but when it comes to homeownership, we’re looking at a very long, very expensive financial commitment. Real estate isn’t something that increases in value overnight, and returns on your investment will take time to grow. You’ll need to stick around with your property for at least five years to reap any substantial rewards.
2. Cost:
On top of a time cost, there are hefty upfront costs as well – from the down-payment to monthly real estate insurance, to continuous maintenance costs (you’re your own landlord when the roof starts to leak!).
3. …More Costs:
On top of a mortgage, the day-to-day upkeep of a house is expensive. In many cases, new homeowners find themselves encountering unforeseen expenses from their new home, making it necessary to tighten budgets in other areas of life – or worse, start to rely on lines of credit and creating debt.
The pros and cons of renting and buying will matter in relation to your current life stage. Do you value flexibility and financial freedom? Are you paying off student loans and credit card debts? Are you still in the process of building an emergency fund?
Or have you decided that you want to start putting down roots and settle down in a place for a while? Are your funds set and solid, so that you can afford to make room for an extra house maintenance budget? Do you have your down payment ready?
There are no right or wrong answers to these questions – only a better or less ideal time to make the transition from renting to ownership, depending on your answers.
The Costs of Buying Real Estate
When it comes to deciding whether or not you’re ready for home ownership, financial considerations certainly top the list. Here are some of the costs to consider if you’re mulling over buying a house in Canada:
1. Down Payment
You’ll want to set aside between 5% to 20% of the house’s selling price for your down payment in order to apply for a mortgage. For down payments below 20%, note that you’ll be required to pay the CMHC Mortgage Loan Insurance as well.
2. Closing Costs
These refer to the other costs that come with buying a house, including legal fees and transfer fees. Closing costs range between 1.5% to 4% of the purchase price; they’re due once you officially take ownership of the house.
3. Insurance
As a homeowner-to-be, you’ll want to protect your new house and investment with property insurance, so be sure to include insurance premiums into your monthly budget. Generally, the bigger your down-payment, the smaller your monthly property insurance premiums will be.
Another insurance you might come across is mortgage loan insurance—which we generally discourage. One of the problems with mortgage loan insurance is that you’ll be paying the same premium even as your mortgage—and potential payout—is getting smaller with every mortgage payment made. Ultimately, it’s the financial institution that benefits. You’re better off getting a separate life insurance policy for yourself and your partner.
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4. Maintenance
Sometimes home repair costs can be small; sometimes, they require replacing a faulty appliance or possibly even hiring a professional. On the other hand, it’s possible that you’ll want to renovate or upgrade old furnishings. Whether for a fix or for a tune-up, you’ll want to budget adequately for the upkeep of your new home.
Selling a House? Additional Costs to Consider
Whether you’re selling the family home before purchasing another or want to make extra income by selling an inherited real estate, these are some additional costs considerations to make:
1. Real Estate Commissions
As a seller, you’re responsible for covering the commissions of both your and your buyer’s real estate agents. This can range from 3% to 7% of the house’s list price.
2. Legal Fees
This covers the preparation of documents and contracts involved in selling your home, including title transfers.
3. Home Staging and Other Repairs
You might also want to hire a professional to stage your property, a photographer and videographer to create marketing assets, and even maintenance professionals to address fixes around the house prior to listing it on the market. These details are important to present to buyers when selling a house.
4. Taxes
These include sales tax (unless you’re selling your primary residence) and land or property transfer taxes, which can range from 0.1% to 2.1% of the property’s value.
Buying a House in Canada: 5 Tips for Getting Started
For all the costs and considerations that come with homeownership, there’s no denying that it’s also an adventure. But it’s complicated enough, so your level of preparation will make all the difference. Here are five ways to prepare mentally, financially, and practically for the big step.
1. Start Looking
To get a sense of the amount of money you’ll need to save, start looking for property. Consider your target location, the average sold prices of houses in the area, and whether or not the houses available might require renovating or potential repairs. Be sure to budget for these adjacent expenses.
That said, it’s important to think realistically about your budget as well. How much can you set aside for a down payment, and eventually for your monthly mortgage payments—plus house insurance premiums and maintenance costs—given your current income and income-generating capacity? There’s no harm in aiming high, but don’t forget to pair those aims with concrete, realistic steps.
2. Start Saving For Your Down Payment
With approximate costs considered, you can come up with a ballpark figure for your downpayment, and estimate how much you can start setting aside regularly. You can also start thinking about where to park your savings.
Ayana Forward, a fee-only financial planner and founder of Ottawa-based Retirement in View, points out that it’s important to think about which vehicle might suit your personal circumstances, whether it’s tax-free savings account (TFSA), or a registered retirement savings plan (RRSP), specifically the RRSP Home Buyers Plan.
“The nice thing about the RRSP is that you can take $35,000 out for a downpayment if you’re a first-time homebuyer,” she says.
“Another big factor is your tax bracket. If you're in a lower income tax bracket, I would lean toward the TFSA,” says Forward. “You can put money in and take it out whenever you want, as opposed to the RRSP, where before you can take the money out you have to show that you've signed a sale agreement. And the money has to have been there for 90 days.”
Of course, you can do both, she says. “But if you're planning for something to be your down payment, you have to think about it in a different way because you’ll need to access it in one to three years.”
Aside from the RRSP Home Buyer’s Plan, first-time home buyers in Canada should also take advantage of the First-Time Home Buyers Incentive. This program offers to finance 5% or 10% of a house’s price for a down payment, essentially making home ownership more affordable. Depending on your province, you can also qualify for a Land TransferTax Refund or a GST/HST New Housing Rebate.
Pro tip: Write down your savings goals – monthly, quarterly, and yearly. Pen to paper. “I've never hit a financial goal that wasn't written down on paper at the beginning of the year,” says Forward. “If it's written down on paper, you have some accountability to reaching those goals.”
3. Get Your Ducks in a Row (Read: Documentation and Paperwork!)
Forward emphasizes the value of being proactive in presenting yourself as a responsible home buyer, far before you hold any titles to a piece of real estate. This means ensuring you have all your documents in order.
“Banks want every single that you can provide – T4s, tax returns, letters of employment, and all of that,” she says.
This also extends to the way you present yourself to sellers. Do your research. Interview your realtor, get a sense for when the seller hopes to close, present evidence that your financing has been pre-approved, and see how you can come up with an attractive offer even if you’re not necessarily the highest bidder, says Forward.
“Anything you can do to either speed it up or make your offer the most attractive. Take advantage of any of those.”
4. Check Your Credit Score
The healthier your credit score is, the likelier you’ll get your real estate mortgage pre-approved by a bank.
Your bank’s approval can serve as a helpful budget gauge as well, says Forward. “Banks are really cracking down on who they'll approve. In my opinion, they’re preparing you against buying too much house – ≠they just won't approve you. I would use a bank’s offer as a guide,” she says.
If, however, you don’t have the best of credit ratings but still want to start your home buying journey, there are a couple of things you can get started on.
One of them is to improve your credit rating by slowly paying off debts while saving for a down payment. There’s value to this, apart from the practical consideration of off-loading some debt before taking on a mortgage.
“Look at it in terms of building a foundation first. Having an emergency fund, getting insurance coverage if you don’t have it, paying debts off,” says Nico Felipe, a Vancouver-based fee-only financial planner for Paper & Coin. “One of the things I find common is that people save for an emergency fund. Use that for a downpayment. Now you put yourself in a very tight financial situation where you might have to rely on your line of credit later.”
“Focus on things you're in control of,” he adds. “This might be increasing your income by building new skills or having a second source of income. Or maybe it’s cutting your expenses on things like dining out.”
“That's an easy thing we can do and at the same time, it builds proper financial habits.”
5. Don’t Forget the Bigger Picture
Buying a house is no easy task, and when life throws a curveball, having a mortgage to pay off can become a source of financial pressure and stress. So it’s important not to lose sight of the bigger picture as you start making these decisions.
For Forward, this means going beyond a focus on cash flow and thinking about your net worth. “A lot of the time, we're locked into budgeting our day-to-day and our net expenses. But if you're looking at net worth, you're also thinking about how to lower your taxes.”
“Consider the whole picture, not just those day-to-day expenses.” You don’t want to find yourself getting the house you want, says Forward, and be unable to do anything else as a result.
Felipe echoes these thoughts. “A lot of times people forget to consider that our wealth isn't in a silo. You have to consider it in relation to work and well-being.”
“And so we might be making an “investment” by buying a piece of real estate, but we sacrifice our well-being and our work. Some people choose to continue staying in a career or a job they don't enjoy because they want to save up for a down payment. And then they get the house, but they can’t transition out of that work because they have $2,000 or $3,000 mortgage payments for something they thought would make them happy.”
“Sometimes you don't need to look at it as a return on investment, but a return on life,” he adds. “You want your house to appreciate, but you don't want to get to a point where you stop appreciating your house.”
The Verdict
Having a place to call home is important to our well-being. Renting an apartment or buying a house in Canada both come with respective costs and rewards, so it’s important to be realistic and honest with ourselves when considering the transition from renting to home ownership. The route you take is ultimately your choice to make—and with more consideration, preparation, and planning, the better off you’ll be on your homeownership journey.
Laura McKay
COO & Co-Founder
About the Author
Laura McKay is the co-founder and COO of PolicyMe, Canada's fastest-growing digital life insurance company. In 2021, she was named one of the Women of the Year by Bay Street Bull. Laura has a Bachelor of Mathematics from the University of Waterloo. Her degree focused on Actuarial Science, which included learning about mortality risk, the basis of life insurance pricing and valuation. After her degree, she was employed by Manulife and Munich Re in Actuarial Science. Laura then worked at famed management consulting company Oliver Wyman in New York from 2013-2018. In this position, she worked with many Fortune 500 life insurance companies and helped them develop growth strategies and solve operational problems and regulatory issues.
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