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As a mortgage agent, I help people find the best financing options every day for their home or investment property. One thing that people have found reassuring is the unique nature of the financial advice they receive.

This is because my role as a Mortgage Agent is only one part of my background. First and foremost, I am a Financial Planner. In this post, we will cut through the hype, and the sales-focused and often misleading approach to personal finance and mortgages. You may hear an ad that tells you “every day is the best day to buy a home”. Instead, let’s look at the truth about home buying in Ontario.

Read on to learn more about the top situations where you should probably not buy a home. If any of these apply to you, then seek professional advice and ensure you are fully prepared before you jump into home ownership. 

1. You have Short-Term Housing Needs

If you aren’t sure or know that you will need to move soon, whether it could be for your kid’s school, University for you, or you know you are going to be trying to land that dream job and it is likely to take you out of the area, then remember to rank flexibility highly in your overall financial plan. Buying a house that you may need to turn around quickly and sell is rarely a recipe for success unless your job happens to be Flipping Property. 

2. Your Situation Requires Flexibility

Almost everyone wants to feel they have roots down, but if you are traveling for work, climbing the corporate ladder, or want to travel to the Andes to climb some mountains, your life goals matter, and life is short, so it’s important you build a financial plan that has your interests and goals in mind, whatever they are. When you review your financial plan each month, remember that the point of a financial plan is to support you in achieving your dreams, they are unique to you, and you need a financial team around you that gets that. Flexibility can make a world of difference.

3. Hidden Costs of Home Ownership

When you make the switch from Renting to Ownership, almost all first-time homeowners are shocked at the costs hidden behind ownership. The days of calling the landlord to handle repairs are over, and now you have to make those important decisions, dinner out with friends on Friday or call the plumber to repair the leak, those aren’t always the nicest decisions to have to make, but usually the only other road, and unfortunately the road most travelled is, people choose both and put the dinner on the credit card. That can lead to a downward financial spiral that negates the value added to home ownership. If you aren’t ready, able, and willing to change your lifestyle, then the hidden costs can sink the ship. 

4. Great House, Wrong Location

We often fall in love with a property, without really thinking through the reality of living there, proximity to a specific school for the kids, or an easy commute for you to work.  These things often temporarily fall by the wayside during the honeymoon phase, then after a month of living there and trying to continue to juggle your life as you had it, fatigue sets in, followed often by buyers remorse, a great house in the wrong location is a mirage, a trick of the mind that leaves you worse off than when you started. 

5. You Have a Great Deal on Rent

Homeownership has one advantage for those who lack the discipline to invest in the future. Owning a home forces you to save, and so for some it’s the only financial strategy that would work. For the more savvy investor, a great deal on rent means that you could be much further ahead investing that extra money in your RRSP, in an RESP, creating a college fund, or anything that supports your own version of your future. Great rent can be a great opportunity to build a strong financial base, which is true peace of mind for many. 

6. You’re Thinking with Your Heart, Not Your Head

With the myriad of shows on TV about home buying, and the Covid lockdown that drove us all a little mad, it’s easier than ever to make an Impulse decision. It’s easy to forget when you see friends and family buying homes to think, “gee, maybe I should buy a home too”. This kind of financially irresponsible behaviour has been the financial ruin of many, and it’s that kind of impulse behaviour that most need a strong financial plan to avoid. Ideally, working with a professional who can talk you down off those ledges. 

7. Conflicts with Your Lifestyle

Lifestyle plays a huge role in determining where we truly can find a balance in life that suits us individually. It’s all relative if you have family or friends in the city centre, but push yourself to buy a home in the suburbs just because it was where you could afford, but then spend hours in the car each day just to be with them all again in the city, then what’s the point. We all like to think we can handle lifestyle changes “no problem,” but 90 days after closing, many sing a different tune. It’s your life, and a great financial planning team will always prioritize your goals and dreams. 

8. Too Much Financial Uncertainty 

It’s human nature to think things will just continue as they are, so if things are great for you right now, it is easy to trick yourself into thinking they will stay that way, but a good hard look with a trusted and experienced advisor might help you take a more objective look. How secure is your job? If you are a contract worker and the economy continues to take a downward turn, are you sure you will make it through any job cuts? If you don’t know, or just can’t say with absolute certainty, then bring this up at your monthly progress meeting and be sure it’s included in the overall financial planning. 

In Summary

The interest rate has continued to rise, and many believe the worst is behind us, and that inflation is easing with it, many hope that interest rates will once again drop. With the economy's rise and fall as well as the fear of a recession, trying to plan your financial future amidst these fluctuations can be a scary and difficult road, especially doing it alone. Any of these points discussed in this article can create a reason not to invest in a mortgage right now.

Decisions of this magnitude almost always have better outcomes with an experienced financial team. If you believe that your financial situation is uncertain, then please call us to find out your best move.

For regular tips, tricks, and insights to help you on your financial track as well, please contact the dedicated professionals at WealthTrack.

*All of the following opinions should not be considered as Financial Advice, Plotting your financial course is a serious business that should include a professional as often as you can. Plan your financial future with a professional at WealthTrack.ca

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