Scott Hannah
Province
Q: We’re ready to buy a home and can’t decide between buying an older home or a brand new one. Any advice?
A: You may have a picture of your ideal house in mind, but before backyards and barbecues, consider your budget.
– Location: How will your commute to work be affected by where you choose to buy? Will your transportation costs increase or decrease? Newer homes are often located in the suburbs and older homes in more established areas.
– Looks: Older homes may have been updated to suit the tastes of the previous owner. Do you share their tastes or do you want to remodel? Factor renovation costs into your budget as you consider the purchase price. With a new home, how much extra will you need to pay for customization?
– Maintenance: Costs could be identical, but for different reasons. Older homes need money for maintenance (for example, roofs, hot water tanks), while new homes may need to be fully finished, (for example, the basement or yard).
– Property taxes, municipal-utility bills and strata fees: Research your added obligations carefully and factor them into your overall monthly commitments. Strata fees, in particular, may vary greatly depending on amenities and the age of the home.
The only real right or wrong decision is what your budget dictates. If you’re not sure what you can afford, test drive owning the home of your dreams before you commit. Set aside the difference between your current monthly housing expenses and the estimated amount it would cost at your new home in a separate account for three to six months. You will gain insights about your lifestyle choices and priorities and can make a more informed decision about what to buy.
Scott Hannah is the president and CEO of the B.C.-based Credit Counselling Society. For more information about managing your money, check www.nomoredebts.org or call 604-527-8999.
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