AH, the not-so-age-old question of whether to buy a house before or after you get
married.
Here’s the thing. As with anything in life, there is no cookie-cutter answer for everyone to follow. This won’t be a moral/cultural/religious debate about whether you should be waiting to get married before you move in together – you do you, honey. After all, according to a poll by theknot.com 82% of Canadians are already living together before their wedding.
This article will take a look at some of the pros and cons for buying a house before you get married, but better yet, lets take a look at what programs you should be taking advantage of so you don’t have to make this choice in the future.
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The Main PRO: A Larger Downpayment
I am writing this article from the great city of Toronto, where, as of November 2024, the average price of any home type came in at a whopping $1,106,050 (never mind the average price for a detached home at $1,695,939). When housing is this expensive, people will spend lots of headspace trying to figure out how they can achieve homeownership. Do they put other plans on hold? How will they achieve their downpayment?
Theknot.com shared with their readers that the average wedding in Canada had about 89 guests and cost on average $19,000 USD – that’s about $27,291 Canadian dollars. Many young people would rather take that money and put it towards a downpayment.
Let’s assume you haven’t taken advantage of any of the programs below and have no other savings other than this money that would go toward your wedding. The average price for a condo in Toronto clocks in at $713,364, which is close to all the down payments you would need.
To qualify for CHMC financing, you would have to have a minimum of 5% downpayment. Of course, there are less expensive condos on the market, but assuming you buy the average-priced condo, at 5% of $713,364, that would be a deposit of $35,668.20 needed. Add on to that your other closing costs, and you can see why some couples are eschewing the idea of a full-blown wedding in favour of putting that money towards a down payment.
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The Main CON: It Can Get Messy
To me, the only downside of buying a home before you get married (other than disappointing your parents) is what happens if the two of you break up. Of course, this could happen even if you got married before buying the house. However, imagine your worst break up, but add a shared asset with a few hundred thousand dollars into the mix.
To mitigate this, you should definitely speak to a lawyer and draw up a contract that stipulates ownership percentage, who is on the title, what amount each put into the
downpayment, what happens in the event of a breakup, etc.
Hmmmm….doesn’t this sound an awful lot like a prenup? Except without all the baggage and emotional
connections that come with writing one up when you’re getting married? I do think it’s easier for couples to have this kind of conversation OUTSIDE of the craziness of engagement parties, seating charts, and parental involvement. Who needs one more stressor when they’re getting married?
So hey…maybe this just turned into a PRO after all?
Home Buying Programs For Canadian Couples
I’m going to go out on a limb here and say that over 80% of the people who are debating this marriage-or-home-first debate are first-time home buyers, and if you count yourself as one, read on to make sure you are taking advantage of the following programs so that you might not find yourself in a situation where you have to choose between house and marriage.
The Home Buyer’s Plan (HBP)
As soon as you start your employment years, a good idea is to start saving your money in a Registered Retirement Savings plan. This is a not only a tax-deferred savings program, but deductible contributions can be used to reduce your tax. The best part for first-time homebuyers? The government will temporarily allow you to withdraw up to $60,000 from your RRSP to put towards your home purchase, tax free. Of course, this money must be put back but in smaller amounts over the course of 15 years.
First Homes Savings Account (FHSA)
Similar to the better know TFSA, the FHSA allows you to save up to $40,000 TAX FREE. Each year you are allowed to contribute up to a max of $8000. You can carry forward up to a maximum of $8,000 of unused FHSA participation room at the end of the year to use in the following year, (subject to the lifetime FHSA limit). You need to be a minimum of 18 years old to open your FHSA.
Imagine you took advantage of both these programs… you could have acquired up to $100,000 to put towards your downpayment goal. Of course, hindsight is always 20/20. I know when I was 18, home ownership was but a distant dream…and focus.
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