Busting home ownership myths

By Viktor Chong and Kevin Eichenberger

You probably don’t need to be told that home ownership may represent one of the biggest endeavours in any person’s life.

You may be in for a rude shock if you watch a lot of television and have an idealistic picture of what home ownership looks like. There’s some work involved, there are rules to follow, and you may not be able to afford an insta-worthy mansion on a basic salary. These are some of the myths of home ownership.

Myth #1: I can renovate as I wish

Your house, your way

Neighbours are puzzled as to whether this home in their neighbourhood has the proper approvals to carry out this renovation.

Neighbours are puzzled as to whether this home in their neighbourhood has the proper approvals to carry out this renovation.

Homeowners cannot indiscriminately renovate their houses. Changes and modifications made to housing units are subject to building codes, township regulations, and zoning guidelines. Care should also be taken to ensure that your renovation does not obstruct or cause inconvenience to your neighbours, as according to the law.

You can always design your renovations in accordance to your dreams, but if the renovations don’t adhere to the standards of the Uniform Building By-Laws (1984), you may have your renovations demolished and the costs billed to you by City Hall.

All home improvements add value

"I'll buy it if you can put the bathtub back in the bathroom." Photo by yann maignan on Unsplash

“I’ll buy it if you put the bathtub back in the bathroom.” Photo by yann maignan on Unsplash.

Home improvements do not add value on a dollar-for-dollar basis as the utility of renovations is subjectively perceived by others. Transforming most of your first floor into a wet bar or a home gym might sound appealing to you, but others might not approve of the lifestyle or may view the renovations unfavourably.

If you are planning to sell the home, any improvements should take into account the needs of your prospective house buyers. Traditionally safe improvements are kitchen remodels, conversions of extra space into additional rooms, and new front doors.

Myth #2: I have to do everything

You have to do your own work and repairs

"My assistant will be taking over from here." Photo by rawpixel.com from Pexels

“I’ll just have my team take over from here.” Photo by rawpixel.com from Pexels.

Owning your own home opens you up to become a plumber, electrician, lawn-mower, gardener, and more. If the idea of being a jack of all trades does not appeal to you, there are ample service providers to help you maintain your house – for a fee of course. Hands-on individuals, however, might enjoy the exertion. Consider it a step outside your comfort zone and an opportunity to cultivate new talents.

New homes are maintenance-free

Image by Free-Photos from Pixabay

Pictured: A “maintenance-free” home. Image by Free-Photos from Pixabay.

Wrong, the workmanship of a developer determines the quality of the building and defects in newly made houses are not uncommon. Cracked walls, uneven floors, doors with missing hinges, scratches on countertops are just some of the common defects. Professional building inspectors can be hired to seek out these problems, which can then be rectified by the developer.

If you’re not entirely happy with the home you’re getting, or if you believe some parts of your home may not have met the specifications, put that sledgehammer down, list the defects, get a professional building inspector to back your claims, and provide the developer with a written notice detailing the defects within the liability period.

Building inspectors will find every problem

"This is not the sandbox I was promised."

“This sandbox is definitely not to specifications.”

The best building inspectors may be unable to examine every inch of your home. Prudent house buyers should supplement these professional investigations with their own observations during the walkthrough with the inspector. It is advisable to be present during the home inspection.

Latent defects – the less obvious kind that may only become evident after some time has passed – will be more difficult to spot, which necessitates the trained eye of a professional building inspector to ensure that you get your new home in the best possible condition. Prevention is better than the cure.

Myth #3: To buy or not to buy, that is the question

You’re always better off buying than renting

Image by Gerd Altmann from Pixabay

Image by Gerd Altmann from Pixabay.

There is no one-size-fits-all solution as the reality of economics is volatile. If the monthly mortgage payment is way higher than the average rental in the market, then you are better off renting and saving the extra cash to be invested elsewhere. Other factors to be considered include the capital appreciation of the house owned, and your ability to cover the interest on a loan.

From a preference perspective, some might enjoy the nomadic lifestyle of hopping from house to house while experiencing a new environment under a new roof. Others prefer to be firmly rooted in a spot, where family and friends can gather for generations.

Homeownership is a good investment

Unlike during previous generations, capital appreciation is not a guarantee – especially in the current property market and with the increasing property overhang. High-rise units can sometimes perform poorly relative to landed properties when it comes to capital appreciation. Considering the current market, renting out a home may be an equally challenging endeavour. However, critical factors such as location play an important role in making a home rentable. Do your homework.

Myth #4: I can’t own a house

Feeling down from your down-payments

On the plus side, at least you've got a bare concrete room to cry yourself to sleep in.

On the plus side, at least you’ve now got a bare concrete room to cry yourself to sleep in.

It isn’t easy to fork out the necessary amount of cash to fund your down-payment, especially at current price levels. However, some developers offer zero down-payment plans for their units, so look out for them.

You need perfect credit

Image by www_slon_pics from Pixabay

Image by www_slon_pics from Pixabay.

Not necessarily. The better your credit score, the easier it is for you to get your loan approved. There will also be more loan options available at your disposal. Here are some ways to improve your credit rating:

  1. Never be late on your payments and pay up in full.
  2. Keep a steady job with a company that has been in business for a long time.
  3. Maintain an extensive credit history with a particular bank (banks want to know that you are a reliable bill payer).
  4. Maintain a diverse list of accounts in your credit score, such as mortgages, car loans, personal loans, and credit cards.

Interest rates are a pain

Pro tip: If it hurts, you probably shouldn't do it.

Pro tip: If it hurts, you probably shouldn’t do it.

Interest rates fluctuate over time. Choose the right loan packages that offer favourable interest rates according to your situational needs.

You will lose your house if you miss a loan repayment

Image by garyh18 from Pixabay

Contrary to popular opinion, not all bankers are goblins – the vast majority of bankers rely on functional muggles to act as paying customers. Image by garyh18 from Pixabay.

Banks do not enjoy foreclosing on a property and disconnecting themselves from a paying customer. They are reasonable and usually open to negotiation. Late payments incur penalty interest rates and one-off penalties which differ from one bank to another.

Pictured: not the work of a licensed financial institution.

Pictured: Not the work of a licensed financial institution.

If you fail to regularise the arrears by the end of 60 days, banks typically reserve the right to revise the interest rate accordingly. If you are prompt in your future payments, the revised interest rate may be reverted to the original rate – or it may not.

Read on for the three myths of property investment – or if need more advice, get the First Time Home Buyer Guide.