While buying a home is the biggest investment the average Canadian will ever make, many first-time home buyers still don’t take the time to perform sufficient financial due diligence before signing their offer to purchase. A recent survey commissioned by TD Canada Trust has found that the two biggest regrets include not saving for a larger down payment and not doing enough research into the actual costs of maintaining a home.
According to the survey, 29 percent of 1,002 respondents admitted that they didn’t think to factor ongoing costs, such as maintenance or utilities, into their home hunting budget. What’s more, one in eight said they overlooked one or more one-time fees associated with purchasing a home (this included inspection and legal fees, title insurance, and land transfer taxes).
Another key finding from the survey shows that Canadian’s don’t start saving up for a home soon enough. Many first-time homebuyers simply don’t understand the value of a large deposit. A 20 percent or higher down payment will reduce monthly mortgage fees, as well as open up a wider range of mortgage term and amortization options. You’ll also be able to opt out of default mortgage insurance, cutting your monthly expenses even further.
Other Common Homebuyer Regrets
Don’t let buyer’s remorse ruin your home hunting journey. Here are three common regrets of homebuyers and how to prevent them from colouring your homebuying experience:
1) Buying too soon
Buying before your life or finances are ready for the rigours of owning your own home is a mistake that can end up causing you a limitless amount of regret. Jumping the gun and buying before you’ve saved as much as you need, or before you’ve tackled outstanding debt could come back to bite you in the behind. What’s more, buying because you feel pressure to get into the market while interest rates are low, rather than because you’re confident that you can afford to, is a guaranteed way to trigger buyer’s remorse.
2) Buying a house that’s too small
First-time home buyers who purchase a property that’s too small become acutely aware of their mistake the moment they win in. Buying a home that’s too small is uncomfortable, awkward and frustrating. It can also be extremely expensive, especially if you end up selling after just one or two short years in the property. Of course, the flip side of the argument is also true: buying a house that’s too big can cost you extra due to increased maintenance and utility costs. Avoid both of these problems by starting your house hunt with a visioning exercise. What do you want your home to look like in 5 or 10 years? Who will be living there? Will you be having (more) children? What sort of activities will take place in the home? Buy a home that can comfortably fit all of these current and future needs.
3) Buying a home that’s outside your price range
Overextending your budget is a bad idea. Just because mortgage rates are low now, doesn’t mean they’ll stay there for ever. If you can’t foresee being able to handle your monthly mortgage payments 5 or 10 years into the future without refinancing, you’re in for a long haul. Work with a mortgage broker to secure a mortgage pre-approval prior to starting your hunt. This will help you understand what you can afford now, and in the future.
Don’t lose sleep over your decision to buy a home. Consult with a mortgage broker today to ensure that you’re making the best choice for your future.