Condo or home? Semi-detached or fully detached? New or old? Fixed-rate or variable rate mortgage? Never before has doing the dreaded homework on home-buying been more crucial.
Nor has it ever been done so exhaustively, says the first TD Canada Trust Home Buyers Report which surveyed Canadians who have purchased their first home in the past two years or who intend to purchase in the next two.
Canadians are getting increasingly savvy and are making informed financial decisions before shopping for their first home, says the survey.
Some of the most researched aspects of home buying include learning about mortgage options (93%), getting pre-approved (91%), calculating closing costs (88%) and estimating utility costs (85%).
The findings of the survey revealed interesting facts about attitudes, preferences and preparedness of first time homebuyers in various provinces.
The majority of first time home buyers in Ontario prefer newer and detached homes to older and semi-detached homes or condos and expect to pay less than the asking price.
Thirty-six per cent of homebuyers in Ontario plan to have more than a 20% down payment. The remaining 64% will require their mortgage to be insured by the Canada Mortgage and Housing Corporation (CMHC).
“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment what that will mean for both the type of home you buy and for your mortgage payments over time,” says Farhaneh Haque, regional sales manager, mobile mortgage specialists, TD Canada Trust. “I advise first time home owners to consider a larger down payment because a 10% or greater down payment will make a big difference.”
This may mean homebuyers will need to wait and save longer before buying their first home, but it will pay off in the end.
Ignoring historical hints, 72% of those surveyed in Ontario have or plan to have a fixed-rate mortgage. “Historically, you are more likely to save interest costs with a variable rate or short-term mortgage option,” says Haque who recommends buyers choose a variable rate. “If people are adverse to interest rate fluctuations then a fixed-rate is best.”
While the majority of Ontarians chose detached homes, 18% favoured condos and 17% preferred town homes, says the report.
When it comes to the question of commute, size doesn’t matter to Ontarians. Fifty-seven per cent are willing to sacrifice the size of their home to eliminate a commute. Price featured on top of the list of factors to consider the type of home to buy and where (99%), features of the home followed closely at 97%, marginally ahead of layout of the home (96%).
Choices of the first time homebuyers in British Columbia (B.C.) were found to be in complete contrast to the rest of the country. As many as 37% British Columbians bought or plan to buy a condominium, narrowly outnumbering those who prefer detached homes (36%).
For the first home, 60% Quebecers bought or intend to buy a fully detached home and 81% want a new home. Respondents in Quebec showed they are the least likely in the country to worry about being able to afford their home if interest rates rise (47% versus 59% nationally). In yet another departure from the national trend, Quebecers look at the fewest homes while shopping for their first home, despite being most likely to spend their entire lifetime in it.
First time homebuyers in Alberta found their distinction in being most determined to pay less than the asking price for their home (71% versus 65% nationally). Albertans also have their hearts set on fully detached homes (59%), while condos and semi-detached have 17% and 14% takers respectively.
In Atlantic Canada, first time buyers tend to lean sharply towards new, large, fully detached homes, even if it means a longer daily commute. More than in any region province, 83% of Atlantic Canadians bought or intend to buy a fully detached home (versus 58% nationally) and 73% want a new home.
Newer homes also found a huge favour amongst people in Manitoba and Saskatchewan provided price points were similar to that of old. Additionally, almost three-quarters of first time home buyers in the region are leaning towards fully detached homes.
Most participants reported putting down as much as they could afford for a down payment (88%) and 57% said they saved or plan on saving for two years or less for their home purchase.
(07/05/2010)