More than seven in 10 Canadian first-time home buyers (71 per cent) are afraid that they’ll be hit by unanticipated costs during the process, according to a new survey by TD Bank.
Over half of the respondents (56 per cent) agreed that they are “afraid that they'll forget to take a crucial step as they gain their foothold on the property ladder.”
However, a surprisingly low one-quarter of respondents (24 per cent) said that the process is “stressing them out.”
TD Bank said that many respondents aren't taking the steps needed to prepare for a home purchase, which it said should be taken just as seriously as preparing for the birth of a first child. Just 39 per cent of respondents reported that they are taking steps to reduce their debt ahead of their home purchase, with only 28 per cent working to improve their credit score.
TD’s survey report said, “Similar to the rollercoaster ride experienced by first-time parents, owning your first home can be an exhilarating yet unfamiliar experience. Knowing and preparing for what to expect on the home-buying journey is often half the battle, and can help cut down on unexpected surprises.”
Marc Kulak, vice-president, TD Bank Group, added, “For example, when you prepare to have kids, there are numerous steps and stages you go through to help prepare for their arrival. But when it comes to buying your first home, first-time buyers often enter the process with lots of unanswered questions.”
The survey found less than half of first-time buyers said they had planned for additional costs beyond the purchase price and down payment, such as appraisal fees (49 per cent), mortgage default insurance (47 per cent) or closing costs (41 per cent).
“Our research found that more than one-third of first- time home buyers are saving for a down payment without planning the homebuying process,” said Kulak. “Saving for a down payment is just one priority.”
The bank recommended the following steps to help buyers along the way:
• manage existing debt and get your financial house in order;
• consider all homebuying costs including appraisals, title searches, fees and adjustments;
• get the right mortgage for your needs and work with a mortgage advisor;
• don’t overstretched yourself on monthly costs or underestimate other home-related expenses, such as property tax and maintenance; and
• get home insurance to protect against the unexpected.