TD survey finds seven in 10 first-time homebuyers worry about being hit with an unanticipated cost
TORONTO, April 26, 2018 /CNW/ - 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 homebuying journey is often half the battle, and can help cut down on unexpected surprises.
A new survey by TD reveals that more than half (56 per cent) of Canadian first-time homebuyers are anxious and afraid that they'll forget to take a crucial step as they gain their foothold on the property ladder. It's no wonder that nearly one quarter of those polled (24 per cent) say that the homebuying process is stressing them out, while one fifth (21 per cent) admit they are simply overwhelmed.
"For any significant life milestone, it's challenging to know what to expect," said Marc Kulak, Vice President, TD Bank Group. "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. By seeking out advice in advance, you can avoid many of the common pitfalls, such as being hit with an unanticipated cost, experienced by first-time buyers."
The survey findings also reveal that seven out of ten (71 per cent) first-time homebuyers are worrying about being hit with unanticipated costs during the homebuying process. At the same time, many of those surveyed aren't taking the steps needed to prepare when purchasing a home. Just 39 per cent are taking steps to reduce their debt, with less than a third (28 per cent) working to improve their credit score.
"Our research found that more than one-third of first-time home buyers are saving for a down payment without planning the home buying process," said Kulak. "Saving for a down payment is just one priority. Take time to consider the many costs and steps associated with homebuying – from appraisal fees to mortgage default insurance. By anticipating expenses and adopting sound financial behaviours such as paying down your existing debts, you are setting yourself up for success."
For first-time homebuyers looking to ease anxiety and stress during their homebuying journey, TD is offering the following tips and advice:
Manage any Existing Debt
First-time parents are often advised to get financially "ready" as they prepare to make the big decision to have kids. Similarly, you'll want to feel financially "ready" when making a decision as important as buying a home. Before applying for a mortgage, it is a good idea to get your own 'financial house' in order. The TD Mortgage Affordability Calculator is a helpful tool – it uses financial information provided by the potential buyer to help them understand how much home they may be able to afford after monthly expenses, debt payments and savings are accounted for.
Consider all Homebuying Costs
From diapers to daycare and everything in between, the costs associated with caring for a newborn can add up fast. Similarly, first-time homebuyers will quickly find out there are many expenses associated with buying a home. The survey found less than half first-time home buyers had planned for appraisal fees (49 per cent), mortgage default insurance (47 per cent) or closing adjustments (41 per cent). The best advice is to be aware of all the possible costs you could face so you don't get hit with an unexpected expense.
Make Your Mortgage Work for You
As first-time parents find out soon enough, every baby is different; first time home-buyers also learn that not all mortgages are the same. The TD survey revealed that more than half (52 per cent) of first-time homebuyers are uncertain which type of mortgage would be the best fit for their needs and lifestyle. Meeting with a financial advisor can help determine the best mortgage type to help meet your personal financial situation.
Don't Put Your Finances Under Pressure
Similar to parenting, the costs of owning a home continue for years to come. Once you close on your home purchase and pay all closing costs, don't make the mistake of assuming your mortgage payments will be the only home-related expenses you'll face. From property taxes to maintenance costs, there are lots of responsibilities and expenses that come with owning a home.
Protect Your Home
It's well-known that new parents are typically very protective of their children, and often child-proof their home well before their child is on the move. Protecting your new home is also critical. Most first time home-buyers (70 per cent) are prepared for the costs of home insurance. Having the right insurance can help you feel at ease with your specific circumstances and help ensure there are no surprises down the road if crisis or catastrophe hits.
About the TD survey
TD commissioned Environics Research Group to conduct an online survey among a total of 1,001 adults from February 5-14, 2018. All respondents had to be 18-69 years of age, be a first-time home buyer and reside in Canada.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 12 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America. Mutual Funds Representatives with TD Investment Services Inc. distribute mutual funds at TD Canada Trust.
SOURCE TD Canada Trust
For further information: Julie Bellissimo, TD Bank Group, 416-965-6050, Julie.Bellissimo@td.com; Marisa Wolch, Hill+Knowlton Strategies, 416-413-4639, Marisa.Wolch@hkstrategies.ca