“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%) 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 for purchasing a home. Just 39 percent are taking steps to reduce their debt, with about three in ten (28%) working to improve their credit score.
“Our research found that more than one-third of first-time homebuyers 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 an important decision like buying a home. Before applying for a mortgage, it’s 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 that between four and five in ten first-time home buyers had planned for appraisal fees (49%), mortgage default insurance (47%) or closing adjustments (41%). 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 homebuyers also learn that not all mortgages are the same. The TD survey revealed that half (52%) of first-time homebuyers are uncertain as to 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 a well-known fact 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 homebuyers (70%) 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 hit.
About the TD survey
TD commissioned Environics Research to conduct an online survey among a total of 1,001 adults from February 5-14, 2018. All respondents had to be 18 to 69 years of age, be a first-time homebuyer and reside in Canada.
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