As reported in National
Post, RBC recently conducted an interesting survey among 1,050 Canadians,
half of who purchased their first house in the last 2 years and half who plan
to buy one in the next 2 years. Of the future buyers, two-thirds said that they
intended to buy individual, detached homes while those respondents who had
purchased homes had bought condos or townhouses.
VP of Home Equity Financing at RBC Marcia Moffat said that
home affordability is not limited to just the price of the house, but also
includes home maintenance costs, legal fees, taxes and childcare costs in case
of younger families. She said that it is important that a first time buyer
thinks through all these aspects before approaching a lender or a mortgage broker. The
survey also revealed that the 3 things that buyers worried about the most were (a)
getting the mortgage approval (b) being able to afford down payment and (c)
increase in home prices.
First time home buyers can seek the help of mortgage
specialists to better understand how to plan their monthly budget and use mortgage
calculator tools online to determine the mortgage payments and rental payments
each month.
Ms. Moffat recommends making larger monthly payments because
of expected future interest rate spikes. It makes sense to pay down as much of
the principal amount as possible when the rates are low and the payments are
more affordable. She also says it is preferable not to seek mortgage advice
from your mom and dad as the housing market environment of the past was much
different than what it is at present.
