Bank of Montreal recently conducted a survey among first-time home buyers in Canada, asking them what price ranges they’re looking at, how much of a down payment they’re expecting to make, and how long they think they’ll have their mortgage. The results may sound encouraging, but are first time buyers kidding themselves in some areas?
According to the BMO survey, the average first-time buyer is 29 years old, will purchase a $300,000 home, and will put down a $48,000 down payment on that home. Breaking that down further, you can see that how much people plan to spend, not surprisingly, depends on where they live. And the amount of time it will take to pay that mortgage off also widely varies.
Breaking the results down geographically, it’s not surprising to see that first-time buyers in Vancouver plan to spend considerably more than first-time buyers in Atlantic Canada. But in addition to paying for just those mortgages, how long do first-time buyers expect to be paying those off?
The average buyer expects to pay off their mortgage within 20 years, while 20 per cent believe that they’ll have it paid off before that; and 3 per cent think it will take them less than ten years to pay off their mortgage. Nearly one-third of first-time buyers however, 31 per cent, said that they didn’t know how long it would take them to pay off their home loan.
How long it will take them might depend on what kind of mortgage they choose – fixed or variable. Not surprisingly here either, most are choosing to take advantage of today’s rock bottom rates and lock into a fixed rate – 46 per cent, in fact.
As for the nearly $50,000 in down payment that the average first-time buyer is expecting to make, Laura Parsons, BMO mortgage expert, says that instead of simply worrying about saving up for a major down payment (even though that’s important, too,) first-time buyers need to make sure that they’re fully prepared for home ownership, and the costs that come with it – from the time of house hunting, to the time of repairing an old roof in another ten years.
“What we tend to do is jump in the market when we’re ready, instead of starting a plan now,” she says.
“Let’s start getting ready for it so we can start giving you good advice all along the way. Don’t be afraid to get things going.”
