It’s no secret that some housing markets have gone wild in Canada – namely Greater Toronto and Vancouver, where demand for homes continues to rise with prices in lockstep, while supply is dwindling.
Recent measures aimed at cooling these hot housing markets seem to be having their desired effect – including new mortgage rules, Premiere Wynne’s 16-point Fair Housing Plan in Ontario, and Vancouver’s foreign buyer’s tax.
Despite signs of markets cooling, homebuyers are hot to trot when it comes to snagging their dream home.
A recent home-buying survey by TD reveals that 60 per cent of respondents are willing to go over budget if it means getting their foot in the door. In fact, 56 per cent would up their spend by as much as $50,000. That’s no chump change.
“A recent home-buying survey by TD reveals that 60 per cent of respondents are willing to go over budget if it means getting their foot in the door. In fact, 56 per cent would up their spend by as much as $50,000. That’s no chump change.”
“Emotions are playing too big of a role in the home buying process and are tempting buyers to spend more than they can afford,” says Roy D’Souza, associate vice-president, Real Estate Secured Lending at TD Canada Trust. “$50,000 might lose its sticker-shock compared to the overall price of a house, but it’s still a substantial amount of money that could be used to meet other financial needs… Keeping your feelings in check is critical to making objective decisions that match your short- and long-term financial plans.”
- 58% of those surveyed said they’re worried that an interest rate increase will affect their ability to afford a home.
- 43% of respondents worry about job stability and other personal issues.
If you’re planning on buying a home, making sure you understand where your money’s coming from and where it’s going. This Monthly Home Budget Planner is a good place to start.
If you still find yourself challenged, visit a financial planner to ensure you’re not spending more than you can actually afford.
TD offers these additional tips to home-buying within your budget:
BUFFER ZONE Maintain a financial buffer of at least three to six months, to soften the blow of interest rate increases and unexpected bumps in the road.
Tip: When buying a home, consider the mortgage rate and terms, which can add up over the life of your mortgage.
GET REAL The mortgage you qualify for and what you can actually afford are two very different things. Look at your lifestyle, now and in the future, and consider how your mortgage payments and ongoing home costs will impact you. When buying a home, you might have to make some compromises on lifestyle in the interest of homeownership.
HOMEOWNER STATE OF MIND Buying a home involves more than just mortgage payments. Ongoing expenses include maintenance, home insurance, property taxes, and utilities.
Tip: Each month, set aside all your anticipated costs to ensure your budget is sustainable.
When you’re ready, we’re here to help. It’s important to be honest and up front about your budget with your real estate agent. This will arm them with the knowledge they need to ensure they can negotiate on your behalf, without going to high, and also present you options that will fall in your range, no matter what the market conditions are like.