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Big city house hunters suffer from FOMO (fear of missing out)
TD survey finds 1 in 5 Vancouverite and Torontonian homeowners listed FOMO as top consideration before buying
TORONTO, April 18, 2016 /CNW/ - The real estate market is more competitive than ever, and home prices continue to rise in cities like Vancouver and Toronto. A recent TD survey found that 19 per cent of Vancouverite and Torontonian homeowners listed FOMO as a top consideration before making their first home purchase. Additionally, Canadian prospective first-time buyers are concerned about rushing the process to avoid missing an opportunity (20 per cent) and being pushed out of the market (13 per cent), as well as buying too fast in order to win a bidding war (18 per cent).
"The busy spring home buying season can create competitive bidding wars, and research suggests that prospective buyers are already worried about rushing the process," says Marc Kulak, associate vice president, Real Estate Secured Lending, TD Canada Trust. "There's more to consider beyond purchase price, interest rate and the monthly mortgage payment. It's essential that buyers leave enough time to do their homework - especially considering, 40 per cent of prospective first-time buyers are worried they don't understand the full cost of ownership."
In Toronto and Vancouver's competitive housing market, it can be challenging to get your dream home within your price range. One of the best ways to avoid over-extending yourself is to understand the difference between your set budget and the mortgage you qualify for. While a mortgage pre-approval can help buyers shop with confidence, they first need to look at their financial reality to determine what they can afford each month along with ongoing expenses (groceries, daycare, transportation and long term savings goals). If there's a disconnect between the set budget and selling prices, Kulak suggests either looking at alternatives or holding off until buyers can save for a larger down payment.
"We recommend that first-time homebuyers save for the largest down payment they can afford, even if that means waiting a bit longer to buy," says Kulak. "The larger the down payment, the less you will need to borrow, which ultimately saves you money in interest payments long term. With a down payment of at least 20 per cent, buyers can also save on mortgage insurance premiums upfront."
One way for buyers to maximize their down payment is to take advantage of the RSP Home Buyers' Plan, which allows Canadians to borrow up to $25,000 each from their RSPs for their first home. It must be repaid within 15 years, so the cost must be factored into the homebuyers' overall budget.
"It's understandable that house hunters don't want to miss out on buying their dream home, but that shouldn't come at a cost they can't really afford," said Kulak. "With careful planning and a good savings plan for a down payment, it is possible to get a property that works for them without ending up with buyers' remorse after they've closed the deal."
About the TD Homebuyer Fear of Missing Out Poll
TD Canada Trust commissioned Environics Research Group to conduct a custom survey of 6,337 Canadians aged 18 and older. Reponses were collected between February 25 and March 17, 2016. All fieldwork was performed by Environics' wholly-owned field subsidiary, maintaining strict quality control procedures in accordance with guidelines established by the Marketing Research and Intelligence Association (MRIA).
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, plus credit protection and credit 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 at over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
SOURCE TD Canada Trust
Image with caption: "Big city house hunters suffer from FOMO (CNW Group/TD Canada Trust)". Image available at: http://photos.newswire.ca/images/download/20160418_C3867_PHOTO_EN_667133.jpg
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