Almost two-thirds of young Canadians (63 per cent) are looking to purchase their first home within the next two years, according to a recent RBC Home Ownership Poll. But these 18-34-year-olds have significant concerns about making the leap. Almost half of respondents (49 per cent) in this age group cited affordability as a reason they had not yet purchased a home, while one-third (34 per cent) said they were saving money for a large down payment.
“Buying your first home is a major milestone and you want to ensure you are both financially and emotionally prepared,” says Michael Schmidt, manager of client segment strategies. “There are no ‘do-overs’ when buying your first house, so it’s important to arm yourself with the right advice to avoid unexpected costs down the road.”
First-time buyers could also benefit from the wisdom of current owners. Three-in-five Canadian homeowners admit they made at least one mistake when they bought a house, including underestimating or overlooking significant renovations that the property needed, not having a bigger down payment, and lack of a home inspection.
Schmidt provides the following tips to combat some of common home buying mistakes:
• Put saving on autopilot: Down payment saving takes discipline. So when you get your paycheque, pay yourself first. One of the easiest ways to commit to this plan is to arrange for pre-authorized transfers from your bank account to your savings account.
• Understand the total cost of owning a home: Purchasing a house is more than just a regular mortgage payment. Budget for both one-time expenses (such as land transfer tax, property surveys, and legal fees) and ongoing costs (property tax, utilities, condo fees) and balance those costs against your lifestyle.
• Create a rainy day fund: Major repairs and upgrades are inevitable. Keeping a separate emergency fund will ease unexpected costs such as a leaky roof or a furnace repair.
More information is available online at /www.rbcroyalbank.com/mortgages/first-time-home-buyers.
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About Don Cholak
