Almost
one in six first time homebuyers are “house poor”, according to a new
survey. A Decima Research survey conducted for BMO Bank of Montreal
found that 16 per cent of recent first time homebuyers find their home
payments are difficult to manage, or that they consider themselves to
be “house poor”.
The survey also found that 77 per
cent of recent house hunters did not seek any financial advice from a
financial professional such as banker, financial adviser, or a mortgage
broker.
"What's surprising about these findings is
the number of people who don't seek financial advice from experts on
the biggest investment they'll ever make, and that could be a big
mistake," said Maria Racanelli, Vice President, Personal Banking with
BMO Bank of Montreal. "While securing a great mortgage rate is
important, developing a realistic plan on how to manage both your
regular payments and unexpected expenses often makes a huge difference
in maintaining a comfort level about your overall finances."
With
the increasingly competitive real estate market of the past several
years marked by increased home prices, multiple offers, and real estate
bidding wars, a homebuyer now has to work harder and pay more for what
they want, particularly in some of the higher cost city centres across
the country. For example, recent homebuyers in cities like Vancouver
(15 per cent of respondents), Toronto (14 per cent) and Calgary (12 per
cent) are significantly more likely than those in Halifax (six per
cent) to face difficulties in handling their home mortgage payments.
Those
recent first time homebuyers who obtained financial advice in advance
of the purchase are more likely to agree that their home payments are a
small and manageable portion of their household income than those who
did not obtain financial advice (86 per cent vs. 74 per cent
respectively). Not surprisingly, those who took advantage of the Home
Buyers’ Plan are more likely to agree that their home payments are a
small and manageable portion than those who did not take advantage of
the plan (85 per cent vs. 76 per cent respectively). Forty-five per
cent of recent first time buyers surveyed reported they had taken
advantage of the program.
The survey was conducted
by Decima Research among 1,015 Canadians recent homeowners (who
purchased current home within the past 10 years) in five major cities
(Vancouver, Calgary, Toronto, Montreal, and Halifax) and has a margin
or error of +/- 3.1 per cent 19 times out of 20.
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