Shopping for your home as a first-time home buyer can be daunting and stressful; the Canada Mortgage and Housing Corporation agrees. That’s why the Crown Corporation releases an annual mortgage consumer survey.
“Shopping for a mortgage can be overwhelming so the more information you have, the better your experience,” says Carla Staresina, VP of client relationship management at CMHC. “Ultimately, our hope is to help Canadians get the most out of the mortgage shopping experience.”
And at Ratehub, that’s our hope as well.
The CMHC surveyed 4,000 recent mortgage Canadian about their experiences. These are five lessons you can learn from the people surveyed.
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One of the first steps in the home buying journey should be determining your affordability. According to the CMHC survey, 28% of first-time home buyers and 68% of repeat buyers spent the most they could afford on a home.
But how do you determine affordability? With a mortgage affordability calculator.
Affordability calculators allow you to input income, debt, and living costs to help you answer the question: How much can I afford? With that, you’ll have a great starting point to determine what type of home and which neighbourhoods you should be targeting for your first (or next) home purchase.
Budgeting is important as well. You need to know how extra housing costs (such as a mortgage, yearly taxes, condo fees, and closing costs) will fit into your unique budget.
Twenty-four per cent of first-time buyers and 38% of repeat buyers do not have a monthly budget.
The internet was the no. 1 place home buyers conducted their research; but, still, ¼ of buyers conducted research offline only.
Of those researching online, 78% of first-time home buyers and 85% of repeat buyers researched mortgage interest rates online.
However, far fewer (34% of first-time home buyers and 32% of repeat buyers) submitted online mortgage applications for pre-approvals. Pre-approvals are a great way to lock an interest rate in for up to 120 days – which is increasingly important in the current rising rate environment.
According to the survey, loyalty to their current lender decreased among first-time home buyers and “increased significantly” among repeat buyers. A majority of buyers also said they used their primary bank for their mortgage needs.
However, only 65% of first-time buyers were satisfied with their mortgage lender.
Alternatively, 75% of buyers who used a mortgage broker were satisfied with their experience. Those buyers who used a broker cited several reasons for doing so; to get the best rate, for the advice, and for the convenience.
There were several key concerns among both first-time and repeat buyers. Those include; unforeseen costs, paying too much for a home, finding the right home, interest rate increases, and qualifying for a mortgage.
Each of these can add stress to the home buying process, so it’s important to equip yourself with as much knowledge as possible before purchasing a home. However, there are always resources available to help you fill in any knowledge gaps…
Only 50% of home buyers said their mortgage professional discussed unexpected costs with them during the buying process.
Meanwhile, 37% of home buyers felt uncertainty or concerned about their home buying experience, primarily around unforeseen costs and choosing the right home.
These stats drive home the importance of asking your mortgage broker the right questions to ensure you aren’t hit with any unexpected surprises.