Home buyers in Manitoba and Saskatchewan are the most likely in the country willing to pay for a more expensive home, according to a new survey
People in the two provinces were the most likely to have paid over the asking price for a home, according to the TD Canada Trust Repeat Home Buyers Report, a survey of Canadians who have either purchased or intend to purchase a home that was not their first home.
In Canada, home buyers in Manitoba and Saskatchewan are also the most likely to take out a mortgage for their next home. On the other hand, home buyers in the two provinces are more likely to save on their mortgage costs by making a greater down payment. They also want to pay off a new mortgage as quickly as possible.
“It is encouraging that the majority of Canadians are taking steps to save money on their mortgage," said Farhaneh Haque, regional sales manager, mobile mortgage specialists, TD Canada Trust.
“I recommend that home buyers buy the house that fits their budget, not just their lifestyle. After all, if you buy a house that is too big for you to afford, you could be giving up that lifestyle just to pay it off.”
The report found that home buyers in Manitoba and Saskatchewan have expensive taste compared to the rest of the country. Three-quarters of the respondents want a fully-detached home versus 71 per cent nationally, and 60 per cent intend to buy a more expensive home versus 51 per cent nationally.
Three-quarters of the people in the two provinces said they will sell their current property before buying a new one. They are least likely to have a mortgage on their current home, but most likely to say that the proceeds from the sale of their house will be less than the value of their new home, meaning they will need to take out a mortgage on their new home (64 per cent versus 51 per cent nationally).
Despite this, 11 per cent, versus 21 per cent nationally, are least likely to take out the maximum mortgage they qualify for from their bank, as home buyers in Manitoba and Saskatchewan will try to save money on their mortgage costs. Eighty-eight per cent said they will put down as much as they can afford for a down payment. Sixty-three per cent say they will save on interest payments by choosing accelerated payments (weekly or bi-weekly instead of monthly). Sixty-two per cent will save on interest payments by choosing a shorter amortization period for their mortgage.
“There are many options available to repeat home buyers and a mortgage expert can help you choose the right one to save money so you can own your new home faster,” said Haque.
The TD report found that half of buyers don’t know that they have options or haven’t thought about their mortgage options.
Haque’s tip to home buyers is to take your mortgage with you when you move. Many banks will let buyers take their mortgage with them, even if they need to increase their principal amount. This gets blended at the current market rate with the existing principal at its original interest rate.
Another tip is to use your mortgage as a selling feature. If the seller’s mortgage interest rate is lower than current market rates, the purchasers may be able to take on the seller’s mortgage when they move.
The TD report found that only 36 per cent of repeat buyers bring their current mortgage with them to their new home and only 10 per cent use it as a selling feature of their prior home, allowing the new owner to assume their mortgage.
Two-thirds of repeat buyers intend to use their current lender when they purchase a new home. The top reasons for switching among the remaining 35 per cent of respondents were better rates at 53 per cent, better customer service at 41 per cent) and better mortgage terms at 24 per cent.
The top factor that influences the decision to move is retirement, which was cited by 32 per cent of respondents. Twenty-three per cent said they had always planned to move but were waiting to save enough money. Other factors include market conditions at 21 per cent, investment opportunities at 15 per cent and 15 per cent cited being bored or restless with their current home.
Ninety-nine per cent of home buyers in Manitoba and Saskatchewan said their top consideration was the layout of the home. The size of the home was cited by 98 per cent and price by 96 per cent.
Hoping to improve the resale value of their home, 56 per cent of the people in Manitoba and Saskatchewan renovate, 52 per cent redecorate and 41 per cent improve the curb appeal by landscaping.
Fifty-two per cent of the people in the two provinces are cautious, saying they wouldn’t buy a new home until their current home was sold, But 48 per cent said that if the perfect home came up for sale, they would put in an offer and hope that their existing house sells.