News & Resources

More Than Half of Canadian Homebuyers Willing to Break the Bank

Oct. 13, 2017
3 mins
A professional woman in trendy glasses sits outside at a table while working on her laptop and talking on the phone

TD survey finds 60% of Canadians are willing to exceed their budget to buy a home.
Budget-schmudget. At least that appears to be the sentiment of Canadian homebuyers, according to a new TD home buying survey. Of those polled, 60% said they would be willing to exceed their budget, with more than half (56%) saying they would be willing to go over budget by up to $50,000. TD largely blames the emotional rollercoaster that comes with house hunting for our willingness to break the bank. This willingness however to spend more now, often leads to regrets later.

Hindsight Is 20/20

The survey also found that 97% of current homeowners wish they knew now, what they didn’t know then: that there is so much more to homeownership financially, then just getting a mortgage and making payments. They wish they had factored in other financial obligations when determining how much mortgage they could really afford—including property taxes and home maintenance costs (54%), and overall lifestyle expenses (33%).

"How you live is just as important as where you live," says Roy D’Souza, Associate Vice President, Real Estate Secured Lending at TD Canada Trust. "Owning a home is a lot more expensive than buyers expect. Buyers who don't account for these extra costs are potentially putting themselves under a lot of financial stress should their circumstances unexpectedly change, and are also risking not having enough money left over to maintain their lifestyle, and continue saving for the future." As a result, TD offers the following tips to help buyers get ready for the costs associated with buying a home:

  • Build a buffer before you buy: Twice in the last year, mortgage rates have increased. As a result, it’s recommended that you maintain a financial buffer of at least three to six months of extra mortgage payments to help offset the impact of potential future rate changes.
  • Take a good look at the lifestyle you want to live: The mortgage you qualify for may not align with your budget and the lifestyle you want to maintain. It’s suggested that you prioritize what you can live with, what you can live without, and then factor in how your mortgage payments (and ongoing home costs) will affect your lifestyle outside of the home.
  • Live today like you’re already a homeowner: Take your mortgage for a test drive. Set aside what you anticipate you’ll be spending as a homeowner each month to prove that your budget is sustainable. This amount should include more than just your mortgage payments. It should include the other costs of owning a home too, things that you may not already being paying for: property taxes, hydro, natural gas, and water to name just a few.

The Canadian Mortgage and Housing Corporation (CMHC) provides another reason to stay within budget when buying a home: closing costs. The CMHC estimates that typically you’ll need to have 1.5% to 4% saved up to cover things like legal fees and land transfer taxes.

Lesley Green

Lesley Green is a senior writer and editor at RATESDOTCA and has been a part of the team since 2002. During non-pandemic times she enjoys live theatre, travelling, curling and, depending on how well she's hitting the ball, golfing.

Latest life insurance articles

Will a Life Insurance Policy Cover Death Due to COVID-19?
Demand for life insurance may be on the rise during the pandemic as more Canadians consider buying a policy or reviewing ones they already have. If you’re thinking of applying for a policy, here are a few things to keep in mind.
How Does Vaping and e-Cigarettes Affect Life Insurance?
Many insurers may classify vaping in the same way they do smoking. If you smoke or vape, you can still qualify for a life insurance premium, but in all likelihood, you will pay a higher rate than someone who does not.
Credit Life Insurance: Is It Worth It?
You’re a new homebuyer in the final stages of closing a mortgage. Suddenly the lender rep asks if you want to take out a life insurance policy for your mortgage. Do you take it?