With the possible exception of tying the knot, buying a home is perhaps the most consequential decision that the average Canadian can make. However, it seems that those who are interested in buying a residence are jumping at the chance, spending less time thinking and more time doing, a newly released survey suggests.
When it comes to the amount of time Canadians spend ruminating on applying for a mortgage, the average person weighs the pluses and minuses for approximately 5.75 hours, according to a recent poll conducted by personal finance website LowestRates.ca. That's only slightly longer than the time it takes for the typical buyer to decide on a piece of furniture, and less than the hours spent thinking about an upcoming family vacation.
It's not as if applying for a mortgage is something that Canadians take lightly, either. On the contrary, over two-thirds consider it to be a significant choice that will affect their lives in numerous ways, the survey found. Despite this, prospective borrowers apparently put more of their energies toward fairly pedestrian tasks than they do homeownership.
Additionally, because of high demand and low supply, home prices have reached record heights in 2016. In April, for example, asking values reached a record high, according to the Canadian Real Estate Association. It's part of the reason why national home sales have dropped four consecutive months, the most recent being in August, when they were down 3.1 percent from July and showing a dip of 10 percent on a year-over-year, unadjusted basis.
Borrowers all too often consult with only one lender
Though mortgage rates tend to hover around the same level for everyone, several factors can influence what borrowers actually spend in interest, such as their credit score and payment history. Also, lenders compete for buyers' business by offering rates that may be more affordable than other financial institutions. First-time and veteran home shoppers may realize this intuitively, but many are not put their knowledge into practice, the survey intimated. Some 40 percent of the poll's respondents only met with one borrower when they applied for a mortgage - the one they ended up buying from, LowestRates.ca reported. At 67 percent, they overwhelmingly contracted with a bank, while approximately 1 in 5 borrowed with a mortgage broker.
Justin Thouin, LowestRates.ca CEO, stressed that borrowers have options when they're looking to buy a house, and it's important that they take advantage of them in order to save.
"Finding the best mortgage rate isn't something to be taken lightly or without unbiased consultation, yet many Canadians are on auto-pilot when it comes to a major financial decision like this," Thouin explained. "The banks are not always on your side when it comes to securing the best rate. We are trying to educate people about their options during their search."
Beggars can't be choosers?
Some are of the mindset that if they want to live in a highly sought-after locale, they're going to have to pay for it one way or another. Nearly 50 percent of millennials acknowledge that they're more likely to spend top dollar if they want to reside in proximity to their employer, a separate poll conducted by TD Bank revealed. Meanwhile, approximately one-third of all Canadians, regardless of age, felt the same way.
"While living close to work has many benefits, purchasing a home in expensive urban cities can come at a price," warned Pat Giles, TD Bank's associate vice president of real estate lending. "Finding your dream location means striking a balance among affordability, your non-negotiables and your financial future."
He added that when in the real estate market, buyers have to determine what they're willing to be flexible on and what they're unwilling to compromise on. For example, those who are interested in living in a convenient location may have to accept that they won't have the financial resources to purchase a place that's spacious.