Gen X Canadians want flexibility in their budgets so they can afford things like travel, after paying their monthly mortgages.
In fact, only 14% will pay on the higher end of mortgage payments, find a TD survey. But Gen Xers are fairly evenly split between those who see themselves living in their current home forever (42%) and those who see it as a stepping stone to a different property (45%).
“More than two-thirds of Gen X Canadians have told us they don’t want their entire budget allocated to mortgage payments,” says Nupi Zubair, associate vice-president, Retail Products at TD. “It’s possible to own a home and not feel handcuffed to the mortgage, but it does require careful saving and planning before signing on the dotted line.”
Zubair says in addition to the sale price of the home, Gen X needs to factor in other costs of homeownership — such as taxes, maintenance, closing costs and insurance — and set a budget for all of the discretionary things they want to do.
“One way to have more disposable income every month is to make a larger down payment up front, which ultimately reduces the size of the mortgage and monthly payments,” Zubair adds. “Keep in mind though, a shorter amortization period and making payments weekly, rather than monthly, can increase monthly payments but lower the overall costs of the mortgage.”
The survey found sale price is the most important factor for Gen X Canadians buying a home, followed by location and the future appreciation. Access to public transit and proximity to schools were much lower on the priority list.
Here are some tips to help homebuyers.
1. Save for a down payment. Tell clients to set up a regular automatic savings plan and add any special monetary gifts or bonuses they receive.
2. Set a budget. Help them list all income and expenses.
3. Buy a house that fits the budget. Ensure your client’s mortgage is realistic based on the available budget. If it’s not enough, tell them to consider holding off and saving a larger down payment, or looking for a less expensive property.