First-time purchasers eye $300,000 homes
Is there an ideal price tag attached to the dream of home ownership?
Well, first-time homebuyers in Canada think so. In fact, they are zooming in on the $300,000 price range when looking for a new house.
And, they plan on putting down about 16 per cent ($48,000), according to a new BMO First-Time Home Buyer's Report.
And that's up significantly from a decade ago when the average resale house price was sitting just above the $200,000 margin.
Times have certainly changed. I remember when we bought our home way back in (ahem) 1989 when both interest rates and housing prices were at an all-time high.
But that was then and this is now.For the past few years, Canadians have been fortunate to be able to take advantage of the historically low interest rates. The current rates have made it a lot easier for first-time homebuyers to get their foot over the welcome mat and into the door of home ownership.
According to the report, most first-time homebuyers indicated they hope to be mortgage-free in 20 years or even sooner.
Laura Parsons, Mortgage Expert, BMO Bank of Montreal says, "Buying a home is one of the most important financial decisions one can make. It's crucial that those planning to enter the market are well-prepared -- not only to manage their costs, but also pay off their mortgage as soon as possible.
"Determining what your mortgage payments and overall costs of home ownership will look like, and then living in that financial reality for a year before entering the market, can be an effective strategy."
There are many options available to paying down your mortgage sooner, including choosing a shorter amortization and by taking advantage of accelerated payment options rather than your typical monthly mortgage payment.
The report also found that six out of ten first-time buyers have made adjustments to their lifestyle to help save for their first home, while one in four are looking to parents or other family members to help finance their first home.
It's always nice if you can get a little help from your relatives. However, 59 per cent of first-time homebuyers polled admitted they put off buying their first home due to increasing house prices and, about the same amount, wished they had bought their first home five years earlier.
Home ownership can sometimes be a tough market to break in to when you're first starting out. But with planning, saving and mixed with the right market conditions -- it can make the perfect ingredients to owning your first home.
By Donna Donaldson, MSN Money
What, if any, roadblocks do you feel are in the way of buying your first home? What would make the process easier?