Low borrowing costs and sudden demand have made the Canadians quite desperate and curious to jump into the pool of Canada’s housing market to buy their first home. Despite interest and demand at its peak, the majority cannot easily do this without financial support. About 56 % of people who participated in the survey conducted by Pollara Strategic Insights for BMO Bank of Montreal have accepted that they would ask for help from their family to buy their very first home. After 58 % of participants agreed that they would get help for financial support, British Columbia’s home-hunters topped as the first one. The Ontario buyers topped the second in the list of buyers who are likely to seek help for financial support to buy their home. You should check out Tridel for financially friendly options for your first home.
Pew Research Center calls people those born between 1981 and 1996 as Millennials and calls those born between 1965 and 1980 as Gen X. According to them, Millennials have a higher probability to look for financial support when compared to Gen X. As we have approximately learned who are interested in seeking financial help to buy their first home, let us see how much these people will seek from the outside sources to purchase their home.
About 25% of people from those who are looking for financial help require an amount between $10,000 and $50,000 on average. The first time buyers are seeking for $44,500 for assistance. To our surprise, about 23 % of Millennials are expecting about $100,000 and more as financial support to buy their first home from Tridel. This easily proves that Millennials are the people who come under those expecting most amount as financial help to purchase their home.
Hassan Pirnia, the Head of Personal Lending and Home Financing Products at BMO Bank of Montreal has told, “In our conversations, we typically advise prospective buyers not to spend more than 30% of their monthly income on housing”. According to Pirnia, the bank’s opportunities and equations like cashback offers for the first time buyers and the education criteria on which the individuals are capable to afford their home will be available to buyers those planning to purchase a home. For example, online calculators will be of great help to the home buyers to plan and calculate their budget and check how much amount they could save and how much they would spend.
Pirnia added, “We continue to watch the impact that COVID has had on homebuyers, but would encourage buyers to be patient and ensure they can sustain the monthly costs. For first-time buyers that are in a comfortable financial position, we are in a favourable interest rate environment”. The Covid-19 pandemic has made everything a bit simpler for first time home buyers. Pirnia further said, “When looking at the type of mortgage, it’s important to understand how the choice will affect day-to-day finances and long-term financial plans.”
According to a recent survey, these first time home buyers have cited ‘Covid-19 pandemic’ as the influencing reason for them to decide on which type of mortgage they’d opt for. Though most of the people have experienced financial difficulties and uncertainties, a sign of reliability has been seen in their selection of mortgage. The survey has reported that about 57 % have chosen the fixed-rate option for their mortgage selection. This is not at all surprising.
The owner and broker of record at The Mortgage Trail, Jerome Trail, has said, “We have noticed the same [aforementioned] trends amongst our first-time homebuyers — lots of family financial support, and opinions, involved in the buying process”. He further added, “Most often, the parents are urging their kids (or grandkids in some instances) to only take a fixed-rate mortgage solution.”
Jerome feels that he will suggest a fixed mortgage product for first time home buyers, as it will surely guarantee a monthly payment, which can be managed pretty easily. This will help the customers to plan their budget and payment in the right manner. According to him, only in unique circumstances, variable rate products will be recommended.
Among the new home buyers who are confused about choosing a suitable mortgage type, about 8 % are attracted to variable rate mortgage and about 30 % gravitate towards fixed-rate type. This is as per the poll results. And, the Covid-19 pandemic has played a huge role in making them choose either type. It has influenced their decision in choosing the desired mortgage-type.
Among those who are planning to opt for variable rate mortgage choices, about 55% are planning to engage themselves with the long-term plan, thinking they will have to pay quite less over the mortgage’s duration. While concerning Ontario, approximately about 60 % of the first-time homebuyers are thinking to opt for the above plan. You can check Tridel if you are planning to buy a home.
Jerome Trail says, “In today’s incredibly low rate environment, the rate savings on a variable solution is marginally different as compared to the fixed-rate solution. The monthly payments are almost the same.”
The Bank of Canada is subsidizing the financial sector via numerous means. It is also permitting the lenders to offer borrowers with very much low rate of mortgage financing. According to Trail, this low-interest rate practice does not have any future and it will not extend for so many years. It is just for a temporary being.
Jerome Trail’s advises the borrowers to see for mortgage offers that would last for longer terms. This includes offers those plans in the 7 or 10 year fixed rate options. This will make them locked for a much longer period and will also benefit their family.
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