TD recently surveyed 1,000 home owners for its Repeat Home Buyers Report. Below are nine mortgage-related findings from that report with our perspective tossed in…

• 1 in 5 repeat home buyers have owned more than five homes.

  Mortgage Considerations:  People move a lot over their lifetime, sometimes unexpectedly. Having the ability to port a mortgage without a penalty can therefore be a money-saver. Fortunately, most prime mortgages are portable nowadays. Just make sure you understand your lender’s porting restrictions.

• 49% plan to upgrade when they buy their next home.

  Mortgage Considerations:  If you’re thinking of buying a more expensive property sometime during your mortgage term, be sure your lender has a policy of offering fully discounted rates on ports & increases. People who port and increase sometimes get stuck with subpar discounts (like 1.25% off posted 5-year fixed rates) because the lender knows the client can’t break without a penalty.

• 21% plan to take the maximum mortgage they’ll qualify for.

  Mortgage Considerations:  This increases to 28% for buyers under 40. There are few things more stressful than worrying about making your mortgage payment. So keep your blood pressure low…and your gross debt service ratio under 32%.

• 72% plan to stick with their current lender when they buy a new home.

  Mortgage Considerations:  The top reasons for switching lenders were: better rates (60% cited this reason), better customer service (33%), and better mortgage terms (28%). If you love your lender’s rates and service, that’s groovy. But don’t make the mistake of not shopping around.  If you’re buying a new house, you’ll need to apply all over again anyway. See if there’s a mortgage elsewhere that’ll save you a few tenths of a percent and offer more flexibility.

• 60% aren’t familiar with their portability or assumability options.

  Mortgage Considerations:  “Porting” lets you avoid a mortgage penalty if you move. “Assumability” lets you:  a) offer a low mortgage rate as an incentive to buyers of your home; and/or, b) avoid a penalty if you’re selling and need to break your mortgage. Here’s a related story from the Post.

• Just 1 in 3 port their mortgage when buying a new home.

  Mortgage Considerations:  If you have a mortgage and buy a new home, always ask your mortgage advisor if porting will save you money.

• Only 8% of home sellers offer an assumption as a selling feature of their home.

  Mortgage Considerations:  This may be due to:
  1) sellers not realizing they can offer an assumption
  2) down-trending rates that have made assumptions less attractive; or,
  3) sellers porting their mortgage to their new property (most people with great terms keep their mortgage when they buy a new property).

• 84% plan to sell their current property before purchasing another one.
  
  Mortgage Considerations:  If you want to buy a new property before you sell your old one, get prequalified to ensure you can debt service both homes if needed.
• Two-thirds will choose accelerated payments for their next mortgage.

  Mortgage Considerations:  If you can afford the equivalent of one extra payment a year, accelerated bi-weekly payments can shave up to four years off a 25-year mortgage.

____________________________________________________

About the TD Canada Trust Home Buyers Report:

Results for the TD Canada Trust Home Buyers Report were collected through a custom online survey conducted by Environics Research Group. A total of 1,000 completed surveys were collected from August 12 to 27, 2010. All participants either purchased a home that was not their first home within the past 24 months, or intend to purchase a home that is not their first home within the next 24 months. (Source: TD)

Last modified: April 26, 2014