Canada's Condominium Magazine
It’s often said about Generation X that they want it all. It looks like that could be true, and why not? A new TD survey finds that most Gen X-ers want “budget flexibility” so that they can afford not just a home but the other things in life that they value as well. No “house poor” young people they, sitting at home in front of the television while their non-mortgaged friends have all the fun. This group, according to TD, is the “House-Plus” crowd, overwhelmingly preferring to have the house plus the travel and the discretionary spending as well.
Wanting to avoid being a “House-All” buyer, one who goes to the upper limit of what he or she can afford, with nothing much left over at the end of the month for other things, most of the Gen X crowd say they don’t want to be “handcuffed” to a mortgage. But can they manage it?
It’s the budget
It’s one thing to say you don’t want to be restricted by the realities of mortgage payments and all the other expenses that go with home ownership, but how do you manage them? The TD’s Nupi Zubair, commenting on the survey, said that it’s a matter of “careful saving and planning.” If you want to own a home and at the same time have money to spend on other things every month, you have to purchase what you can afford and budget for your other priorities.
It seems that the Gen X potential home buyer has the right attitude about price: most of them said it was the most important factor they looked at when buying a home. Next came location, and then the future appreciation of the home’s value. Surprisingly, access to public transit and to schools were “much lower” on the priority list for all the Gen X respondents, whether they intended to stay in the home for a short time or a long time.
Of course, the most obvious way to ensure that you have more disposable income after your mortgage payments each month is to make a bigger down payment.
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. Buyers need to purchase a home at a price they can afford, while still budgeting for the other things on their list of priorities.
Nupi Zubair, Associate Vice President, Retail Products, TD
TD Tips for younger homebuyers
- Save for a down payment by setting up a regular, automatic savings plan. Add to it any monetary gifts or bonuses received. First-time buyers can also take advantage of the RSP Home Buyers’ Plan to build a bigger down payment.
- Set a budget. List all sources of income (including potential help from family), then list all non-discretionary expenses—food, utilities, insurance and car or student loan. The difference will be the amount available for mortgage payments, savings and any discretionary spending.
- Buy the house that fits the budget. If the available money is not enough to buy the desired home, consider holding off and saving for a larger down payment, or look for a less expensive property. The alternative to waiting is finding ways to cut back on allocated discretionary spending money each month.
- Ask for advice. Work with a mortgage specialist and financial advisor to develop a strategy to save for a down payment and, after closing, help maximize available funds for discretionary spending and future financial goals.