Credit Counselling Society

June 12, 2007 10:48 ET

Test Drive The Purchase of A New Home

Attention: Assignment Editor, Business/Financial Editor, Lifestyle Editor, News Editor NEW WESTMINSTER, BRITISH COLUMBIA, PSA--(Marketwire - June 12, 2007) - According to Canada Mortgage and Housing Corporation (CMHC), house prices across the country have increased by more than 10% a year for four straight years and affordability is becoming an issue. Taking a test drive before buying a new home could help home buyers make informed choices and save money.
A recent survey by the Royal Bank of Canada shows 3 in 10 Canadians plan to buy a new home within the next two years. Many of those people may qualify on paper for the mortgage but may not be prepared for the reality that comes with the purchase of a new home. Scott Hannah, President of the Credit Counselling Society, a non-profit debt solutions service, suggests anyone wishing to purchase a home take a test drive before they take the plunge. "With the purchase of a new home you have to consider all your costs and the impact these extra expenses will have on your lifestyle." Hannah notes. "We recommend the potential home buyer make a list of all the monthly costs including mortgage, taxes, insurance and utilities. Include additional expenses such as new furniture and renovations. Then, take the difference between current monthly housing costs and the proposed costs and deposit that amount of money each month in a separate bank account." After 6 months of depositing the funds the home buyer will have gained valuable insight and can make an informed choice before they actually buy. The money in the account can then help with the down payment.
Many home buyers may not fully realize how much more they will have to pay. An average home in Vancouver, the most expensive market in the country, sold for $527,524 in April 2007 compared with $312,828 in January, 2003, when the West Coast market started to heat up. With a 5% down payment the home buyer would be responsible for a $3,387 monthly mortgage payment based on a 25-year amortization and current mortgage rates for a five-year term. "If someone is currently paying $1500 per month for their housing costs and their potential costs are more than double this increases the risk of future problems with credit card debt as they try to maintain their lifestyle." Hannah says, "We are seeing more and more people struggling with debt load since the increase in house prices."
About Credit Counselling Society
The Credit Counselling Society is a non-profit organization dedicated to helping individuals and families find solutions to their debt and money problems. They provide free credit counseling and confidential guidance for debt repayment and credit education to consumers across Canada. The Credit Counselling Society are federally registered as a Canadian Charitable Organization and licensed in the provinces of British Columbia, Alberta, Manitoba and Saskatchewan. For more information, visit www.nomoredebts.org.
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Contact Information

  • Scott Hannah, President, Credit Counselling Society
    Primary Phone: 604-527-8999 ext. 211
    Secondary Phone: 604-636-0211
    Toll-Free: 888-527-8999
    E-mail: scott@nomoredebts.org