Everyone makes mistakes, but when it comes to buying a home, those mistakes can be costly. According to data from the Royal Bank of Canada's 20th Annual Homeownership Poll, most Canadians admit to make some kind of mistake during the homebuying process. While 40 percent said everything went smoothly, 60 percent said there was some type of error on their part.
The following are the most common homebuying mistakes according to the RBC poll, as well as ways to avoid them.
The mistake the most respondents highlighted, coming in at 15 percent, was buying a home in need of "significant renovations."
This can be a common mistake for individuals, especially first-time homebuyers. Say a person finds the home of their dreams – great location, great layout and great price. There's just one problem: The property is falling apart. Many homebuyers may take this in stride, thinking that the money they save on purchasing the property can be used toward renovating it. Unfortunately, this can turn into the real estate equivalent of piling too much food on your plate by overestimating how hungry you were.
If a home is in serious need of repairs, the costs can add up quickly. What's more, the time and effort needed for such renovations can lead to frustration and buyers' remorse, two things no Canadian wants to deal with after they spend thousands of dollars buying a new home.
The best way for Canadian homebuyers to avoid this mistake is to seriously consider the ramifications of their purchase and how a home's condition will affect them. If they're both financially and mentally ready to deal with a home in need of renovations, then they should move forward. However, it's never wise to let excitement and temptation lead a homebuyer into a purchase that hasn't been given the proper thought.
Not having a bigger down payment was the second most cited mistake, coming in at 14 percent. In fact, not having a bigger down payment was especially problematic for younger homebuyers, with Canadian homeowners between the ages of 18 and 34 being less likely than the national average to not have a bigger down payment (21 percent vs. 14 percent).
While not having a minimum down payment of 20 percent isn't necessarily a deal breaker, it can lead to financial trouble down the line. The lower a down payment is, the more money a buyer will owe on their home. Along with mortgage rates, this can lead to much more money spent in the long run.
Avoiding this mistake can be both simple and difficult. The only real remedy is to wait and save. Homebuyers who don't have a down payment of at least 20 percent may want to hold off on entering the market and work on building their savings.
Thirteen percent of respondents said not getting a home inspection was their biggest mistake.
Home inspections should be a priority for any homebuyer, as a professional inspection can uncover any number of problems that may lead to serious costs down the line. While some Canadians may think doing a simple walkthrough is enough, professional home inspectors are trained to spot things average individuals may fail to notice.
Investing in a home inspection is a smart decision, and something every homebuyer should do.