Budgeting, saving and investing for a brighter financial future

Newlywed home-buying mistakes

By Deanne Gage,

Comments (4)

These days, getting hitched and buying a home seem to go hand in hand. But if you want your wedded bliss to last, avoid these three classic mistakes.

Newlywed home-buying mistakes Top three mistakes newlyweds make in their real estate purchases:

1. Focusing on the interest rate

Who can resist an ad that promises you’ll only pay 2.99% over five years for a fixed-rate mortgage? Very few, it seems. But the lowest interest rate doesn’t necessarily mean the best mortgage for your situation, says Angela Calla, an accredited mortgage professional with Dominion Lending Centres in Vancouver. She says such a mortgage likely has restrictions and penalties. Younger couples may need a more flexible mortgage — one that allows them to pay more when they have more and less when a spouse is on maternity leave or facing job loss, for instance.

While the payments required to carry a hefty mortgage are lower than, say, a decade ago, Calla says the strategy should be to repay the debt as quickly as possible. That means paying more money towards the mortgage than you technically need to. This strategy will pay off greatly when interest rates return to more normal levels. “Today’s interest rates are a gift and young couples have a great opportunity to pay off a significant part of their mortgage,” she adds.

But are they doing this? By and large, the answer is no. Many newlyweds tend to lack an overall plan for paying off the mortgage, notes David Field, a financial advisor with WSC Insurance Group in Oakville, Ont.

2. Not talking about their finances

Picture it: A young couple goes out for a Sunday drive and spots a new housing development in a trendy area. They see the open house signs and decide to take a quick look, since they’re in the neighbourhood anyway. Presto! They’ve found their dream starter home. Calla hears a version of this scenario more often than she’d like. The problem is, couples haven’t run the numbers ahead of time. “A lot of times, they don’t take the time to get preapproved for a mortgage before looking. They don’t even understand about each other’s credit situation,” she says. “One of them may not be in a financial position to even purchase a home. That can put a damper on their plans moving forward.”

3. Not factoring in other expenses

Young couples definitely know the amounts of their mortgage payments for the next three to five years. But when Field asks his newlywed clients about their property taxes, home insurance policy premiums and how much they are setting aside for emergencies, details get scarce. Many couples’ budgets are more mortgage-heavy than they should be. But taxes and insurance can rise significantly each year, and that translates into a lack of cash flow.

The lesson here? Make sure you are saving properly for retirement and emergencies, then see how comfortably your mortgage, utilities and property taxes fit into what’s left over. “If your cash flow is too tight, if something happens like losing your job or having a new baby, you are really constrained,” says Field. “A new marriage has its ups and downs as it is; adding money problems to the mix really affects the marriage.”

Newlyweds Get more bright ideas for starting life together right.

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Guidelines to Purchase a Home for Newly Weds | Properties Outline on

[…] Prior to buy a new home, the newly married couples have to be properly calculative regarding their budgets and estimates. One silly step can reward you with the curse of foreclosure of your newly decorated place of togetherness as the mortgage for newly-wedsinclude many tough challenges and they are quite prone to commit dangerous mistakes. […]

Bill McCollam on

On the first point (get a flexible mortgage) – can’t agree more. We had a very flexible mortgage that allowed us to pretty well pay off principal any time we had spare cash (year end bonus, parental gifts etc…). I was also pretty handy with spreadsheets and created one to model our mortgage – so we could ‘see’ what the effect would be of any early payment. Together – this was very motivational. The spreadsheet made it real. We could see that putting 50% of the bonus against the mortgage would save us months and years of payments.

Justin on

I think a big issue is newly weds rush into “buying” a place. I think its best to rent something for a year to give the couple time to figure out what they want in a home. I lived in 5 places whereas my girlfriend only lived in 1(other than her home). One year in a rental can give a couple a lot of time to go house shopping and in the end should get them a home that they enjoy more.

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