That’s right! We’re slowing headed into another buying season in Quebec.\u00a0Many Quebecers and Canadians alike are contemplating the sale of their\u00a0property or perhaps that first purchase. This blog entry will focus on\u00a0the latter. First time home buyers are my favorite clients to\u00a0work with. Maybe it’s the former teacher within me that’s speaking.\u00a0There is so much information to share and areas to discuss. I often read\u00a0the Globe & Mail, and I think the timing of Robert McLister’s article on down payments is important to share and review.<\/p>\n
If you’re looking to buy a primary home, condo or duplex for yourself\u00a0then you will still need a minimum of 5% down. So if you are looking to\u00a0make a purchase, where can down payment originate from? Here is a down\u00a0payment quick snapshot:<\/p>\n
1. Many people like to tap into their RRSPs with the Home Buyer’s Plan (HBP).\u00a0As a first time buyer you are permitted to use up to $25,000 per\u00a0person. You have a 2 year grace period upon which your 3rd year you will\u00a0need to reimburse 1\/15 of your amount borrowed. Rob is very correct in\u00a0that bank’s do not take into account that new future debt as part of\u00a0their TDS calculation but also future debt planning. In other words\u00a0think twice about using your RRSPs as many Canadians are having trouble\u00a0repaying that loan.<\/p>\n
2. Some folks with generous family members (parents, brother, sister, grandparents) provide down payments gifts.\u00a0This remains fairly popular given the price of homes. Rob is right in\u00a0that banks try to ensure that the cash is genuinely a gift rather than a\u00a0loan. Something that is challenging to monitor after the purchase.<\/p>\n
3. In my opinion, building up your personal savings is still the best way to create\u00a0 down payment. Yes it is slow and old fashioned but less potential headaches later.<\/p>\n
4. If you are pressed to buy and are low on down payment in certain\u00a0circumstances banks will permit you to dip into your credit cards and\u00a0personal line(s) of credit for the missing down payment. The banks refer\u00a0to this as alternative sources of down payment. But Rob is\u00a0correct to highlight that the borrower(s) must be well qualified, i.e.\u00a0great credit, good job. Also, borrowing money towards your down payment\u00a0has to make financial sense given the your overall indebtedness\u00a0increases and that needs to be taken into account.<\/p>\n
Once upon a time prior to 2012 mortgage changes, many people took advantage of the “cash-back mortgage”\u00a0programs. In such cases, the bank would give your 5% down in exchange\u00a0for paying a much higher 5 year fixed rate. Usually the bank of Canada\u00a0posted rate. In essence, you self-finance the cash back. However the\u00a0penalties for such mortgages should you sell or refinance are costly as\u00a0you are expected to reimburse some or all of the original cash-back.\u00a0 If\u00a0you have such a mortgage, ride out your term before refinancing unless\u00a0the penalties aren’t an issue.<\/p>\n
I agree with Rob’s sentiment throughout his article in that buying a\u00a0home without having\u00a0 properly saved down payment and with having the\u00a0right financial\/mortgage plan is risky.<\/p>\n
Mark Balcar is a mortgage broker with North East Mortgages and editor of http:\/\/www.montrealmortgageblogger.com\/
\n_____________________________________
\nMcLister, Robert “Canadians can still buy a house without saving their pennie” Published
\nMonday, Jan. 07 2013, The Globe & Mail.<\/p>\n
http:\/\/www.theglobeandmail.com\/globe-investor\/personal-finance\/mortgages\/canadians-can-still-buy-a-house-without-saving-their-pennies\/article6970799\/<\/p>\n","protected":false},"excerpt":{"rendered":"
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That’s right! We’re slowing headed into another buying season in Quebec.\u00a0Many Quebecers and Canadians alike are contemplating the sale of their\u00a0property or perhaps that first purchase. This blog entry will focus on\u00a0the latter. First time home buyers are my favorite clients to\u00a0work with. Maybe it’s the former teacher within me that’s speaking.\u00a0There is so much information to share and areas to discuss. I often read\u00a0the Globe & Mail, and I think the timing of Robert McLister’s article on down payments is important to share and review. If you’re looking to buy a primary home, condo or duplex for yourself\u00a0then you…<\/p>\n","category_list":"Uncategorized","author_info":{"name":"Terry Kilakos","url":"https:\/\/www.nordest.ca\/blogue\/en\/author\/hdgyye73sy\/"},"comments_num":"0 comments","yoast_head":"\n