Four Ways To Help You Find That Down Payment

Finding that down payment for your first home can be downright painful and sometimes it feels like you are not getting any further ahead. Michael Beatch sits down with TMG Mortgage Specialists, Atif Muhammad & Ryean Campbell to see if there are other alternatives that you may not have considered before.

Saving Up The Old Traditional Way. Though this may be the most time consuming or frustrating way to get your down payment, it is also the option that presents the least amount of risk. As Ryean Campbell suggests, creating a saving budget and plan it out over a period of year or two so you can visually see that homeownership is actually attainable.

Let’s take this scenario. You are buying your first home at $250,000, your minimum down payment of 5% = $12,500. If you break that down payment into a year, you would need to save $1042/month. Or, you could break it down into three years so you would need to save $347/month, which seems a little more realistic. So what are you going to do to save that money up? It will take some sacrificing, sticking to a plan, and perhaps generating more income. Some suggestions are to make some small but noticeable changes like brown bagging those lunches or ease up on your online shopping binges. You’d be surprised what you can scrape together too, just by selling used items, or picking up an extra shift.

Receiving Your Down Payment As A Gift. This alternative option of obtaining a down payment is on the significant rise. In fact, getting a down payment through a gift has doubled since 2000 according to the Mortgage Professionals of Canada. Most lenders will accept a gift from a family member if they provide a letter stating it is a true gift, not a loan, signed by the donor. Atif Muhammad has also mentioned that some lenders will even now consider a close friend or extended family as well if your parents aren’t flush with cash. This method does come with some crucial scenarios to consider if you are thegifter” so it’s best to talk to a professional to weigh out the pros and cons.

Borrow Your Down Payment Through A Line of Credit. If you have excellent credit and a high income compared to what you’re borrowing, you might qualify to borrow your down payment through your line of credit. Keep in mind, your lender will also need to use this in your debt service ratios.

Withdrawing Your Down Payment From Your RRSP. What is known as the Home Buyer’s Plan, a first time home buyer or someone who has not owned a home in the last five years can take an early withdrawal from their RRSP without getting taxed. Currently, you can pull up to a maximum of $25,000 to buy or build. This withdrawal must be repaid within the 15 years.

It is always critical to get all the facts and investigate which avenues work best for your financial picture and future goals.

Michael Beatch – JC Realty Regina – mike@jcrealty.com

Atif Muhammad – TMG – atif@mortgagegroup.com

Ryean Campbell – TMG – ryean@tmgregina.com

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