Mortgage Advice - Tip #1
Coming up with a down
payment
For most new homebuyers, the most daunting
task is coming up with enough funds to use as a down payment
on their new home. While there is no easy answer to this
dilemma (other than winning the lottery!), there are a
number of ideas to make this goal quite achievable:
Monthly Savings Plan
The best way to come up with a down payment
for your new home is the “pay yourself first” concept. With
technology, it has never been to set up an monthly automatic
payment plan that takes money from your chequing account and
deposits it in a high interest savings account, money market
fund, or any other type of savings vehicle. You can set this
up through your local banker, over the phone, or even over
the internet for most financial institutions. Because the
savings are automatic, you’ll learn to do without the money
that you are “salting away”, and before you know it, you
will have your down payment!
RRSP Home Buyer’s Plan
If you are buying your first home, or you
haven’t owned and lived in a home as your principal
residence in the last 5 calendar years, you and your spouse
may be eligible to withdraw up to $20,000.00 from your RRSP
tax-free. You use this money as a down payment on your home,
and the government gives you 15 years to pay it back in
annual instalments. Feel free to contact us to see if this
program would apply to your own personal situation.
No Down Payment Mortgages
To remain competitive in the mortgage
marketplace, several financial institutions have come up
with some creative ways to allow you to purchase a home
without the funds necessary for a down payment. While this
might allow you to enter into home-ownership faster than you
might have been able to in the past, it is important to
determine if your income would be sufficient to cover the
mortgage on the home that you’re looking to purchase (see
the How Much
Mortgage Can I afford? calculator).
