What should you do – Rent or Own Home?
Do you have insufficient down payment?
You’re not alone. Anything less than 20% down payment is considered insufficient. Canadian law prohibits all federally regulated loan institutions from extending home finance without the minimum 20% down payment.
Are there options for you? Yes, in fact Two.
Does that mean You can get a home now?
Absolutely! In fact, with the second option you may even come out further ahead.Let’s say you want to buy a $500,000 home. With less than the 20% down payment, you have two choices.
A. The rent and save option.
In this scenario, lets say presently you have $40,000 in your total savings and you decide to save $800 a month until you have the (20%) $100,000 down payment, which should only take you about 6 years. Of course, by now you have been renting an apartment and have paid out, and lost, about $108,800. In the meantime, the home you want to buy has appreciated in value and will likely cost you north of $700,000 , which will, by the way, now take $140,000 as a down payment. It’s a cycle that will never ends. You keep running after a moving target and you will pay for the ride.
B. Low down mortgage insurance option
If you have at least 5% ($ 25,000) to put down closing cost and qualify mortgage stress test, you may qualify for High Ratio Mortgage Insurance. In this option, you pay a small insurance rate premium to your bank and move in to your home quicker.
Which makes the most sense to you?
Option A or B?
In an attempt to make Canadians aware of their home ownership choices, Mortgage Delivery Guy has launched a People Awareness Campaign. You are invited for a FREE, NO OBLIGATION Mortgage Strategy Session to discover more about your options to rent or own home.
Learn how Mississauga Mortgage Broker can guide you and help you become a proud home owner quickly.
F.A.Q.
FIRST TIME HOME BUYER PROGRAM
This federal government program aka Home Buyers Plan (HBP) allow first time home buyers to withdraw RRSP funds up to $25,000 once with out any income tax on it.
If both you and your spouse/ partner qualifies for this federal government program, you can each borrow up to $25,000.
As long as you or your partner have not owned a primary residence within last 5 years and you are buying this property to live in you may be qualified for home buyers plan (HBP).
YES, you have to pay the rrsp withdrawn under the home buyers plan as a first time home buyer.
As per the plan all first time home buyers should start paying the rrsp loan back from year two onwards.
In general 1/15th of the borrowed rrsp funds under home buyers plan should be paid off every year. Any unpaid amount will be taxed in year 15.
If you buying a primary residnece in Ontario you may qualify for a Land Transfer Tax rebate from provicial government. You may receive back up to $4,000 in taxes you paid when buying your first home in Ontario.
Yes Indeed!
If you are ready to buy your first home in Ontario Canada, You should speak to a mortgage expert who will take time to sit with you, evaluate your situation in detail, gather income and down payment documents and is willing to evaluate your credit details.
Being pre approved has become critical for all first time home buyers since Jan 01, 2018 when mortgage stress test was implemented. Everyone who has purchased a home in past or are first time home buyers has to pass the mortgage stress test.