So – you are thinking about buying a house in Canada. In fact, you have been dreaming about getting a place to call your own your whole life. And once you finished college, found a job and a place to settle in – the reality kicks in. Buying a house in Canada is everything but simple and easy. It is hard and even more – a complex process. A process you’ll have to go through in order to buy your first property. However, many other young professionals did it, and so will you. And yes, we know that you are already starting to ask yourself – ‘’How can I ever save enough money for a down payment for a house in Canada?’’. That is why we are here today. To help you do it in the most efficient manner possible. So, let’s dive in!
Why do you need a down payment for a house in Canada?
Well, the answer is much simpler than you think. Planning on buying a house is simple. But, once the reality kicks in, you will suddenly come to realize that you will need a lot of money in order to do it. And the next thought that will come through your head is – taking out a mortgage to finance everything. Toronto might be a perfect choice for your family, but, you can’t just borrow money. Especially when we are talking about large sums of it. And as you already know – houses and (Canada) real estate, in general, are no joke. They are everything but a joke.
Yes, we are talking about large sums of cash. And that is the main reason loaners will ask you for a down payment. To ensure you can get it back over a period of time. A down payment gives your mortgage lender a sort of a reassurance you’ll be able to come up with your mortgage payments in full and on time.
Borrowing money
The first thing you can come up with is an idea. The idea of borrowing even more money. But, unfortunately, this option is not available for everybody. And that is why it is wise to think about this idea twice before making any final calls. Not every home loan allows using borrowed money for a down payment. And the reason is simple – you can’t borrow money to prove you have enough of it. However, borrowing money for a down payment is an option in some cases. Rare, but possible. In order use borrowed money towards a down payment, you’ll need to have an excellent credit score and (more than) good household income.
Withdrawing money from a personal savings account
Remember those times people told you to open your own savings account because you will need it at some point? Well, the time has come for you to use it. And if you have listened to your family and friend’s advice – you won’t have a problem now. Using your personal savings account towards a down payment is not only a great idea, but it is also an idea that is widely accepted in Canada. And in most parts of the world. Also, it is good to know that using your own money in this process will give your lender a signal that you do have enough money and that you are eligible for a mortgage. Some good news, finally? Yes!
Saving money as a lifestyle
You should not only save money once you need it. No. You should do it on an everyday basis. And when it comes to buying a property, moving and life after your relocation – it all does matter. Finding a reliable moving company can help you a lot. So, make sure you find one. A company such as High Level Movers Toronto – affordable, yet trustworthy.
A gift – lifesaver in these types of situations
Well, not all of us have opened our savings account. On time. Or ever. And even more of us haven’t saved enough. But, all out of the sudden – you need a house mortgage. Down payments are not affordable, nor easily obtained. But, even if you don’t have enough money on your hands (or in your savings account) – the cause is not lost yet. You can always borrow money from your family members. Or friends. In most cases – from parents.
Yes. This option exists, and not very surprisingly – many people use it as a lifesaver in these types of situations. So, if your parents (or another person you can trust and rely on) is willing to help you out, lenders will accept this money as a gift. But, it still needs to be a legal money exchange. Both you and a person willing to help you out will have to sign a gift letter (contract) that stipulates that money in question is really a gift, not a loan.
Retirement account
When the time for you to buy a house comes, and selling your old property and any other option fails – it is time for you to get creative. And you are not alone in this. Many people had to go through the same process. Some of them even over and over again. And one of them came up with an idea. The idea of getting money out of their retirement account.
The even better news is that – it is completely legal. Your RRSPs isn’t reserved only for your retirement and can come in more than handy in this kind of situations. So, if you have saved up some cash in an RRSP account – it is almost ready to use now. The problem is, the amount of money you’ll be able to use is limited. The amount varies, so make sure you contact your bank before calculating your budget all over again. On the other hand, the good news is that you won’t be taxed on this withdrawal. And – you have up to fifteen years to pay back the money taken for your down payment.
There are so many options in front of you, so make sure you pick the one that suits you the best. This way, you will avoid all the trouble and get the most for your money’s worth. And that was the main goal here! Good luck!