If this is the year you decide to get into the real estate market and make that first home purchase you may find it overwhelming at first. Before you can begin to explore what’s available in your price range and finding a Brampton Mortgage Broker, you need to first think about a suitable down payment and where to find it. It’s common for most Canadian homebuyers to purchase a home with the absolute minimum down payment. The amount you need down varies with each situation so you’ll want to be informed on how it’s calculated. Some questions you need to be prepared for are as follows:
Will You be Living in The Home? An owner occupied home requires 5% down when the purchase price is less than $500,000, homes priced between $500,000 and $999,000 will need to come up with 10% of the price. Any homes with a list price of a million dollars or more require a 20% down payment.
Mortgage Default Insurance can be avoided if you come up with a 20% down payment or this mandatory insurance is added to your mortgage principal.
Rental or Second Properties require a 20% down payment, there are some programs that only need 5% down but you will need mortgage default insurance, for rental properties it’s always a 20% down payment.
Not a Canadian Citizen? Permanent residents need to come up with a 5% down payment up to a purchase price of $500,000 and 10% if the property is $500,000 to $999,000. Non permanent residents need 5 to 10% depending on the insurer while non residents must come up with 35% and show the money comes from their own resources.
Where to Find That Down Payment
If you’re planning to purchase a rental or recreational property the best avenue is to refinance your existing home and tap into any equity you’ve built up. For first time buyers you can borrow up to $35,000 or $70,000 per couple from your RRSP’s and need a good repayment plan to repay it within 15 years. A financial gift is another option if you have someone to gift you some money and will need a form stating it doesn’t need to be repaid. Anyone fortunate to have an inheritance coming might find parents or grandparents open to giving them the money now to help with their down payment. There’s no better time to open a TFSA and start saving, you can then withdraw funds towards a down payment on your new home. The good news is that you can re-contribute without losing your TFSA limit!
Contact Rakhi Madan if you are looking for a mortgage broker in Brampton.