If you want to buy a home in Richmond Hill, Toronto, Oshawa … anywhere in Ontario, you obviously need a mortgage and a down payment, unless you have the total amount cash-ready. The question is “do you have enough money for a down payment”? And the most often the answer is “no, we don’t”. If it is the case, don’t despair. With some creative strategies from an experienced mortgage broker, you can probably come up with more cash than you think.
Let’s begin from the beginning.
Save money for a down payment to get a good mortgage
More likely, it’s the first thing that you think about. If you start saving a little bit of money every month, in a year you would be surprised … HOW LITTLE you’ve accumulated. Have not expected such a non-traditional ending of the famous phrase? However, it’s true. The advice to put aside 5% of your budget every month is the most non-workable idea from the list of non-workable ideas. Just calculate how much it would be. Does the sum make you enthusiastic?
Moreover, for that year the housing prices got higher, so the down payment did. Will you ever catch up with the rising costs?! It’s just a rhetorical question.
What to do then? Save much more! It’s a paradox but it’s a fact. How to do it? Maybe work harder for a year or two: find part-time job or improve your qualifications and get better paid position? You can quit later.
Cut off your non-essential spending to accumulate more money for a down payment to get a good mortgage
Your friends and relatives will understand if for a certain period of time you cut off your dining out. Your family members will understand, too. Make saving for a house fun. Chart your progress on paper and post it on the wall to remind yourself of your goal.
Ask for help from your parents, relatives, friends, your church, synagogue or other nonprofit organization
If they can’t give or loan any money, perhaps they’ll agree to co-sign the mortgage.
Use RRSPs (Registered Retirement Savings Plans) for a down payment to get a good mortgage
It is a good way to guarantee your financial future and enjoy tax benefits today. You can use RRSPs to buy your dream home. The prevailing plan for Home Buyers in Canada allows them to withdraw up to $20,000 from RRSP for paying against purchasing a home. This amount will be considered as a loan and you must have to pay it off within 15 years from the year of withdrawal.
Use a Tax-Free Saving Account (TFSA) to accumulate more money for a down payment to get a good mortgage
The Tax-Free Savings Account is an account that provides tax benefits for saving. Contributions to a TFSA are not deductible for income tax purposes. Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn.
Cash in your life-insurance policy
If you have “permanent”, “universal” or “whole life” life insurance policy (not “term” insurance plan) that grow in value as you pay into them. Talk to your insurance broker to learn about your options.
Ask your employer for help with your down payment
To keep valued employees in their jobs and closer to work, some companies have special programs to provide employees with down-payment assistance. Check with your boss or with your human-resources department.
Offer your services, products or expertise to the seller in lieu of a down payment
It could be auto services if you’re a mechanic, artwork if you’re an artist, legal work if you’re a lawyer, dental work if you’re a dentist… Be creative