Get your down payment prepared
January 20, 2010 3:48 pm Credit, Employed Persons, First Time Home Buyer, Pre ApprovalIn a previous blog post I ran through the steps that most people take to get their first property. One of the steps that I had written I didn’t have a previous blog post about – Get your down payment prepared.
The down payment is a critical part to getting a mortgage on a property. It determines how much equity you will have in the property after you purchase it. The more equity you have the less risk the lender and insurer will see in your file.
Down payments can come from many different resources:
- Personal savings – This is the money that you have squirreled away for years in a savings account. If it is not in a bank account and you intend to use it put it in a savings account today.
- RRSP – As you may know the Government of Canada has a First Time Home Buyers Program that allows people to take money out of their RRSPs tax free as long as they promise to repay it in a certain time. Check out the following link to the Government of Canada’s website that explains the program. Link
- Gift from an immediate family member – Just like it sounds your parents or your sibling gives you all or a piece of the down payment.
- Borrow the funds for the down payment - This method requires that you use a good mortgage broker to show you if this option will work for you. Depending on the lender there can be a maximum that you can borrow and there maybe other terms in the mortgage that you will need to be made aware of.
There are a couple more options available to you please call to find out more.
Down payments are very important and the lender has some specific needs in proving where the down payment comes from. If you have any questions please contact me and I will answer them.
