With mortgage rates at the lowest, it seems logical to own a home. Why pay rent when you could invest that money in your own home? The only problem is that you cannot just move into a house or condo and pay the mortgage payments to become the owner. One must first pay a substantial sum as a down payment to access the property. Here are some ways to get there faster.
The bare minimum
As house prices have been high for a decade, the amount of down payment is quite large. Under the general terms and conditions that apply to mortgage insurance, you must pay a 20% down payment to buy a home. If this amount is not available, you must purchase mortgage insurance from CMHC and still pay a minimum down payment equal to 5% of the cost of the property.. It is better to put more on the table. A deposit of only 5% requires a larger mortgage loan, which may compromise the ability to cover other costs associated with the purchase of the home, lawyers’ fees, taxes and other related expenses, not to mention any renovations and repairs. Unless you move into a new home, homeowners usually need to do some upgrades. Even buyers of new homes must plan to purchase items such as shelves, paint and lamps. The lower the deposit, the higher the mortgage insurance premiums. It is better to save as much as possible and start early.
The best approach to saving is to make a concerted effort. This can be done by automatic transfers from a cheque account to another account or to a dedicated fund. It is also necessary to ensure that the money is safe and accessible to the case for example or the stock market would decline at the time of purchase. A lack of funds could jeopardize any real estate transaction. Better be careful with his money. Many financial products are not very flexible, you must avoid those that could prevent from touching the money when you need them.
High Interest Savings Accounts: This type of account does not offer much interest at this time, less than 2%. Beware of management fees and the temptation to get your money out. It is also easy to get your money when you are ready to buy your home and there is no risk of loss. No need to invest much in this classic savings product, simply make sure to buy bonds that can be cashed at any time. One never knows when one will find the house of his dreams and need to make a deposit to buy it.
Money Markets: This type of product is generally fairly stable and flexible. Make sure it is possible to withdraw money at any time. The RRSP First-time buyers are permitted to withdraw up to $ 25,000.00 of RRSP-free tax under the Home Buyers’ Plan, provided they repay the amount in less than 15 years. This is a challenge for new owners.