24 Mar Tips for Financing Your Down Payment
Purchasing a piece of property, commercial space or a home requires careful planning. Saving your money ahead of time will leave you in a much better financial position when it comes time for mortgage downpayment and approval. Your Kelowna Mortgage Broker has some exceptional advice.
The BC HOME Partnership Program
BC’s eligible first time homebuyers are taking advantage of the new BC Home Owner Mortgage and Equity Partnership aka the BC HOME Partnership Program. This offering provides repayable down payment assistant loans up to 5% of the purchase price. Contributing significantly to personal downpayment options, the goal of this program is to help BC’s first time homebuyers break into the market. In order to work successfully, candidates must ensure that they meet the minimum down payment requirement for an insured first mortgage loan by combining the amount of their personal downpayment with the BC HOME Partnership loan.
This loan is for a 25 year term and is interest and payment free for the first 5 years. Repayment is required after the first 5 years. It is vital to budget accurately in order to make this option feasible. Your Kelowna Mortgage Broker can help you crunch the numbers and see if this program is right for you.
Eligibility Requirements for the BC HOME Partnership Loan:
Each individual who will be on the property title must fall within these guidelines:
- First time homebuyer who has never owned property anywhere in the world or received any first time homebuyers’ refund or exemption
- Total purchase price of the home is $750K or less
- Combined gross household income of borrowers cannot exceed $150K
- Home must be the principal residence of for first 5 years
- Meet eligibility requirements for a high ratio insured first mortgage
Borrowers additionally must prove they are a Canadian citizen or permanent resident for the past 5 years and have lived in British Columbia for the past 12 months. Recreational, seasonal and rental properties are not eligible for the BC HOME Partnership program. Semi-detached and detached homes, condominiums, row houses and town homes are all eligible.
Additional Tips for Financing Your Downpayment
The following tips are great for everyone to consider whether you are eligible for the BC HOME Partnership Program or not:
Pay Off Your Credit Cards
Having multiple credit cards carrying balances is detrimental to your credit rating and your financial future. It is wise to pay off debts that have the highest interest rate first. Enjoy the new freedom you will have once this cloud over your head is taken care of. Multiple credit cards cause more grief than convenience. Consider choosing one card once everything is paid off. Phone the credit card company to apply for their low interest credit card.
If you have the luxury of receiving a monetary gift from family or friends to use towards your downpayment; consider yourself fortunate! Many families put money aside for their child’s future and this option may significantly help you increase your down payment option. Some parents open up special savings accounts for their children when they are born separate from education savings. These dedicated funds are often used toward first time property purchases or graduation gifts.
Each borrower is allowed to withdraw up to $25,000 from RRSP’s to be used towards their downpayment. This is only a possibility for funds that have been in the account for a minimum of 3 months or 90 days. These funds must be paid back within 15 years and often repayment commences with tax season.
Creating a Budget
Keeping track of money coming in and out is essential to determining where your money is going. Making simple adjustments such as packing your lunch and limiting suppers out to appetizers for awhile or skipping eating out altogether can save you loads of money. Assess your closet and see if you really need that next pair of shoes or the latest fashion. Being frugal can dramatically increase your savings. Even purchasing your favourite coffee to go a few times a week adds up ridiculously. Once you start monitoring your spending you will be able to enjoy treats less frequently while your bank account grows and your debt diminishes.
Ensuring your credit rating is in great standing provides you with much better options when it comes to your borrowing funds. Those who have decent incomes often have funds available on a line of credit that they may be able to access.
Selling Unnecessary Items
Are you riding your skidoo as often as you envisioned? Do you really require two cars? While having that boat or quad is nice, it may be time to seriously evaluate your needs vs. wants. Definitely keep the items that you enjoy and make time to use but consider selling off that dusty dirt bike and purchasing one again in the future if you are really only using it a couple of weekends a year. Unworn gold jewellery or unsightly heirlooms that you are not going to get re-vamped by a goldsmith might be another source of potential money. Keep tabs on your sentimental items for sure. However, once you add up all of those broken gold chains, bent bangles and missing earrings, you might be sitting on some potential income simply from cleaning out your jewellery box!
Assessing Your Current Rental Situation
If you are in a two bedroom rental at the moment but one room is simply being used as storage; consider downsizing or getting a roommate. If you can split your current rent now, you will be able to save significantly faster for your downpayment. Small sacrifices can lead to impressive gains sooner than later.
Your Kelowna Mortgage Broker Provides the Best Borrowing Options
Our dedicated and professional team has the experience and the knowledge to help you secure the best rates and mortgage products available; at no cost to you! We look forward to helping you settle into your future!
JOHN ANTLE MORTGAGES – KELOWNA’S MORTGAGE SPECIALIST
We specialise in offering mortgage solutions that go above and ‘beyond the bank’. This means we are able to provide flexible solutions at great rates, often better than what traditional banks have to offer. Working with a mortgage broker can open up your options, allow for potentially greater solutions for your situation. We work with a variety clients including first-time buyers, those looking to transition from renting to owning or renewing a mortgage, self-employed business people, as well as investors in rental and/or vacation properties.