Why Your Down Payment Matters

familylendingMortgage Talk Canada

Is it actually that big of a deal?

Piggy Bank with savings messageAll lenders assume that you will put some money down on your home purchase. The minimum down payment in Canada is 5 % of the purchase price. The amount of insurance expenses charged is relative to your best mortgage rate and your down payment amount. So keep in mind, the more cash you are able to save and put towards your down payment, the lower your mortgage monthly payments are going to be.

Down Payment Due Diligence

This ends up being considerably crucial if your credit history is less than spotless. Some lenders will likely disregard previous credit blemishes, not confirm earnings and various other financial conditions, if you have 35 % to 40 % of the purchasing price available upfront as part of your down payment.

What you may not know about your down payment is that this equity goes to the banks in the unfavorable event of foreclosure. For this reason, the bigger the down payment the more protection the banks have. Make sure to have your down payment available at least 30 days prior to applying for a mortgage loan.

Ways to Accumulate a Down Payment

If you have already spoken with low mortgage rate lenders and they have notified you that your down payment is not quite enough, make it a top priority to find a way to save your money such as postponing a brand-new vehicle or a vacation.

If you have sufficient equity in your RRSP, you are able to get a loan from this investment account in order to help improve your down payment. Canadians are allowed to borrow as much as $25,000 from an RRSP. In addition, down payment funds can be borrowed from a secured line of credit or can be given from a family member.

Similar Posts:

Sharing is caring!