25 May The Reality Of Your Down Payment
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Today, the minimum down payment in Canada is 5% of the purchase price.
[Please routinely visit this blog for updates to Canadian minimum down payments]
With this small of a dollar amount, you are charged with a Mortgage insurance premium, protecting the Mortgage lender (not you) from any loss if you foreclose on your home.
This premium is about 3.15% of the Mortgage amount. This amount can be paid out directly OR capitalized (added) into your Mortgage.
If the thought of the Government getting any more of your AFTER TAX dollars, you do have an option.
SAVE.
Save up your down payment to equal 20% of the purchase price.
I think the reality of people saving for this kind of down payment is small. I think the average saving timeline, this may take years. And today, I think people want what they want, and they want it NOW.
So here is, what I think the reality of your down payment is ..
Look at your budget (income vs liabilites).
How much do you save a month?
[If you don’t like that amount, change one of the two.]
Now calculate how long it will take to save a 5% down payment. 10% down payment. 15, 20% (you get it).
Now ask yourself, “is putting off buying a house until I can avoid the Mortgage insurance premium what I want?”
If yes, save. If no, consider being happy there is an option for you to purchase a home with such a little down payment.
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Do you have about down payment? Send me an email chad@canadamortgagedirect.com
Thank you and talk soon!
Chad Moore
403-809-4557
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