AYN Advice

Dreaming of buying a home?

Dreaming of buying a home but don’t think you have the wherewithal?
Well, you’re not alone. Many people continue to live in rented accommodation because they believe that they can’t afford their own home, with lack of a deposit being the main deterrent. But with interest rates at such a low level the cost differences between renting and owning your own home may be negligible.

So how can you do it?
Well, surprising as it sounds, with help from the government – in the shape of The Home Buyers Plan and Mortgage Loan Insurance.

The Home Buyers Plan is a government program that allows first-time buyers to withdraw up to $20,000 from an RRSP, free of tax, for use as a down payment on the purchase of a home. In order to qualify, you (and/or your partner) must not have owned a home in Quebec in the last five years and you must have entered into a written contract to purchase before you can withdraw the funds.

Mortgage Loan Insurance allows a purchaser to buy a home with as little as 5% equity, provided that the loan is insured by either The Canada Housing & Mortgage Corporation (CMCH) or GE Capital. The premium is a percentage of the mortgage loan and guarantees payment of the mortgage in the event of default.

There are other options too, like the City of Montreal’s “Home Ownership” financial assistance program and cash-back mortgages. It’s even possible to take advantage of the Home Buyers Plan without having an RRSP! But don’t forget that you still have to qualify for a home loan, and the key to that is to get your financial affairs in order as soon as possible.

So pay off those credit card balances and make sure that your credit is shipshape so that you can take advantage of current low interest rates. Then with a pre-approved low interest mortgage commitment in your pocket – you can go shopping!