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It would be so easy to buy the house of your dreams if you didn’t need cash down. Whether you’re saving for your first mortgage at 5 per cent down, or an uninsured mortgage at 20 per cent down, that’s a whole lot of money for most of us to come up with.
Here are six ideas to start you thinking about where that money could come from:
Reach for your piggy bank more often than your wallet. Ok, it’s not too creative, but it works. Especially if you start saving early and have time on your side.
The Government of Canada has a Home Buyers’ Plan (HBP) that allows you to withdraw up to $25,000 from your registered retirement savings plan (RRSP) tax-free if you use it to buy or build your first home. You’ll have to repay this amount back to your RRSPs within 15 years, and there are some other conditions. Check out the Canada Revenue Agency’s Home Buyers’ Plan for more details.
Do you have stocks, bonds, or mutual funds that you could sell? Talk to your tax professional first to make sure you won’t have to pay more tax than you need to.
Do you have more cars than you need? Vacation vehicles such as snowmobiles, jet-skis, boats, or motorcycles that collect dust most of the year? A cottage you rarely use? They could represent a good chunk of change for you. Do you have whole life insurance that you no longer need? You may be able to cash that out as well.
It’s rarely a good idea to borrow from family and friends, but gifts, on the other hand, are always nice. Your mortgage provider may ask you to provide a signed letter stating that the funds are a gift and don’t need to be paid back.
Earn more, and put the extra money towards your down payment. You could look for a temporary part-time job, and you never know—maybe you’ll find weekend work doing something you love to do!
In most cases, you’ll have to show bank statements that prove you have the necessary money in your bank account for 90 days prior to your closing date. So take some time to think everything through and make sure your finances are in order before you jump into the home-buying process.
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