Zero Down Mortgage

Majority of Canadian would like to own their home. That’s why for quite some time the idea of purchasing a home without a down payment was pretty existing. After events that happened south to our border in 2007 many reconsidered if zero down payment mortgages were financially sound decision. The answer, is both yes and no and heavily depends on home buyers financial situation and self motivation.

A zero down mortgage is not for EVERYONE, but for home buyers who can qualify for such a mortgage, a well-designed zero-down plan can be an incredible financial boost: allowing Canadians to own their homes faster, saving thousands in rent, and giving home buyers a jump start on building wealth and planning for retirement.

As a matter of fact: a true zero down payment mortgage products were never available in Canada. Additionally, the Canadian government has changed mortgage rules three times in less than three years and made it more difficult to enter the housing market. Nevertheless Canadians also remain prudent with their mortgage repayment management; according to Canadian banking industry, the percentage of mortgages in arrears currently sits at .38 of one percent. That combination – regulation, conservative lending and consumer attitude – have played a big role in protecting the Canadian housing market.

Keep in mind that the money currently going to your landlord could be helping you build home equity. On top of that we are in a time-limited window of opportunity of historically low mortgage rate. With proper mortgage planning you could lock in a great payment plan for five or even ten years instead of waiting and saving, only to find that rising interest rates are putting your dreams of home ownership out of reach.

Now let’s consider how can you get around saving that initial 5% down payment:

1. Borrowing the down payment through a loan or unsecured line of credit

2. Having the down payment gifted to you by a parent or other blood relative with a letter saying you are not required to pay the money back at any time

3. Creative use of tax laws that allow you to create down payment

Don’t forget that each one of these options requires proper approach and planning before starting your home search. As mortgage experts we can outline all of the details that you should be aware of with each option. For example, cash back mortgages have higher interest rates and if you pay out your mortgage before your term is up, you’ll be required to pay back a remaining amount of the down payment you received based on remaining mortgage term. If you borrow the down payment, the loan payment will be used in your qualifying ratios. And you’ll need to have funds set aside to cover your closing costs.

If your desire to learn how to build your downpayment faster, how to purchase now without waiting, or how to build your credit rating to qualify for a great rate when the time comes? If you’re in the “saving up” stage of preparing for home ownership, this is a great time to come in for mortgage advice. Let’s talk!