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Saturday, September 3rd, 2016

Can Vancouver Home Mortgages Still be Obtained with Low Down Payments? – Ask a Vancouver Mortgage Broker

Vancouver Mortgage BrokerCan Vancouver Home Mortgages Still be Obtained with Low Down Payments? – Ask a Vancouver Mortgage Broker

The answer is yes. Vancouver home mortgages can still be found even if you don’t have much in the way of savings for a down payment.

It’s a lot tougher than it was just a few years ago but it can still be done. Despite that the Feds eliminated the CMHC’s ability to provide 100% financing in 2008, along with barring lenders from offering cash back for down payments is 2012, those who don’t have much in the way of savings can still strategize to buy a home or condo if they are determined to do so.

If you’re not considered one of those who is well off enough to handily pay for a mortgage payment, and are only lacking the down payment, then this would most likely be a relatively risk free investment. If you’re not a big wage earner, then the risks of assuming a mortgage, if you can find a lender willing to approve your application, the risk rises substantially, especially if prices fall or interest rates rise.

The group which largely figure into this group are young people. The average price for a home in Canada stands at $356,687 while almost 25% of renters have less than $5000 which they have saved up and plan to use for a down payment. Since you need at least 5% as a minimal down payment which works to about $17,834 using the average price, what can you do to make up the difference?

There are several strategies that potential home buyers can look to when trying to bridge the gap to make the minimal down payment, but take heed, then can be additional risk involved.

Use other credit sources

Can you borrow the difference? In some instance you might be able to do that so long as the lender is not a bank or a federally licensed trust company because this has been prohibited by the Feds.

Other credit sources that can be considered are using such avenues as accessing a line of credit from your bank, or even using your credit cards, but you better be very prepared to be budgeted to pay off the high interest rates the credit card companies charge. Also, some lenders will decline your application outright if you try using the credit card strategy.

The other disadvantage is that you’re more likely to be paying higher interest rates for a mortgage.

Where to Access a Cash-Back Down Payment for a Mortgage?

You can still find a lender who will give you a cash back down payment for a mortgage so long as that particular lender doesn’t fall under federal regulations. This eliminates the major banks and many trust companies from the mix of possibilities, but some still exist.

Remember though, you will still have to be able to pay for the closing costs which they won’t include. Closing cots can be as high as 2% of the value of the property you want to buy! Also, be prepared to pay higher interest rates even if you do find a lender who will give you a cash-back down payment.

Using a Gift

If you have a family member who is willing to give you the money as a gift to make up the difference you need for a down payment, most lenders will be relatively lenient. You will have to affirm this in writing and this includes the relative who gave you the money.

Using a Home Buyers Plan (HGP)

If you have an RRSP you can borrow up to $25,000 towards what you have saved (you must have already accumulated the amount you intend to borrow in your RRSP plan). The drawback is that you will have to begin to repay this amount in the second year after you have received the funds and must repay the entire amount in 15 annual instalments.

There are also special government and lender programs which will provide assistance to people who make low or moderate wages, and you can be certain that lenders look at these folks with very close scrutiny.

Whatever strategy you take in finding what you need for a down payment, Vancouver home mortgages can still be found, but whatever approach you take involves added risk.

 

 

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