A zero-down mortgage is not for everyone – but for qualified homebuyers, a well-designed zero-down plan can be a tremendous financial boost: getting Canadians into their homes faster, saving potentially thousands in rent, and giving homebuyers a jump start on building wealth.
What
about the worry that the Canadian housing industry is following the same
catastrophic path as in the U.S.? Well, let’s take a clear-eyed look at why the
Canadian and U.S. situations are very different. The ability of our American
neighbours to tax-deduct the interest on their mortgage created millions of
heavily-leveraged homeowners. And their previously lax lending rules on
subprime and adjustable rate mortgages coaxed many U.S. homebuyers into homes
that were affordable for only the first few years, which ultimately led to the
U.S. housing crisis.
The problem
mortgage products were never available in Canada. Additionally, the Canadian
government has tightened mortgage rules three times in less than three years,
while lenders have become increasingly cautious. Canadians also remain prudent
with their financial management; according to Canadian banking industry
figures, the percentage of mortgages in arrears currently sits at a mere
.38 of one percent. That combination – regulation,
conservative lending and consumer attitude – have played a big role in protecting
the Canadian housing market.
Today,
buying a home with zero downpayment for the right candidate can still be a
financial breakthrough, and the beginning of a successful wealth journey. If
you have stable income, good credit, and the ability to comfortably manage your
monthly mortgage payment and ongoing housing expenses, then you could be a
candidate for a zero-down mortgage.
Consider that the money currently going to rent could be helping you build
home equity right now. And that we are in a time-limited window of opportunity
of historically low mortgage rates – meaning 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.
So
how can you get around saving that critical 5% downpayment: the minimum
required to qualify for an insured mortgage? We can review your options, which
include:
1.
Borrowing the downpayment through a loan or unsecured line of credit;
2. Securing
a “cash-back” mortgage that provides the cash upfront; or
3.
Having the downpayment 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.
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