Advice for Living Through These Uncertain Times
Jen & Cory • May 27, 2020
It only takes a quick trip to the grocery store to realize that life is VERY different than it was just a couple of months ago. COVID-19 has already left a permanent mark in modern human history. So as you continue life mid-pandemic, here's some good advice: don’t believe everything you read on the internet or see in the news.
As it relates to your personal financial situation.
As it relates to the Canadian economy.
As it relates to the value of your home.
As it relates to Canadian real estate values.
Because as the media continues to cover COVID-19, you can expect to see financial doomsday headlines; designed to grab your attention, get more outlandish as time goes on. The goal is to catch your eye with a wild headline so that you read an article (or watch a video) and are exposed to the advertisements contained within.
Media and news companies are in the business of selling advertisements, not providing you with accurate unbiased information.
The best way to grab your attention is with an attempt to instil fear or shock. One headline will read that house prices are expected to plummet, the next will claim mortgage defaults are on the rise by a billion per cent, while the next will provide incredible proof that house sales are expected to grind to a screeching halt and will never return to normal.
And although most of these stories contain *some* level of truth, rest assured that what may be true for the rest of Canada (or the US) is not necessarily true about your personal financial situation, your local economy, your local real estate, or your mortgage.
Don’t buy into the hype and get anxious about things you can’t control.
It might be best to just turn off the TV, put down the newspaper, and stop scrolling Facebook. Especially if you aren't thinking of making a move anytime soon anyway! But if your mortgage is up for renewal, if you're thinking of buying a new property, or if you're looking to make a change with your investments, then it's best to talk with local professional and seek their advice!
Be influenced by those who have your best interest in mind!
If you have any questions about your mortgage, please don’t hesitate to contact us anytime. We’d be more than happy to let you know exactly where you stand.
Recent Posts
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. This decision comes against a backdrop of significant global uncertainty — and for Canadian homeowners, buyers, and anyone with a mortgage coming up for renewal, here's what it means.
For most Canadians, the down payment is the biggest hurdle to homeownership. A down payment is the initial amount you contribute toward your property purchase, while the lender covers the rest through a mortgage. By law, Canadian lenders can only finance up to 95% of a property’s value, which means you’ll need at least 5% down to qualify. If you’re putting down less than 20%, your mortgage must be insured through one of Canada’s three default insurance providers— CMHC, Sagen (formerly Genworth), or Canada Guaranty . This insurance comes at a cost, but it can be rolled into your mortgage amount. The less you put down, the higher the premium. Since saving a down payment can feel overwhelming, it helps to know the different sources you can draw from. Here are the most common options available to Canadian homebuyers: 1. Savings & Personal Resources The most straightforward source is your own savings. Lenders will ask to see a 90-day history of the funds in your account. Any large deposits outside of regular payroll must be explained with documentation—such as the sale of a vehicle or a transfer from an investment account. This requirement isn’t just red tape; it’s part of Canada’s anti-money laundering rules. 2. Proceeds from the Sale of a Property If you’ve recently sold another home, you can use the proceeds as a down payment on your new purchase. Proof of the sale—such as the final statement of adjustments from your lawyer—will be required. 3. RRSP Home Buyers’ Plan (HBP) First-time buyers can withdraw up to $35,000 each (or $70,000 as a couple) from their RRSPs to put toward a down payment under the federal Home Buyers’ Plan . The funds are withdrawn tax-free, but they must be repaid over a 15-year period. This is a popular option for buyers who have been steadily contributing to their retirement savings. 4. Gifted Down Payment With today’s housing prices, many buyers turn to family for help. A parent or immediate family member can provide a gift that makes up part—or even all—of the required down payment. The lender will require a signed gift letter confirming that the money is a true gift (with no repayment expected) and proof that the funds have been deposited into your account. 5. Borrowed Down Payment In some cases, you may be able to borrow your down payment. This option is usually available only if you have strong credit and sufficient income. The payments on the borrowed funds are factored into your debt service ratios, so affordability is key. Lenders typically use 3% of the outstanding balance when calculating the additional payment. The Bottom Line A down payment doesn’t have to come from just one source—it can be a combination of savings, gifted funds, RRSPs, or other resources. What matters most is being able to show where the money came from and that it meets lender requirements. If you’d like to explore your options or learn how much you might qualify for, it’s never too early to start the conversation. Connect with us today—we’d be happy to help you create a plan and take the first steps toward homeownership.
