How does the FREE down payment mortgage work?
The lender would provide you with the 5% required to pay the down payment if you qualify.
Why would the bank give me a FREE down payment? What’s the catch?
The interest rate on the mortgage is not discounted as it would be if you had your own down payment. The rate that you would receive would be the 5 year posted rate which is still very reasonable considering you don’t need any money for a down payment. Just four years ago, the 5 year discounted rate for fixed mortgages was around 5.79% where consumers needed to provide the 5% down from their own pocket. The ten year average discounted rate prior to the great recession was 5.35% and twenty year average is 5.855! At this time, the FREE down mortgage is at *5.29% with the lender providing you with the down payment! Not a bad deal right?
Isn’t it better if I have a down payment?
While it is true that you would receive a better interest rate, we recognize it is often very difficult to save the minimum 5% down that would normally be required. For example, on a purchase of $280,000 home, you would need to come up with $14,000 for the down payment plus 1.5% for closing costs so that would be a total of $18,200. Coming up with that kind of money can be especially challenging for first time home buyers just starting out. For many people, the FREE down payment is a great option. Here are some of the advantages of taking the FREE down payment mortgage:
Purchase in a buyer’s market now. If you wait until you have the 5% saved, there is an excellent chance that the market will be very different and you may have less buying power. Why wait for housing prices and interest rates to climb when you can buy now?
You can save your cash for other debt obligations. The interest rate on your mortgage is likely going to be significantly lower than on your unsecured debts such as credit cards. Therefore, if you have other debts besides your mortgage, as most people do, then it may make more sense to direct your funds to paying those down first.
Keep your RRSPs where they are. Under the Home Buyer’s Plan, you can withdraw up to $25,000 in RRSPs for your down payment on your first home tax-free (as long as they are paid back within 15 years). However, it doesn’t mean that it’s the best option. You may prefer to leave them alone, especially in a down market.
Keep your savings for a rainy day. It’s a good idea to have some money socked away for unexpected events such as a temporary job loss or a broken furnace. That way, you won’t have to rely on your credit cards in case something unforeseen happens that doesn’t fit the budget.
Buy now and gain equity in your home. It takes most people at least a few years to save their down payment for a home. In that time, you will most likely have gained significant equity in your home that may offset the cost of the higher interest rate. Start building your net worth instead of your land lord’s right now! You’ll be glad you did.
How do I qualify?
Firstly, the lender looks for decent income stability. That means having worked full time for the same employer for at least 3 months. If you are self-employed we would use your 2 year average of the income that you reported on your income tax return. You also need to have good established credit. Generally, the mortgage amount that you would qualify for is calculated using all of your monthly debt obligations and property taxes, heat, and mortgage payments. These should represent no more than 42% of your gross monthly income. You can also apply jointly with your spouse using both incomes to qualify. I can help you determine if you qualify since these are only general guidelines. Just e-mail me at tgrozelle@regionalmortgage.ca . You may also contact me directly at 403-392-5808. I would be happy to help you get pre-approved for a FREE down mortgage so that you can shop with the confidence of knowing your mortgage is secured.
I also have other mortgage options that may better suit your unique situation. Lets talk!
*rates subject to change without notice.
If you would like to find out if a zero down mortgage is a viable option for you, please call me for your free consultation, or fill out the contact form on the home page. We may be able to get you into that home of your dreams sooner than you think!
The lender would provide you with the 5% required to pay the down payment if you qualify.
Why would the bank give me a FREE down payment? What’s the catch?
The interest rate on the mortgage is not discounted as it would be if you had your own down payment. The rate that you would receive would be the 5 year posted rate which is still very reasonable considering you don’t need any money for a down payment. Just four years ago, the 5 year discounted rate for fixed mortgages was around 5.79% where consumers needed to provide the 5% down from their own pocket. The ten year average discounted rate prior to the great recession was 5.35% and twenty year average is 5.855! At this time, the FREE down mortgage is at *5.29% with the lender providing you with the down payment! Not a bad deal right?
Isn’t it better if I have a down payment?
While it is true that you would receive a better interest rate, we recognize it is often very difficult to save the minimum 5% down that would normally be required. For example, on a purchase of $280,000 home, you would need to come up with $14,000 for the down payment plus 1.5% for closing costs so that would be a total of $18,200. Coming up with that kind of money can be especially challenging for first time home buyers just starting out. For many people, the FREE down payment is a great option. Here are some of the advantages of taking the FREE down payment mortgage:
Purchase in a buyer’s market now. If you wait until you have the 5% saved, there is an excellent chance that the market will be very different and you may have less buying power. Why wait for housing prices and interest rates to climb when you can buy now?
You can save your cash for other debt obligations. The interest rate on your mortgage is likely going to be significantly lower than on your unsecured debts such as credit cards. Therefore, if you have other debts besides your mortgage, as most people do, then it may make more sense to direct your funds to paying those down first.
Keep your RRSPs where they are. Under the Home Buyer’s Plan, you can withdraw up to $25,000 in RRSPs for your down payment on your first home tax-free (as long as they are paid back within 15 years). However, it doesn’t mean that it’s the best option. You may prefer to leave them alone, especially in a down market.
Keep your savings for a rainy day. It’s a good idea to have some money socked away for unexpected events such as a temporary job loss or a broken furnace. That way, you won’t have to rely on your credit cards in case something unforeseen happens that doesn’t fit the budget.
Buy now and gain equity in your home. It takes most people at least a few years to save their down payment for a home. In that time, you will most likely have gained significant equity in your home that may offset the cost of the higher interest rate. Start building your net worth instead of your land lord’s right now! You’ll be glad you did.
How do I qualify?
Firstly, the lender looks for decent income stability. That means having worked full time for the same employer for at least 3 months. If you are self-employed we would use your 2 year average of the income that you reported on your income tax return. You also need to have good established credit. Generally, the mortgage amount that you would qualify for is calculated using all of your monthly debt obligations and property taxes, heat, and mortgage payments. These should represent no more than 42% of your gross monthly income. You can also apply jointly with your spouse using both incomes to qualify. I can help you determine if you qualify since these are only general guidelines. Just e-mail me at tgrozelle@regionalmortgage.ca . You may also contact me directly at 403-392-5808. I would be happy to help you get pre-approved for a FREE down mortgage so that you can shop with the confidence of knowing your mortgage is secured.
I also have other mortgage options that may better suit your unique situation. Lets talk!
*rates subject to change without notice.
If you would like to find out if a zero down mortgage is a viable option for you, please call me for your free consultation, or fill out the contact form on the home page. We may be able to get you into that home of your dreams sooner than you think!
