Home buyers get help from Family

According to a recent survey over over 50% of First time buyers rely on Family help to buy a home.  In fact 6 out of ever 10 home buyers who live in BC and Ontario had help from family.

Why is this?  The help can come in 2 ways

Buyers who have saved their minimum down payment (5% on first $500,000 and 10% on balance) only to find they don't have enough income to "debt service" (income needed to support current debts and new mortgage payment) thus requiring a CO-Signer.  Co-signers are now required by even seasoned buyers due to changes to the government regulated borrowing qualification.  Often a Co-signer is a way to help borrowers without a financial obligation.

       Why would a Co-signer be required?

• High student loan debt 
• Existing car loans 
• Recent changes to employment or new to self employment 
• Apprentice worker not yet making full wage and can't rely on future income

OR

Buyers have great income buy haven't been able to save the thousands of dollars needed to get into the market. 

• Just finished school 
• New position high pay job
• Most First time buyers expect over $40,000 in assistance, on average.
• Almost 1 in 4 millennial buyers (23%) expect $100,000+. It’s nice to have well-off parents.

Is Real Estate a good investment for new borrowers?

Personally I go back to my first experience buying a home.  

    

    Why did I buy?  

My parents said "you should buy a house, it is a good investment into your future". 

 

Being young and naive with my greatest financial goal being what kind of car would I buy, I did not realize the impact home ownership would bring.  I mean the mortgage payment is almost as much as my rent and now I have property taxes, utility bills and maintenance; how could this be better than renting, am I saving and $$$$?

I didn't realize the answer until I sold my first Townhouse and bought a single family home.  It was then I learned the value of "home appreciation" or "home equity".  Seems my parents. advice was actually very sound.  

                                            

 (**spoiler allert a $6500 investment.... 3 year later is worth $60,000)

You see, at the time I bought my townhouse for $130,000 with 5% down.... yes that was 1997 and the community I bought in was just starting to become a popular destination to live.  I sold that place and used the money we made on sale to buy a house.  I not only had the money I put down initially (peanuts) but I had the "appreciation" or the "equity" plus the $$$ I paid down on the mortgage.  The value of the property in 3 years had gone up $45,000.  In comparison to the initial investment of $6500 that's pretty huge amount.  

Personally with a growing family we could not have saved $60,000 for a down payment on a house.  It was then I realized how important getting into the market was.

    **FYI That same townhouse we bought in 1996 sold for $450,000 in 2018 .....21 years later.   

Another wise realtor once told me "the best time to get into the market is whenever you can".

I have had experience buying and selling on my own and helped thousands of people find home ownership themselves.  Sure the market goes up and goes down but in reality in the long run an investment in Real Estate is the best decision you can make.  

Some of you will argue that there is a good and a bad time to buy.  While I agree there are more favourable times to get into the market and some buyers will luck out in getting in at the "right time". 

    **my advice to buyers is buy something you are not going to grow out of short term.  

You do not want to buy something with the expectation you can sell and make money in a few short years.  For instance, if you are a buyer who is planning to grow in size, a 1 bed condo is likely not the best choice.  While the market may allow for this property to have "appreciated" enough for you to use the "equity" or the "sale proceeds" to sell and buy in the short term.   Being forced to sell because you have outgrown the size of the home could leave you in a situation where you are not walking away with funds for a down payment on a purchase of another property.  

If you are wanting to know exactly what you need to do to get into the Real Estate market I would love to tailor a scenario for you.  I take your short and long terms goals and assess whether you are ready to get into the market.  For those individuals who aren't quite ready, I can help you to set a goal so you will be able to get into the market.  

                                                                    

Whether you are a First Time buyer or you are a seasoned home buyer looking to sell property and buy something else, I would love to help.  Our pre approval application takes 5-10 minutes and will give me the basic information I need to get started on helping you set your home ownership goals.

https://harmonymortgage.ca/application-form/