3 Creative Options to Help You Afford a Real Estate Purchase

Dated: February 23 2022

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When it comes to purchasing a real estate property, as the saying goes, there is no time like the present.  One of my real estate mantras is “don’t look back”, as in “I should have purchased property in 1992”.  As for the future, the number of potential real estate buyers is predicted to increase in the GTA and associated areas of Ontario, while the number of properties for sale is currently not able to keep up to the demand.  This will most likely mean that property prices will increase.

So, how can you afford to purchase?

1.       The down payment sum required to purchase can be prohibitive.  These funds can come from a variety of sources, some of which may require taking on some additional debt.  In addition to your own savings, you may have the option of taking $35,000 from your RRSP’s under CRA’s Home Buyers’ Plan if you are a first-time home buyer.  The funds must be paid back within 15 years.

Another option is to borrow from a family member (or even better, a gift from the bank of Mom & Dad) if you are lucky enough to have family or friends with the funds available to help.  Said donors or lenders may not have the funds available in their bank account but may very well have enough equity in their home to enable them to withdraw funds in the form of an equity takeout as a line of credit, or a mortgage refinance, or even as a reverse mortgage.  Your mortgage lender or broker can provide you with an analysis of what is feasible for you, taking this potential loan into consideration.

2.    Co-purchase a home with family or friends – your combined down payment and income may make home ownership a reality.  If you feel some trepidation, rest assured that your lawyer draws up an agreement outlining guidelines and procedures to follow covering all situations that might arise.  For example – what is the exit strategy if one of you wishes to sell and the other(s) doesn’t?  There are many circumstances that can be prepared and compensated for.

This opportunity is being utilized in many different forms – for first-time buyers or those wanting to upgrade to a larger home, two families purchasing a property together, or downsizers creating a new living arrangement where they benefit from a financial perspective as well as having someone to shout out Jeopardy answers with.  The Golden Girls were ahead of their time in many ways.

The options range between a home divided into two or more separate units to living together as roommates and sharing common rooms like the kitchen.

3.       The third opportunity is to purchase an income property.  There can be a positive impact on your mortgage application – some lenders will take the proposed rental income into account.  Another advantage is the tax benefits - you can write off your tenants’ share of mortgage interest, property taxes, home insurance, utilities, and upgrades. 

Again, an income property can take many forms.  Generally speaking, the income comes from a separate unit in your home or on your property – a basement apartment, duplex (two more or less equal units) or triplex where you occupy one unit and rent out the other(s), or a laneway or garden suite located on your property.  Each option has its own advantages, disadvantages and costs associated with maintaining them.

If you are just starting out in the market, some of these options might work for you.  They are often a short-term living arrangement as you build equity to eventually afford a place of your own.  Or not.  The pandemic has taught us that community matters – we are healthier and happier when we have the company and support of others.  For more ideas or information, do not hesitate to contact me to work toward a creative solution.

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Deborah Fletcher

I have ALWAYS loved “nesting”! Growing up I couldn’t wait to do my own nesting – starting with my first apartment. Now, as a homeowner, I still continually go through open houses, admiring ho....

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