Buying a house with Mom and Dad? In competitive housing markets, this seemingly unconventional choice can be a smart strategy for attaining homeownership sooner. That said, any financial partnership requires planning. Avoid conflict by clarifying roles and formalizing financial agreements. Here are two common shared homeownership scenarios, along with tips for making a financial arrangement that works for everyone.
FAMILY HOMEOWNERSHIP SCENARIO NO. 1:
Housing your child during university
Why: Renting can be expensive. Some parents may prefer to buy a home for their child while they attend university or college. This option allows families to build their own equity, rather than pay a landlord rent for three to five years or more.
- Size & lifestyle: Choose a home that is appropriate for a single young adult, such as a turnkey condo or small bungalow.
- Future plans: What will happen once your child graduates? Will the property be sold? Will your child take over the mortgage payments? Discuss future plans openly to avoid unpleasant surprises.
- Written agreement: Use a written agreement to solidify co-ownership responsibilities and expectations, including who is financially responsible for specific homeownership expenses (i.e., mortgage, utilities, taxes and so on), what happens if payments are missed, and what happens if either party wishes to exit the financial partnership.
Ask your mortgage professional about… Genworth Canada’s Family Plan program. This program enables qualified buyers with excellent credit to assist an immediate family member with their home purchase. To qualify, your dependent must have good credit, even if they lack sufficient income to meet typical mortgage qualification standards. The home must meet certain quality criteria, and qualified buyers can make their purchase with as little as five per cent down.
FAMILY HOMEOWNERSHIP SCENARIO NO. 2:
Parents and adult children living together
Why: Forget fleeing the nest. Increasing numbers of adult children are buying a bigger nest with Mom and Dad (maybe even Nan and Gramps too!). According to the 2016 census, a whopping 403,810 households across Canada are multi-generational households with at least three generations of the same family under one roof. Whether you’re inspired by tradition, cost savings or convenience, shared homeownership can be a prudent and fulfilling decision.
- Size & lifestyle: Upfront, family members should be on the same page about living arrangements. Will this be a one-household home with shared living quarters? Or will the property be divided into suites, with each household residing in a self-contained unit?
- Future plans: Involve the whole family in discussions around shared homeownership and include adult siblings who are not buying in with you. Be frank about family assets and the future care needs of older relatives. Is there an expectation that you shoulder this responsibility due to proximity?
- Written agreement: As with any shared homeownership situation, clarify co-ownership responsibilities and expectations in a written agreement.
Ask your mortgage professional about… Genworth Canada’s Progress Advance program, which helps qualified homebuyers finance a custom-built home with as little as five per cent down. Dual master suites? A bachelor-size nanny suite? An approved home builder or contractor can create a house perfect for your multi-generational family’s needs.
Or, if you’d prefer to renovate a resale home, ask about Genworth Canada’s Purchase Plus Improvements (PPI) program, which can finance home improvements and combine them with your mortgage in one easy mortgage, also with as little as five per cent down. Check out our PPI calculator and guide at homeownership.ca/ppi.
Finally, if your family has immigrated to Canada within the last five years, consider Genworth Canada’s New to Canada program. Don’t let a lack of Canadian credit history derail your family’s homeownership dreams. The New to Canada program can help qualified borrowers who have full-time employment and a strong history of rent and utility payments in Canada buy their family home with as little as five per cent down.