Tag Archives: down payment

How couples can save for a downpayment and stop arguing about money

According to a poll by the Bank of Montreal, 68 percent of Canadian couples surveyed cited fighting over money as a top reason for divorce, ahead of infidelity. Buying a home together only raises the stakes — bank accounts are merged, couples are collectively preparing for the biggest purchase of their lives and are budgeting together to chip away at a downpayment.

Octavia Ramirez is the founder of Paper & Coin — a financial coaching company that helps Millennials reach their personal finance goals. “Money can be a huge stressor in relationships. So why not get ahead of the problem?” she says.

Photo: Paper and Coin 

The finance pro is uniquely qualified to help couples. Since getting married, Ramirez has never once fought about money with her husband. “Obviously, I enjoy finances but it’s taken years of practice to get here,” she tells Livabl.

It all comes down to communication and understanding your partner’s unique worldview — especially when it comes to money. Dr. Katelyn Gomes (Ph.D., C.Psych), a clinical psychologist with CBT Associates, echoes this: “We each have unique personal histories that define our values, rules, dislikes and assumptions for living in and viewing the world — including how we spend money, save money, even what’s important in the home you purchase.”

Octavia Ramirez and Dr. Katelyn Gomes spill their tips for communicating about finances and, in turn, making your partnership even stronger.

Photo: James Bombales

1. Work together as a team by joining your accounts

“I often see couples not working together as a team by splitting their expenses. This divides your efforts and can interfere with what you’re trying to accomplish,” Ramirez explains.

When it comes to buying a home, Ramirez makes a case for joining your bank accounts, “When my husband and I get paid, it all goes into the same checking account and we move the money accordingly. We don’t treat it as my money, your money. Consider that both of your incomes together are the grand total.”

When couples put their savings into separate accounts, they also diminish their returns. “Splitting your accounts is a democratic way of doing things, but you won’t get as much bang for your buck that way,” she says.

Ultimately, if you’re in a serious committed relationship, be in a serious committed relationship. “If you divide things based on your separate incomes, it gives the person who makes more a leg-up versus feeling like you’re equally respected in the relationship,” says Ramirez.

Ultimately, you will both be living in the house together. If one person makes considerably less, going 50/50 can potentially lead to selling yourself short — and building resentment long-term.

Photo: Paper and Coin

2. Agree on your collective goals, then make a transparent budget

Ramirez often hears her clients explain that they have budgets — in their head. “It’s important to have a shared document that communicates your budget and spending at a glance.”

Before putting numbers into a Google spreadsheet, agree on your short-term and long-term financial goals with your partner. Working towards homeownership? Start by determining the cost of the house you want to buy, then work backwards to see how much you will need to save each year to make it happen.

“Once you know how much you’ll have to save in the year ahead, go back month-by-month and see what areas of your budget can be cut or if you can increase your income to reach that goal,” explains Ramirez.

Even if it means passing on your yearly vacation and doing a staycation, instead.

Octavia and Will Ramirez. Photo: Paper and Coin

3. Have regular budget meetings with your partner

Once you’ve set your budget and are tracking your expenses and spending, set monthly or bi-monthly meetings to stay on track.

“Getting a downpayment together is a huge accomplishment. It’s a long-term process and there are occasionally going to be slip-ups in your savings efforts. It’s important to come back together regularly to remind yourself of your ‘why’. Maybe you didn’t reach your goal one month. Don’t dwell on it for too long, and instead decide together to get back on the saddle,” says Ramirez.

Dr. Katelyn Gomes explains, “We have this tendency to incorporate comments from our partners using faulty or unhelpful interpretations. These are known as cognitive distortion and it includes things like mindreading, jumping to conclusions, catastrophizing or thinking of the worst-case scenario. When we think our partners opinion, wants or needs don’t align with our lens it can lead to difficulties in communication, clashes or arguments.”

When you keep the lines of communication open over your spending habits, it creates an opportunity to have the necessary dialogue to avoid miscommunications or jumping to conclusions.

“Whether it’s contentious or not, just showing up to have that conversation is really important to keep couples on the same page,” explains Ramirez.

Photo: Paper and Coin

4. Save for an emergency fund

To avoid major money stress down the line, Ramirez recommends having an emergency fund in place: “Before you buy a house, prioritize saving three to six months of expenses in advance. If you break up or someone loses a job, you won’t risk going into extreme debt while you figure out your next move.”

5. Stay in the loop, even if you aren’t handling the finances

If you’re the one to handle the finances, Ramirez recommends letting your partner in on exactly what’s going on — whether it’s your insurance policy, the status of the car payments, how much interest you’re paying on the mortgage, or how much credit card debt each person has brought into the relationship.

“Because I enjoy finances, there’s a temptation to not keep my husband in the loop,” says Ramirez. “But even when I handle everything, I always debrief him after. He knows the passwords for the bank accounts and where things go, so he can take over at any point. Having everything on the table encourages you to trust each other.”

Source: Livabl.com –  

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Down Payment Assistance Programs Across Canada

Canadian down payment assistance programs help first-time home buyersSo many young people want to build home equity and get out from under their landlord’s thumb.

But they can’t. They don’t have the down payment to qualify for a mortgage.

For many modest-income Canadians, saving up the 5 percent minimum down payment (or 20 percent if you want to avoid CMHC insurance) can take years—many, many years.

While some are able to rely on gifts from parents/family (39% of first-time buyers according to a 2018 Mortgage Professionals Canada study) or loans from family (25%), or RRSP withdrawals (38%) to make their down payment, those options aren’t available to everyone.

That’s where government down payment programs come in. Scattered across Canada, these little-publicized municipal and provincial programs are helping first-time home buyers fund their down payments and make the transition from renter to owner.

Since most people don’t know about them, their uptake is typically low. When the B.C. government launched its program in 2017, for example, it thought 42,000 residents would participate in the first three years. After nine months, only 1,400 had done so.

To some onlookers, giving buyers government money to buy a house may seem a bit too socialist, but municipalities have an interest in transitioning financially stable renters from apartments to houses. Among other reasons, it frees up rental units and grows their property tax base.

To help homebuyers find such assistance, the Spy has rounded up some of the more popular programs. What follows are grant or loan programs that provide a portion of the down payment to qualified borrowers. Note that this list isn’t exhaustive and that the status of these programs change regularly. Moreover, once quotas are reached many such programs end, so contact the source for the latest info.

 

Alberta

Program: PEAK Housing Initiatives (formerly PEAK Program)
Provider: Joint initiative between Trico Residential, the Government of Alberta Municipal Affairs, CMHC and Habitat for Humanity
Details: PEAK housing units are priced at market value and recipients must be able to qualify for and hold a mortgage. Once approved for the program, PEAK provides a second mortgage for either a partial or full down payment up to a maximum of 5 percent of the purchase price. PEAK has so far helped 111 individuals and families purchase a home of their own.
How to apply: http://www.peakinitiative.ca/

Program: Attainable Homes (specific to Calgary only)
Provider: The City of Calgary
Details: This program has been in place since 2009 and is geared towards moderate-income Calgarians. Successful applicants must be able to contribute $2,000 towards the downpayment of their home, and the Attainable Homes program contributes the rest.  If and when the homeowner sells the home, the growth in the home’s value is split between the homeowner and the program, with that money reinvested to assist other homebuyers. The longer the homeowner remains in the house, the more their share of the appreciation increases.
How to apply: https://attainyourhome.com/

 

British Columbia

The province of B.C. ended its Home Owner Mortgage and Equity Partnership on March 31, 2018. It has no widely available down payment assistance programs at this time.

 

Manitoba

Program: Rural Homeownership Program
Provider: Manitoba Housing
Details: This program is limited to those renting a home owned by Manitoba Housing in selected rural communities or those who would like to purchase a vacant home owned by Manitoba Housing. Applicants must have a maximum household income of $53,441 if they don’t have children, and $71,255 if there are children or dependents. The program has two components, a loan worth 10 percent of the purchase price, which is forgivable on a pro-rata basis over five years. Another 15 percent loan is forgivable after 15 years of continuous ownership and occupancy of the property.
How to apply: http://www.gov.mb.ca/housing/progs/homeownership.html

 

Saskatchewan

Program: 3% Down Payment Assistance Program
Provider: National Affordable Housing Corporation
Details: Provides Saskatchewan homebuyers with a 3 percent non-repayable down payment assistance grant towards the purchase of a home from one of the NAHC’s partner housing providers. Saskatchewan households with incomes less than $90,000 per year are eligible for financial support under this program.
How to apply: http://nahcorp.ca/assistance/nahc-3-down-payment-assistance-program/

Program: Mortgage Flexibilities Support Program
Provider: City of Saskatoon, CMHC and the Saskatchewan Housing Corporation
Details: This program is for designated projects in the city of Saskatoon and provides qualifying homebuyers with a 5 percent down payment grant for the purchase of a home. The household income limit must be less than $69,975 for one person and $74,640 for two people. Their maximum net worth must also be less than $25,000.
How to apply: https://www.saskatoon.ca/services-residents/housing-property/incentives-homebuyers

 

New Brunswick

Program: Home Ownership Program
Provider: Government of New Brunswick
Details: This program offers assistance in the form of a repayable loan worth up to 40 percent of the purchase price of an existing home, or a maximum of $75,000 for new builds. It’s available to those with household incomes below $40,000. Applicants must be first-time homebuyers or be living in a sub-standard housing unit; have been living in New Brunswick for at least one year prior to application; and have a good credit rating and meet all financial institution lending requirements for obtaining a first mortgage.
How to apply:http://www2.gnb.ca/content/gnb/en/services/services_renderer.8315.Home_Ownership_Program.html

 

Newfoundland & Labrador

Program: Home Purchase Program (HPP)
Provider: Government of Newfoundland and Labrador
Details: This program will remain open over 2018/19 until funding has been fully committed to up to 330 homebuyers. Grants of $3,000 are available to qualifying individuals and families to assist with the down payment of a new home valued up to $400,000 (including HST).
How to apply: http://www.nlhc.nf.ca/programs/programsHpp.html

 

Nova Scotia

Program: Down Payment Assistance Program
Provider:
 Housing Nova Scotia (Government of Nova Scotia)
Details: This is a pilot program to assist Nova Scotians with a household income of $75k or less. The program offers an interest-free loan of up to 5 percent, to a maximum purchase price of $280,000 in the Halifax Regional Municipality and $150,000 elsewhere in the province. The loans will range from $7,500-$14,000 and must be repaid in 10 years. More than 150 first-time buyers benefitted from the program in its first year, and it will remain open until March 31, 2019.
How to apply: https://housing.novascotia.ca/downpayment

 

Ontario

Housing programs in Ontario are administered by municipalities based on the premise that they know their community’s needs best. Below is a selection of just several first-time homeowner assistance programs from some key municipalities.

Barrie (Simcoe County)

Program: Homeownership Program
Details: This program offers 10 percent down payment assistance in the form of a forgivable loan.
There is presently a waiting list, but applicants are still encouraged to apply. A percentage of available funding is designated for applicants currently living in Social Housing or those who self-identify as Aboriginal households.
More details: http://www.simcoe.ca/dpt/sh/apply-for-the-homeownership-program

Hamilton

Program: Homeownership Down Payment Assistance Program
Details: This program provides support to low- and moderate-income residents who qualify for a mortgage with a maximum home price of $375,000. To qualify, applicants must have a maximum household income of $80,000,
More details: https://www.hamilton.ca/social-services/housing/homeownership-down-payment-assistance-program

Kitchener (Region of Waterloo)

Program: Affordable Home Ownership program
Details: This program provides individuals and families with a loan of up to five percent of the purchase price of a home (up to a value of $386,000). Applicants must currently renting in the Region of Waterloo, be able to qualify for a mortgage, and have a maximum household income of $90,500.
More details: https://www.regionofwaterloo.ca/en/living-here/funding-to-help-buy-a-home.aspx

 

Prince Edward Island

Program: Down Payment Assistance Program
Provider: Government of Prince Edward Island
Details: This program assists Prince Edward Islander’s with modest incomes by providing a repayable loan of up to five percent of the purchase price of a new or existing home to a maximum price of $11,250. The loan amount must go towards the down payment and not towards financing or other closing costs. The loan bears a fixed interest rate of 5% per annum. The purchase price of the home must be no more than $225,000.
How to apply: https://www.princeedwardisland.ca/en/information/finance-pei/down-payment-assistance-program

 

Quebec

Program: Accès Condos
Provider:
 Société d’habitation et de développement de Montréal (SHDM)
Details: Launched in 2005 by the SHDM, Accès Condos has provided more than 3,600 affordable units that promote home ownership throughout Montreal. Qualifying buyers must make a minimum $1,000 deposit and receive a 10% purchase credit, which is used for the down payment on the house in an approved development.
How to apply: https://accescondos.org/en/

 

financial support

National Non-Loan Programs

First-Time Home Buyers’ (FTHB) Tax Credit

Provider: Government of Canada
Details: The FTHB Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
Link: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html

 

Home Buyers’ Plan (HBP)

Provider: Government of Canada
Details: The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.
Link: http://www.cra-arc.gc.ca/hbp/

 

GST/HST New Housing Rebate

Provider: Government of Canada
Details: You may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house.
Link: http://www.cra-arc.gc.ca/E/pub/gp/rc4028/rc4028-e.html

Source: RateSpy.com – By  on November 26, 2018

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New down payment guidelines may be in the works

The Department of Finance is reportedly recommending tougher down payment requirements, and initial broker reaction may be softer than expected.

“These changes won’t make a huge difference; we need to stabilize the economy, especially the housing market, and this would help,” Jerry Brar, principal broker with Jerry Brar Mortgages, told MortgageBrokerNews.ca. “These changes would eradicate buyers who shouldn’t qualify.”

Brar also argues the changes will help keep home prices in check, which he says the market needs.

Originally reported by Canadian Mortgage Trends — citing a “high-level lender source connected to the DoF, who declined to be identified” – the Department reportedly may recommend a graduated down payment scale that could be structured like this:

  • Homes costing $0 to $500,000 would require at least 5% down
  • Homes costing $501,000 to $700,000 would requires at least 7% down
  • Homes over $700,000 would require 10% down

When reached for comment, the Department of Finance said it does not comment or speculate on possible policy actions, or discuss anything that might be under consideration.

“The Government continuously monitors the housing market and regularly reviews the merit of actions to support the long-term stability of Canada’s housing market and financial system,” the Department wrote in an email to MortgageBrokerNews.ca. “Mortgage insurance rules have been adjusted in the past to protect Canadian families who hold wealth in their homes, and Canadian taxpayers, who support home ownership through government-backed mortgage insurance.”

If it does come to pass, the new guidelines may be more welcome among brokers than previous rule changes.

“I don’t think it’s an overreaching policy and I don’t think it would hinder business,” Kevin Gillis, a mortgage consultant with Cameron Financial Consultants, told MortgageBrokerNews.ca. “Buyers looking for houses over $500,000 usually have higher incomes and can handle the higher down payments; forcing them to do so will help protect them financially.”

Source: MortgageBrokerNews.ca Justin da Rosa | 03 Dec 2015

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