YOUR DOWN PAYMENT

The down payment is that portion of the purchase price you furnish yourself. The balance is obtained from a financial institution in the form of a mortgage. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting. But even with a mortgage, you will need to raise the money for a down payment. The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings. For a conventional mortgage, you will need a down payment of 25% or more of the purchase price of the home. Regardless of the type of mortgage you choose, you still need to come up with a down payment of at least 5%.

Acouple of common practices for raising a down payment include:

- getting a "nest egg" from a parent or relative

RRSP's
* Funds may be withdrawn tax free from you RRSP up to a maximum of $25,000 per person or $50,000 per couple for a down payment on your first home under the following conditions:

If married couples are considered first time buyers and if neither has owned a principal residence in the last five years. Notes:

* Buyers may own or have owned investment property.
* In certain cases only one spouse may qualify.

Cannot have participated in the Plan previously. **You can only use the plan once.
Must be a resident of Canada. (You do not have to be a Canadian Citizen.)
The home must be located in Canada and be your principal place of residence.
You must repay your RRSP withdrawal over a period of 15 years.

Also, more relief for first-timers is offered in a form of a 15% tax credit to help defray closing costs such as legal fees, property transfer tax and other disbursements. This credit is applied on closing costs up to $5,000, which equates to a maximum tax savings of $750.

Give me a call and I will connect you with a Mortgage Specialist that will be able to help you.

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