The Advantages of Putting 20% Down on Your Home

Is it possible to have a down payment strategy in a sizzling Canadian real estate market? From the Prairies to Atlantic Canada, it is clear that all kinds of residential properties are rising in value. And while there are obvious advantages of putting 20 per cent down on your home, current conditions are posing challenges to many homebuyers.

When you factor in higher interest rates, rampant price inflation, and accelerating price growth for single-family homes and condominium units alike, it can be a challenge for prospective homebuyers to find a place.

One of the biggest hurdles for buyers to overcome is the down payment.

According to the federal government’s rules, homebuyers need a minimum of five per cent down payment in order to purchase a home. This number climbs depending on certain thresholds. Twenty per cent is the minimum required to avoid paying mortgage loan insurance.

But is 20 per cent doable in this environment? And, if so, is it worthwhile to accumulate that much of a down payment? If possible, having that 20-per-cent down payment can save you a lot of money in the long run and make your life a little fiscally easier during the peaks and valleys of everyday life.

The Canadian government has several programs designed to help first-time homebuyers save more for a home purchase, including the Home Buyer’s Plan and the First Home Savings Account. But is it enough? Considering that 90  per cent of Canadians feel locked out of the real estate industry, it could be a trying endeavour for too many families.

Still, compiling an enormous down payment can be the short-term pain that will lead you to long-term prosperity if you have the means from the beginning of the home purchasing process. And, of course, you still accomplish the Canadian dream of homeownership.

Sources:

• Global News