House down payment

[Barnet Flame]

Originally Posted by kunkstyle

I'm going to guess based on purely anecdotal evidence that it's a small percentage of people that put 20% on their first home.

Personally, I did around 10-11%. Wish I'd waited and done the 20%, but I got an unreal deal on the house so it'll likely come out in the wash.

In a market so heated, you probably did the right thing.

I live in London and I made a 5% deposit on my house. I'd love to have had a bigger deposit, but it simply made no sense saving because the longer you stayed out of a red hot market, the further away you got from getting on the ladder.

It was a big risk as negative equity wasn't far away at first, but had I left it even just a couple of years, I couldn't afford to be where I am now.

[Northendzone]

i am assuming that this thread does not apply to anyone who buys there home using some type of credit card, or cash?

[#-3]

just me personally but I did 10% on both houses I have owned.

As a rule when interest rates are as low as they are, it makes sense to go right to the bottom of whatever CMHC bracket you can afford to be in.
So I would look at the most you can afford, round down to the nearest 5, and keep the rest of the money in your pocket. 9%, 14% or 19% are just a bad number the way the loan insurance is calculated.

[kevman]

Originally Posted by #-3

just me personally but I did 10% on both houses I have owned.

As a rule when interest rates are as low as they are, it makes sense to go right to the bottom of whatever CMHC bracket you can afford to be in.
So I would look at the most you can afford, round down to the nearest 5, and keep the rest of the money in your pocket. 9%, 14% or 19% are just a bad number the way the loan insurance is calculated.

This. I was a 20% guy when I bought but with rates like this I'd probably be a 5% guy in today's market.

[JMN]

20% on a condo.

[darklord700]

Originally Posted by Northendzone

i am assuming that this thread does not apply to anyone who buys there home using some type of credit card, or cash?

I did buy my investment property with those 0% credit card to do the down payment. You have to be careful and pay off the minimum every single month or you'll lose the 0% rate.

It's not really 0% as you pay 1% transaction fee. And since it was on reducing balance so your effective interest rate is a little higher than 1%.

It's OK to do so as long as you can pay off the remaining balance when those 0% term ends.

[Tyler]

Wow.. you people putting 5% down on a house. Every financial expert would tell you that this is the #1 sign that you're not ready for home ownership.

[Locke]

Pfft. Amateurs. We put down 53.5%. Exactly.

[MoneyGuy]

Originally Posted by Locke

Pfft. Amateurs. We put down 53.5%. Exactly.

Paid cash for my last house.

Pfft, amateur.

[Locke]

Originally Posted by MoneyGuy

Paid cash for my last house.

Pfft, amateur.

For a moneyguy thats not very smart. Didnt you do any of the math on the costs of borrowing versus interest rates on investments?

That seems pretty amateur....

[GP_Matt]

I have no regrets putting 5% down on our first house, but our second was 20% and I wouldn't go less on the next one.

We did ramp up the payments right away to build a cushion though. At the time we were newly married, impatient and willing to take a risk. It was a house that we could easily afford to make payments on in a booming market. The same model was selling for 50% more than we paid in the 10 months between when we signed a purchase agreement and when we moved in after construction. So waiting a year to quadruple our down payment seemed like a bad financial decision.

[Travis Munroe]

Originally Posted by Tyler

Wow.. you people putting 5% down on a house. Every financial expert would tell you that this is the #1 sign that you're not ready for home ownership.

Strongly disagree and it is quite a bold statement on your end.
What if I have enough to come up with 10-15% but choose to go with 5?
Im still paying CMHC regardless so the only real savings is the interest, which is nothing (Investors group went below 2%)

[OutOfTheCube]

We bought a townhouse in December with 10% down.

Still waiting for it to be built though! It's been nice though... we can easily afford our current rent so we've been able to recover our savings at a good clip.

[Canehdianman]

Originally Posted by Realtor 1

Strongly disagree and it is quite a bold statement on your end.
What if I have enough to come up with 10-15% but choose to go with 5?
Im still paying CMHC regardless so the only real savings is the interest, which is nothing (Investors group went below 2%)

I'd expect better information from a realtor.

CMHC fees are much lower if you put down 15% over 5%. About 1.5% lower (so on a 400,000 mortgage it would save you $6,000).

[cam_wmh]

Originally Posted by Canehdianman

I'd expect better information from a realtor.

CMHC fees are much lower if you put down 15% over 5%. About 1.5% lower (so on a 400,000 mortgage it would save you $6,000).

Yep, CMHC fees are not linear, they curve.

That said, I bought my first place last year, and put down 23%

[Canehdianman]

My wife and I put down 10% when we bought 4 years ago.

[Tyler]

Originally Posted by Realtor 1

Strongly disagree and it is quite a bold statement on your end.
What if I have enough to come up with 10-15% but choose to go with 5?
Im still paying CMHC regardless so the only real savings is the interest, which is nothing (Investors group went below 2%)

You're a great dude and I don't want to start an argument about this, but you're kind of in a conflict of interest here given your profession lol

Line up the nations best financial experts and you'll be hard pressed to find anyone who says a 5% down payment on their mortgage is a good idea.

RIP Jim Flaherty

[lorenavedon]

I'm really interested in the %35 down then get a HELOC route. I already PMed WinnipegFan about it and got good info but was wondering if anyone else has done this to purchase a place or if they had any other insights. Seems like an easy way to save in volatile markets. If you feel the stock market is currently too risky and being in cash earns almost nothing, I'd rather put everything I have into a home, even if it's %50 with a HELOC. Zero savings... then if you hit a few months of tough times you can take money out IF needed to survive, but if times are good you can continue to dump in as much as possible and basically earn %2 to %2.5 (which is what you'd be losing holding it in a savings account and keeping a mortgage) (Please no "put your emergency funds into stocks or bonds" advice) Thanks

eg. 200k savings (%1.5)

buy 400k place
260k HELOC. (%3.5)
after purchase balance - 0 savings and 200k on HELOC %3.5

vs (%20 down = 80k) 320k mortgage @ %3
plus 120k savings @ %1.5

[#-3]

Originally Posted by cam_wmh

Yep, CMHC fees are not linear, they curve.

That said, I bought my first place last year, and put down 23%

This is what I was saying, at today's interests rates, if makes allot more sense to pay 20%, and invest the extra $10,000 - $15,000 you probably spent. Even in a GIC or something, you will likely gain more on the investment than you will pay on your mortgage over the term.

[ken0042]

Originally Posted by Tyler

You're a great dude and I don't want to start an argument about this, but you're kind of in a conflict of interest here given your profession lol

Line up the nations best financial experts and you'll be hard pressed to find anyone who says a 5% down payment on their mortgage is a good idea.

RIP Jim Flaherty

In a housing market where prices are going up and up, is it better to continue to rent for another year or two to be able to save up a bigger down payment?

I agree you are in better shape if you can put in a bigger down payment, but given the "renting is throwing your money away" line we hear so often; how can renting be better just to save a few points off the CMHC rate?