Options for Home Downpayment?

[Ducay]

This has good idea written all over it....

a) Are you going to qualify for a loan even if you get the downpayment (ie, are your ratio's going to be ok?)

Im sure one of CP's mortgage brokers will come in with some real answers, but as mentioned, I think the downpayment has to be hard cash (not borrowed).

[mykalberta]

If the cash is gifted to you where does it matter where it comes from so long as the new home isnt on the hook for it - that is the point of non borrowed money.

If the parents or whoever took out a loan they would be using something else as collateral, what they choose to do with that money is up to them.

I am not saying this is a good or bad idea, I am just giving the poster options on how to get what he asked for in his o/p. I will leave holier than thou financial advise to the many obvious experts here on cp.

[CGYTransplant]

Originally Posted by fundmark19

Just say you are moving into the new place and renting out the old and then you only have to pay 5 percent! And make sure you buy before april 19 or what ever the date is or you have to pay 20 percent on the rental instead of 10

If you are applying for a mortgage under this scenario, you usually have to prove that you have guaranteed, consistent rental income coming in on the one property in order to get a mortgage for a second property... you can't just walk into the bank and go "Yeah, the rent will cover our first mortgage, spot me a second one!" But, I've never gotten a mortgage from anywhere other than one of the big banks, so maybe the smaller lenders are more forgiving.

As well, you can only list one primary residence at a time, so you may have to vacate your current home and rent it out beforehand, so you can prove you'd be living in the second property (sidestepping the new CMHC downpayment rules)

And, to be quite honest, if you have limited equity in your first home (so can't borrow against it), and you don't have the savings to tap for a downpayment, the lenders may dismiss you as a lending risk, and not issue you a mortgage- having borrowers mortgaged to within an inch of their lives is not good for the long-term stability of the market, hence the tightening of the mortgage rules. But, of course, I'm saying this without knowing your income, so take it with a grain of salt.

Two years ago, I had two mortgages, and to get the second one, I needed to prove that I had the guaranteed income to be able to cover both of them for a period of 6 months- I needed to prove to the bank that if I couldn't rent or sell the one property (while living in the other), I could still make all the payments.

[bubbsy]

you said 2nd home.

You can leverage 80% of your equity in your first property and use it as a downpayment towards your next property. (ie. if you have paid off 100k of your current property mortgage, you can use 80k of that towards a second mortgage downpayment).

At least that's what TD has quoted me, as we are contemplating doing the same in a year or two.

[VladtheImpaler]

PM Mike Oxlong - he is a broker, and he knows about rental properties. I am working with him right now (still looking for the right property, Mike ).

[chemgear]

Originally Posted by hmmhmmcamo

What if the above is happening while at the same time the housing market is crashing like a mother?

Isn't this why the recent mortgage changes were made? Well, more like half measures really.

Something I came across recently:

[Shazam]

Originally Posted by fotze

I think MJK is in a different place than all the assumptions. He lives in the arctic, I don't believe their economy is even related to the rest of the world, it is probably government cash that keeps it ticking. Also, he works for the government (IIRC) so he has a job for life (and don't mention some job cuts in some government department somewhere).

I think he is counteracting his extreme low financial risk life by adding some risk of a revenue property.

Its like an accountant who works for the goverment putting his savings into a 0.5% GIC, if anyone should put a little more risk in their portfolio its a government accountant.

I wouldn't do it, but MJK doesn't seem like the pragmatic boring financial librarian that I am, though.

Oh, in that case, he should just do whatever

I know what you mean about those gov't jobs though. My wife was with the GSC for two short years, and her pension earned during that amount was massive.

[hmmhmmcamo]

Originally Posted by chemgear

Isn't this why the recent mortgage changes were made? Well, more like half measures really.

The CMHC is a joke and one of the main reasons real estate is so out of whack right now. They have insured mortgages for countless numbers of people who had no business even being in the bank, let alone qualifying for a mortgage.

end rant/thread derailment

[bubbsy]

Originally Posted by chemgear

Isn't this why the recent mortgage changes were made? Well, more like half measures really.

Something I came across recently:

I believe the Van real estate maintains itself since there is just soo much international investment there. Really don't understand how the hell Calgary can justify being that high. It is definitely a very inflated market.

Do you know if the income numbers stated are after tax?

[Pastiche]

Vancouver real estate is a bank account for offshore oligarchs with unsecure banking systems. A rich Russian could choose to put his $500,000 in a russian bank account or riskier investment or buy a condo in Vancouver. A recent BC Hydro scan of unit electricity use showed that there were over 15,000 condo units in Vancouver that were completely vacant.

It's international capital sequestering as Canada has really loose regulations on who can buy a place and how they can buy it. While it benefits current real estate owners it sucks for the affordability index.

Mind you, this isn't the only reason why Vancouver real estate is so expensive. One of the big reasons is just supply and demand. It's a geographically constrained city with unmatched natural beauty and outdoor ameneties. Small supply meet high demand. Boom: economics.

[amorak]

You're way too leveraged if I understand you correctly, so I can't expect anyone short of a loan shark is going to loan you the money.


1) You recently bought your first home and you only have $10,000 equity in it

2) You have no options for unborrowed funds for a second downpayment.


Unless the house value of your first home is very low - IE it's a $100,000 home and you make $150,000 a year, then you are likely not going to qualify for a mortgage regardless of the d/p if all you've got is $10K equity in your first home.

Maybe if you can provide some figures, ballpark, as to the above, a CP-mortgage broker can help, but if I were a CA (gotta CYA), I would tell you that unless the above is true (very low value first home with a high salary), you're going to have to build up some serious equity before a bank lets you take on a second mortgage - Nevermind that you're not allowed to have a borrowed deposit.

[yads]

You have no money and no equity and you want to buy a 2nd house?

[chemgear]

Originally Posted by yads

You have no money and no equity and you want to buy a 2nd house?

It's that how Americans roll circa 2000-2006 . . . maybe Canadians circa 2009-2010?

The evil side of me is highly interested in the effect of the new regulations, higher interest rates in July and onwards, stable to lower oil/gas prices and continued job "optimization." Isn't Suncor supposed to turf another 1000 people this year?

[Slava]

Originally Posted by chemgear

It's that how Americans roll circa 2000-2006 . . . maybe Canadians circa 2009-2010?

The evil side of me is highly interested in the effect of the new regulations, higher interest rates in July and onwards, stable to lower oil/gas prices and continued job "optimization." Isn't Suncor supposed to turf another 1000 people this year?

Well it will be interesting to see the effects of these things the higher interest rates won't likely go from rock bottom to double digits overnight; a small increase at a time and it won't put a lot of people in serious trouble right off the hop.

Suncor is cutting positions from what I understand, but a lot of that is from the sale of gas positions that they hold which I think are in Denver.

[hmmhmmcamo]

Originally Posted by Pastiche

Vancouver real estate is a bank account for offshore oligarchs with unsecure banking systems. A rich Russian could choose to put his $500,000 in a russian bank account or riskier investment or buy a condo in Vancouver.

Let's say this is happening...rich Russian is only leaving his money in a Vancouver condo while prices are still appreciating or level off. If/when prices start dropping, how long will he (and all the others) wait before unloading it? I guess it depends on how rich he is. Sooner or later they will all start selling....leading to a lot more supply.

A recent BC Hydro scan of unit electricity use showed that there were over 15,000 condo units in Vancouver that were completely vacant.

I've heard even higher numbers

Mind you, this isn't the only reason why Vancouver real estate is so expensive. One of the big reasons is just supply and demand. It's a geographically constrained city with unmatched natural beauty and outdoor ameneties. Small supply meet high demand. Boom: economics.

This is the running out of land argument that has been popular here for years. I don't buy it. Vancouver has lots of room to grow...especially up.

[Shazam]

Originally Posted by hmmhmmcamo

This is the running out of land argument that has been popular here for years. I don't buy it. Vancouver has lots of room to grow...especially up.

Those numbers above are for single family dwellings.

[Pastiche]

Let's say this is happening...rich Russian is only leaving his money in a Vancouver condo while prices are still appreciating or level off. If/when prices start dropping, how long will he (and all the others) wait before unloading it? I guess it depends on how rich he is. Sooner or later they will all start selling....leading to a lot more supply.

First, it is happening. The high vacancy rates of condos is a clear testament to the phenomenom. Second, prices did just drop, how many of them sold off? I don't know. Not enough to reorient prices to more baseline levels that's for sure, look at the graph above. I wouldn't bank on the selling happening all at once. I see it as an incremental sell off and I wouldn't put it past more executive purchases of real estate in the city. What I'm saying is the phenomenom may only intensify or marginally subside.

This is the running out of land argument that has been popular here for years. I don't buy it. Vancouver has lots of room to grow...especially up.

It's not an argument it's a fact. Vancouver proper has been entirely built out. You are right, you can now build up. Vancouver's neighbourhoods are, on average, less dense than similar Canadian counterparts in Toronto and Montreal. Sam Sullivan tried the 'ecodensity' thing but met alot of resistance in the least dense neighbourhoods like Dunbar and Mount Pleasant. My point is that building up is a good idea and will happen but it will happen alot slower in the actual neighbourhoods than most people think. City voters like their single detached neighbourhoods and wont convert them easily or quickly to more dense multi-residential building. The result, yes, tight supply.

This is of course looking at the city in a bubble, people can live in Maple Ridge, Burnaby, Coquitlam, Mission but the fact of the matter is that most people want to live in Vancouver and that wont change anytime soon.

[MJK]

Originally Posted by Ducay

This has good idea written all over it....

a) Are you going to qualify for a loan even if you get the downpayment (ie, are your ratio's going to be ok?)

Im sure one of CP's mortgage brokers will come in with some real answers, but as mentioned, I think the downpayment has to be hard cash (not borrowed).

I have already qualified for the mortgage, I just didnt expect to have to pay the 10% on it. I paid 5% on my first one so I don't have $30,000 just sitting in my bank account right now.

[MJK]

Originally Posted by amorak

You're way too leveraged if I understand you correctly, so I can't expect anyone short of a loan shark is going to loan you the money.


1) You recently bought your first home and you only have $10,000 equity in it

2) You have no options for unborrowed funds for a second downpayment.


Unless the house value of your first home is very low - IE it's a $100,000 home and you make $150,000 a year, then you are likely not going to qualify for a mortgage regardless of the d/p if all you've got is $10K equity in your first home.

Maybe if you can provide some figures, ballpark, as to the above, a CP-mortgage broker can help, but if I were a CA (gotta CYA), I would tell you that unless the above is true (very low value first home with a high salary), you're going to have to build up some serious equity before a bank lets you take on a second mortgage - Nevermind that you're not allowed to have a borrowed deposit.

Just to clarify:

I took out a mortgage for 200K last Aug.
I just talked to my RBC guy who tells me I can get the 300K mortgage

He says CMHC is the obstacle becuase they want 10% (30,000) which I don't have sitting in my account right now becuase I pay off other things very heavily like my Jeep.

Borrowing the funds and paying mortgages is not a problem, its getting the $30,000 right now for the downpayment.

[Muta]

Originally Posted by MJK

Just to clarify:

I took out a mortgage for 200K last Aug.
I just talked to my RBC guy who tells me I can get the 300K mortgage

He says CMHC is the obstacle becuase they want 10% (30,000) which I don't have sitting in my account right now becuase I pay off other things very heavily like my Jeep.

Borrowing the funds and paying mortgages is not a problem, its getting the $30,000 right now for the downpayment.

Just whore out Flames_gimp for some extra cash. Tell him he can use kitchen utensils and boom.. watch the money roll in.