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The Young And The Mortgage (less)

Jackson Middleton • November 21, 2018

For many young people, the idea of homeownership can feel out of reach, if not a daunting proposition. They know they want the dream of homeownership, but they’re not sure how to get there. Especially when it comes to financing and getting a mortgage. The good news: There’s so much information and so many professionals out there to lend a hand.

If you’re a young first time homebuyer, there are a few things to consider as you get ready for your journey.

It’s important for young people to know as first-time homebuyers they have certain privileges of which they can take advantage.

First-time homebuyers:

  • are exempt from property transfer taxes on a home less than $500,000
  • can use $25,000 from their RRSPs for a down payment and pay it back within 15 years
  • Need only five per cent as a down payment

If you’re a couple going into your first purchase together, use one as a guarantor. A guarantor guarantees payments will be made, but they have no claim to the property and they are not on the title. This means they also aren’t using their first-time homebuyer status and can save it for a second purchase down the road.

There are also some common misconceptions, or mistakes, young people tend to make as first-time homebuyers.


Newbies to real estate tend to want to try and save up for a larger down payment. But they’ll do so at the expense of paying off their existing debts. Instead of trying to put 10 per cent down, put down five per cent and take that extra money to pay off consumer debt, like credit cards and car payments.

Speaking of debt, a lot of young people will find themselves with student loans to pay back. While it’s always good to pay off as much as you can, they may not be as big of an albatross as you think, provided it’s not reported on your credit bureau. Every lender calculates student loan payments differently, which may or may not hurt your chances of getting a mortgage. But you are better off focusing on your unsecured lines of credit or credit cards before tackling your student loans.

Let’s face it, applying for a mortgage can be intimidating. You’re baring your financial soul to strangers who determine whether your dream will actually come true.

But your mortgage broker is there to help. They work for you, not the other way around.

The mortgage broker is the professional, but you’re the boss. Ask questions and be comfortable in what you’re being told.

You’re doing a disservice to yourself if you accept anything less than excellent communication and customer service.


This article was originally published as part of the DLC Newsletter in November of 2018.


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RRSP As A Downpayment

By DLC Canadian Mortgage Experts • December 28, 2022
Did you know there’s a program that allows you to use your RRSP to help come up with your downpayment to buy a home? It’s called the Home Buyer’s Plan (or HBP for short), and it’s made possible by the government of Canada. While the program is pretty straightforward, there are a few things you need to know. Your first home (with some exceptions) To qualify, you need to be buying your first home. However, when you look into the fine print, you find that technically, you must not have owned a home in the last four years or have lived in a house that your spouse owned in the previous four years. Another exception is for those with a disability or those helping someone with a disability. In this case, you can withdraw from an RRSP for a home purchase at any time. You have to pay back the RRSP You have 15 years to pay back the RRSP, and you start the second year after the withdrawal. While you won’t pay any tax on this particular withdrawal, it does come with some conditions. You’ll have to pay back the total amount you withdrew over 15 years. The CRA will send you an HBP Statement of Account every year to advise how much you owe the RRSP that year. Your repayments will not count as contributions as you’ve already received the tax break from those funds. Access to funds The funds you withdraw from the RRSP must have been there for at least 90 days. You can still technically withdraw the money from your RRSP and use it for your down-payment, but it won’t be tax-deductible and won’t be part of the HBP. You can access up to $35,000 individually or $70,00 per couple through the HBP. Please connect anytime if you’d like to know more about the HBP and how it could work for you as you plan your downpayment. It would be a pleasure to work with you.

Is There A Difference Between A Deposit And Downpayment

By DLC Canadian Mortgage Experts • December 21, 2022
If you’re new to the home buying process, it’s easy to get confused by some of the terms used. The purpose of this article is to clear up any confusion between the deposit and downpayment. What is a deposit? The deposit is the money included with a purchase contract as a sign of good faith when you offer to purchase a property. It’s the “consideration” that helps make up the contract and binds you to the agreement. Typically, you include a certified cheque or a bank draft that your real estate brokerage holds while negotiations are finalized when you offer to purchase a property. If your offer is accepted, your deposit is held in your Realtor’s trust account. If your offer is accepted and you commit to buying the property, your deposit is transferred to the lawyer’s trust account and included in your downpayment. If you aren’t able to reach an agreement, the deposit is refunded to you. However, if you commit to buying the property and don’t complete the transaction, your deposit could be forfeit to the seller. Your deposit goes ahead of the downpayment but makes up part of the downpayment. The amount you put forward as a deposit when negotiating the terms of a purchase contract is arbitrary, meaning there is no predefined or standard amount. Instead, it’s best to discuss this with your real estate professional as your deposit can be a negotiating factor in and of itself. A larger deposit may give you a better chance of having your offer accepted in a competitive situation. It also puts you on the hook for more if something changes down the line and you cannot complete the purchase. What is a downpayment? Your downpayment refers to the initial payment you make when buying a property through mortgage financing. In Canada, the minimum downpayment amount is 5%, as lenders can only lend up to 95% of the property’s value. Securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. You can source your downpayment from your resources, the sale of a property, an RRSP, a gift from a family member, or borrowed funds. Example scenario Let’s say that you are looking to purchase a property worth $400k. You’re planning on making a downpayment of 10% or $40k. When you make the initial offer to buy the property, you put forward $10k as a deposit your real estate brokerage holds in their trust account. If everything checks out with the home inspection and you’re satisfied with financing, you can remove all conditions. Your $10k deposit is transferred to the lawyer’s trust account, where will add the remaining $30k for the downpayment. With your $40k downpayment made, once you sign the mortgage documents and cover the legal and closing costs, the lender will forward the remaining 90% in the form of a mortgage registered to your title, and you have officially purchased the property! If you have any questions about the difference between the deposit and the downpayment or any other mortgage terms, please connect anytime. It would be a pleasure to work with you.
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