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Buying a house in CANADA? | How much to SAVE in downpayment - the maths! 💰🏠
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- เผยแพร่เมื่อ 12 ส.ค. 2024
- We talk about downpayment - 5%, 20% or is there another magic number? Let's understand the maths.
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I am a licensed mortgage agent M21004312 working with Dominion lending centres, Valko Financial FSRA13047. I work with over 60 lenders including the top banks to provide an array of mortgage products that are suited to your needs. I can help you with your housing needs across all provinces in Canada (except Quebec).
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Use a TFSA account to save money for a house. Let's say you have a room of $40,000 in your TFSA. Go to any bank, and you can get 3% to 4% interest on your money. Personally, I prefer cashable GICs, so I can withdraw money myself. I hope this helps new buyers. Also, take advantage of your spouse's TFSA too
Csn you plesse help me with this issue, inam trying to guide my mother whose in canada to buy a house we need guidance 🙏
Man singlehandledly made one of the best non BS straighforward home buying video in 20 minutes. thankyou so much .
Thank you
I agree. Although I read that you can't put a minimum downpayment on a house that you dont plan to live in... an investment property requires 20% no?
It is important to note that you do not have to get a 30 year amortization. I didn't. Just choose 25 years even if you have a 20% down payment.
Very true…
Excellent video and great explanation! I wish I had this kind of guidance 27 years ago.
Hi Nav, I am curious why you assume that in the 20% down scenario that they would take a 30 year Amortization just because they are allowed to? I feel comparing 25 years vs 25 Years with the .25% difference in interest rate is a more fair comparison. And then in addition showing what interest could be made on the $100,000 difference in downpayment and $1000/mnth invested, why not show what you could make by also investing the $28,000 in Mortgage insurance you save instead of throwing away when you go with a 20% down payment. I would love to hear your thoughts.
Never seen anyone go for a 25 year AM when they do 20% down - esp today when the mortgage payments are too high. This is a much more realistic comparison relevant to 95% of people.
İi8u888i7i
@@growwithnavthat does this mean u can compare 25 and 30 years scenario and derive a flawed conclusion. Do with same period and again prove your theory just for a sake of clarifying. 🤔
Really good breakdown. I did 10% in 2018 and no regrets well ahead in the game now.
👏👏👏
Hey Nav, thanks for the video. It was very informative, lots of valuable information for someone that hopes to buy his first home this year. I'll need to revisit the rule of 35 though to make sure what can I afford.
Thanks a lot! This was extremely helpful 🤙
Please also add a comparison of 20 % down with 5% down (BOTH having a tenure of 25 years)
Please do more videos. Love this info. Can you do one where you get a house and also run a home base business from it. How would the number work with that?
Thanks for the info Nav...Very educational...Everything was Clair N easy to understand......You're the best .....I just discover your channel today ........Peace N love .
This is the best video ever seen on this topic!
Thank you 😊
Thanks for sharing brother!
Credit isnt coming down. If it does say goodbye to the dollar. Canada hasnt seen the usual 10 yr cycle in 30 yrs in the realestate market. Immigration has kept the pedal to the metal and low interest rates. I think its reached its maxed. I remember 22 percent interest 3 cycles ago..
Don’t you only have to pay the mortgage insurance until your equity exceeds 20%? Let’s say after 5 years the combined home appreciation and principal payments give you enough equity to exceed 20%. Wouldn’t that mean you no longer have to pay the extra mortgage insurance?
Unfortunately no. Mortgage insurance gets added to the mortgage on day 1 (lump sum) And there is no refund - it’s cost of buying a home for under 20%
Thank you so much for this information.
Very good information, thanks a lot for sharing all this
It's also 20% down if you have bad credit or self-employed depending on the lender.
Yes 👍
Excellent informative video. Thanks Nav:)
Very Informative! Thanks buddy
Nav, thanks a lot for this video! I am saving for a house in an FHSA now and investing in ETFs mostly and some stocks - do you think that this is a good idea if I am planning to buy a house in 3 years?
Amazing video. Thank you Nav
You are too good at maths bro👍
Thanks for sharing
Bro awesome video thank you
Thanks for breaking down the 10% down payment, this might work for me being self-employed. A mortgage broker told me I would need 20% down as I'm self-employed and rebuilding credit after a bankruptcy /consumer proposal Are the numbers the same if you are self-employed ??
The broker may be right if you had a recent consumer proposal.
Minnie😍
Thanks! Good advice!
Excellent explanation Nav!! I don’t think it can be much clear then this. People lack basic awareness and this video will be very helpful. I had following 2 questions:
1. As we all know interest rates are going up and may be over the years they may stabilize to let’s say around 3%. What will be your suggestion? Pay some principal right away or at the time of renewal?
2. Secondly, at the time of renewal, do we get the option of 30 years amortization? Because I don’t see with the current Emi that 20% principal will be paid of at the time of renewal.
Would really appreciate your answer. Thank you!! Keep it up.
1. If you have spare cash sitting around, paying along the way is smart. But if you have a better use for the money, I won’t put it towards the house unless I have a Scotia Step mortgage or Manulife one
2. You can switch to another lender and take the 30 year am if you qualify.
@@growwithnav I think the exact term will be refinance and not switch here, right? refinance is a totally new file where all the ratios have to be met with appraisal.
@@GagandeepSinghPandher if you get into tech terms then yes… but moving lenders is also switch (English word)
But yup… it’s refinance if you want a whole new 30 yr AM
@@growwithnav By the way navjot not sure if you are already aware but look at the “plain Jane” Smith Manoeuvre technique too. Its a good hack for financially savvy people who can take some calculated risk. I love Smith Manoeuvre.
@@GagandeepSinghPandher yeah man! But it’s dangerous for a lot of people when they do it wrong. I am doing it on my condo.
Excellent video! What's your take if someone planning to buy house in 2-3 years?, then where to save money... HISA or TFSA?
RRSP, you can use upto $35000 from your RRSP which are more than 90 days old towards your First home tax free. And my putting money in RRSP you will be taxed less as well. If it is you and your wife buying a house, you both can use upto $35000 each, so in total upto $70000 in total towards your first house. At an average, if your salary is $100K, for every $10K in RRSP you save around $3000 in taxes.
@@bytesizedscreencasts this is really informative, thanks so much!
@@HarpreetSingh-jk8di Just to clarify, in the end he said, he do not suggest investing in the market for short term and put it into HISA, me and my wife also just bought a house and put the money in RRSP in just last 1.5 years. Though we lost some money in RRSP, in total around $1200 but saved more than $8K in Income Taxes, so still we saved $6800 hundred more.
Excellent Nav!
The 5% thing was there before 2016 and then OFSI made the changes . Probably many property were under 500 so many people didnt knew 5% under 500k and 10% below million for down payment. I would take 40 year amortization if possible rather than waiting to accumulate 20% down. Some people gained 20-30% in equity buying during pandemic rather than waiting till price came down until recently. Houses are still not affordable considering such high interest rates, those who bought doing no analysis faired better than people trying to time the market.
You are right 👍
Amortization is max 25 years for insured mortgages
@@growwithnav well with current scenario if one has non adjustable mortgage.. they are already past 40 yr amp
I f you buy 1 M plus house
Is it better to pay 20% only or more than this May be 50%
Another Qs I do not want to pay lots of interest
What the max or acceptable months that I can pay or use as mortgage
Thank you
Hi
Per your example,if I'm purchasing a 750K home with 50K down payment, the mortgage comes around 4029(4.5% int) and Assume utilities+taxes cost 800 dollars, so approx every month I'm gonna pay 5K towards my home. How does the 35% rule fit in here? I need at least 15K net income to pay my mortgage. Do you think every family in Canada has that income?
That's the true and sad reality of GTA and Vancouver housing market. That's why people are moving from these cities
@@GillCanadianimmigrationupdates Very few can move out to different cities because of their jobs. Now many companies are insisting on hybrid and those who believed it would be permanent WFH and bought home outside GTA will be in a very difficult position. Real estate in Canada, especially GTA, Vancouver is 50-60% overvalued. BoC and realtors have major hands on this mess and sad reality is realtors always chant buy buy buy. Another .75BPS hike is confirmed for October and the possibility of the hike in December has increased. BoC will pause the rate hike after that and it ain't coming down soon. 2023&24 is going to be horrible.
You either buy with the bank’s stress test or do your rule 35 numbers on 10 year average of interest rate (3.2%)
Rule of 35 is a safety net :)
And you are right, things are not getting any more affordable… but buying at low prices at least means that when the rates come down, the value will appreciate and you can always refi into a lower rate then.
What is the average income in Canada? Which city?
Can you also advise how to get rid of mortgage insurance if the equity in the house has gone over 20%.
You can’t… it’s part of your mortgage amount upfront
The 10% catch was interesting navjoth, but what about some who already got a condo as their 1st home at 5% but want to ungrade now, is waiting fr 20% dwn the only option?
No, you can sell and buy another with whatever equity you have in the condo :)
So
👍
Excellent video, keep it up
Really informative 🤟
Can you confirm what if putting 20% down and paying off soon instead of 25 or 30 years amortization??... is it still 10% worth ?..
Hello, I have a few questions,
I am a Canadian citizen with Canadian passport, I used to live in Canada for 10 years with my family but we left Canada in 2015, and we recently moved back to Canada again.
I am looking to buy a house which costs around 700k and I have 20% down payment of the house ready ($150k CAD ready), but the RBC bank wants proof of income of at least a salary 100k a year and I can’t show that.
I’m planning to start my work as an Uber driver in the next few weeks, but could I get approved to get around 500k mortgage from a bank without having to show proof of income?
RBC bank mortgage realtor told me because Uber is considered as “self employed”, the mortgage realtor also told me that bank looks at Uber income after at least 1 year of work because it is called “self employed” type of job., and I don’t want wait a whole full year (I want to buy this house sooner).
They said I could get a mortgage from a private lender but the mortgage rate would be high at around 10% (which is around 4% higher than bank rate), is there any way to get approved by the bank for a person like me with no proof of income?
By the way, the house I’m looking at is a detached house that has a walkout basement with separate entrance, I’m planning to rent upstairs to cover the mortgage and I go live in the basement.
Thank you
is mortgage insurance required even if the person has life insurance which may cover the loan value?
🔥🔥🔥 Hot Topic. Great Video Navjot Singh
Is there stamp duty on the Purchase Contract for buying a house in Canada and if so, based on how many % of the purchase price?
There is closing costs incl land transfer tax. You need to budget 1.5-2% in closing costs as a first time home buyer.
Very thoughtful video, i am following you guys since I started my journey for Canada. You guys work for GTA area well?
Yes we do :)
Thank you 😊
I liked the video but I disagree with housing prices going up 6% a year. The market has peaked and will go down 6% a year over the next few years is most likely. I would recommend people be patient and save 20% down and go for the 30 year mortgage
I don’t think so… it will start going back up from 2024!! Do check the video on housing bubble… I talked about a few facts there…
@Grow with Nav your wishful thinking.
@@mashmash7877 it’s not wishful, when it’s based in facts and numbers. And numbers don’t lie :)
But don’t take my word for it; let’s revisit these comments in 2 years :)
CMHC fees is 3.1% for 10% down, not 3%..minute misses are ok :)
It’s a progressive scale … but big picture 😀
Great video again Nav but you haven’t touched why not to invest RRSP for down payment which saves you from hell lot of taxes
Will be doing a separate video on this. The intent of this one was 5 vs 20
Hi Nav I sent you my payslips and haven’t heard back from you..it’s been a week-thank you
Great Information.
Can we pay 10% or 20% downpayment in installments? Or it has to be upfront
It usually needs to go before closing.
Can you tell us about accelerated and non-accelerated payments like which is better?
Next video :)
Why not rrsp?
Can you please check parul tv's video about how to buy a house in 5 years. And give a reply after watching that please sir?
What I mean is if you are buying a house in 12 months. You cannot contribute to RRSP in your first year in canada. You need to complete 1 tax cycle first.
RRSP is awesome otherwise. Will make a separate video on first time home buyer advantages. This video is more about how much.
@@growwithnav okk got it!👍🏻
You need to repay that as well.
@@growwithnavif you withdraw money from rrsp you have repay it back in certain years
Hello Navjot,
Just trying to understand things better for learning.
Correct me if wrong.
So detached house would have been 100-150K higher not more than that I am guessing.
Also there is a possibility that it might have 4 bedrooms on upper unit and 2 bed basement lower unit.
So as detach appreciates more than semi, would not that have been more feasible for better returns for Cash on cash I mean.
I am asking because I am myself looking in KWC and trying to analyze and you are amazing at that and can share on what you think.
Thnks for the video and amazing video and very inspiring.
It you have the cash , then sure :) a more expensive house requires more downpayment and better income eligibility - which is where most people don’t qualify.
@@growwithnav Makes sense thnks for reply
Hey Navjot. Thanks. Regarding your example of investing 100k towards buying a new house funded by tenant. You mentioned this will be fully paid up $2m in 30 years. But isnt this 5% only? Thought the 5% didnt apply to non-residential properties
Investing 100K in a 500K home in 3 years is what I meant :) this will be worth 2M in 30 years.
@@growwithnav ahh. Thanks!
If we are buying a second house for living and 1st one will be rented out, then can I still make 5% down payment as I'll be living in the second house. Similarly what happens if I buy second house for living in and sell the first house and don't rent it out. Thanks
Yes you can
If you qualify on income
@@growwithnav thats the hard part though qualifying on income
@@lamhamoon8785 yup :)
I am very skeptical of your calculations. Even at current scenario where mortgage is expensively is interest income this doesn’t hold good. Higher outlay of interest led by longer tenure is the flaw so i request people to have caution before going ahead with this opinion. ‼️‼️‼️
Is it possible to procure the entire Downpayment from the market? I know interest will be more but for me that is better rather than procuring this huge sum of money
No, unfortunately not. You need a min 5% of your own funds to buy residential properties in canada.
Hi!@@growwithnav Absolutley loved your video, it was very informative!
However regarding the above comment, if I get money from my parents back in India to cover for the 50% of the 20% downpayment for example. Would that be okay?
Sir if we have 48000 dollar then how much of mortgage loan we can avail. Age 25 years with full time Canadian job. Thanks 👍
Average house price increase from 1982 to 2022 was 2%.
That seems off
Thnak you
The income is also gonna increase as we saw people were earning half of what we earn now. May be that would be easy to pay 4000 then.
💯
What about 15% on a 200k home as a first time homebuyer. Is there any difference or stick to 10%?
10% is the sweet spot.. the benefit isn’t as high if you do 15% - vs if you do 10% instead of 5%
So helpfull bro👍🏻 i would like to meet you inperson and discuss few things about real estate. And i want you to be my mortgage agent.
👏👏 do book a call to start with :)
Done bro, thx. Ill contact once i reach toronto.
@@growwithnavawesome client mil gaya!
Hii..i have a question what would be the amortization if we down 10%?
25 years
We currently live in a our house which is 2 bedroom house but wants to buy another house which will be 3 bedroom house. We want to keep our current home as a rental property and want to move to 3 bedroom house as a primary residence. Do we need to pay 20% down for this new 3 bedroom house we will buy?
No as it's going to be your primary residence
As long as you income qualify, you will be ok with
@@growwithnavbut I bought my second property as my primary home even though the issuer refuses to cover the mortgage insurance even we have more than 150k family income and now we only have the option to pay 20% for our second pre construction property before its closing in feb. Can you help me please?
💯 so inspiring
👏👏
I heard that you can opt fixed mortgage rate and your mortgage rate would be revised in every 5 years, is that true?
That’s true.
only if you chose a 5 year term. You can get fixed rates for other lengths of time (1, 2, 4, 7 years etc)
@@canadianjatti what if I choose mortgage for 25 years, can I choose a fixed interest rate for next 25 years ?
@@successmantra2003 that is not possible in Canada, in USA you can get 15 or 30 years fixed mortgages.
@@GagandeepSinghPandher actually as per my research you can get up to 25 years and the only lender than offers this is RBC. TD has up to ten years. The rates are high though (RBC says almost 10% for their 25 year fixed) so its not very attractive to most people. Also, many would want to sell within that time and then would incur the penalties associated with breaking the term. I know its much more common in USA to have 15 year terms.
Hey Nav..wanted some financial advice from you.. How can I reach you?
No such 121 channel right now :/
Hi !Navjot , Should I buy a 1st house of 500K if i want to start a single or two businesses in upcoming 5 years ?
Even my and my spouse income from salary is little bit about than minimum pay rate.
🔥🔥
Down payment should be 75%
Whatever works for you
Your all calculations are wrong because u have not studied the history of mortgage in Canada.