First Home Buyer Mortgage Explained
Buying a home is not easy, especially for cash-strapped Millennials who typically have significant debt, low credit scores, and uncertain finances. A home can provide them with some much needed security and stability, and give them room to focus on other aspects of their life. HSBC’s new global study indicates that despite these obstacles, Millennials are buying new homes. About a third of them do have homes but nearly two-fifths of these homeowners have received assistance from their parents.
According to the Bank of Montreal, 44 percent of Millennials in Canada expected help from their parents when purchasing their first home. Help could either be in the form of a gift or a loan. This is because individuals in this generation need to earn much more in order to finance their home. Some have to spend years and forego some leisure expenses in order to even make the down payment for their first home buyer mortgage.
How Parents Can Help their Children with a Home Loan
No parent likes to see their child struggle to establish themselves in life. Unfortunately, Millennials face unprecedented challenges and require assistance. Here is how you can help with your child’s mortgage home loan.
- Co-Sign on the Loan – Banks will be more willing to finance your child if you co-sign on the loan. However, this would also be a clear indication that your child does not have the credit score and eligibility to get the loan. Consider the financial repercussions and your obligations carefully before you take this step.
- Loan Your Child Some Money – Instead of gifting your child money and letting them escape responsibility, loan your child some money and have them sign a legal document. This ensures you recover the money eventually and your child does not have to struggle to find enough cash for the down payment. You can give this from your savings account to avoid tax repercussions or by unlocking the equity in your home.
No matter how you decide to help your child, be sure to discuss the matter with them and a consult an experienced mortgage broker in Newmarket before you make the decision.
What Options to Weigh Before Committing to Help with First Home Buyer Mortgage?
There are several factors you need to consider before you help your child purchase their first home. It is a good idea to understand the latest mortgage application process and other such factors. You might also want to consult with a professional mortgage broker to get advice on the current real estate market and financial implications of the help. You must consider alternatives such as:
- Working with the local charities that give first time buyers incentive to save on down payments. You can donate the amount your child saves on down payment to a charity.
- Encouraging your child to consider down payment assistance programs run by local housing authorities and the government. Your child can gain around $11,000 in down payment assistance for their home loan.
You can talk to a mortgage broker near you for more tips on how to help your child buy the home of their dreams. Call the experts at Accumetrix Mortgage Alliance today at 905-780-0908 to discuss first time home buyer mortgage and how you can be of assistance to your children.