Borrowed Down Payment

Scenario of a  Buyer who did not have enough down payment:

A client recently got a job promotion and is earning considerably more than she was last year.  Her increased income prompted her interest in buying her first apartment.  Living in the Vancouver Lower Mainland, she did not want to wait another year to save up for more down payment because she was concerned about rising real estate prices.  Plus she wanted to start building equity as soon as possible!

This client had saved up $8000 but she needed at least $18 750 down payment (5% of $375 000) plus some money for closing costs.

Solution:  She got a line of credit for $15 000 from her bank.  With that line of credit, she had enough down payment to purchase her first home plus some money left over.

She is paying 6% on her line of credit, and therefore she wants to pay it off quickly.  Her mortgage interest rate is only 2.49%.  With discipline she  will pay off her line of credit by the beginning of June 2017.  In the meantime she will have already built up over $12 000 of equity in her apartment by paying mortgage rather than rent!

Borrowing a down payment worked well for this first time buyer.  This will work well for many others, but it is not the best strategy for everyone.  Some borrowers are better off to save up their down payment in cash.  They will qualify for more mortgage money in that situation. It is also important to have a solid repayment plan in place if you borrow your down payment.

It always important to have a thorough discussion about your options with a qualified mortgage broker. 

The Best Mortgage in a Multiple Offer Situation

We have all heard Vancouver real estate stories where there are 10 offers on one property.  This intense real estate market makes it difficult for the average working family to compete when buying a home.  There are ways you can make yourself more competitive.  If you are one of those people – keep heart and read on!

I encourage home buyers to think about the speed of a particular mortgage lender.  It is easy to focus entirely on the best interest rate, but a good strategy takes all factors into consideration.

All mortgage lenders have different strengths and go through cycles.  As a mortgage broker I know which lenders are particularly speedy at a given time.

Imagine a seller who is considering offers after a weekend open house.  All offers are being viewed on the immediate Tuesday.  That seller has 2 offers in hand:

1. Subject to finance, subject to be removed in 10 days
2. Subject to finance, subject to be removed on the immediate Friday (the mortgage application is processed in 3 days).  The key is that the subject is to be removed before the upcoming weekend.

It is obvious that a short turn-around time is more attractive to the seller!

This strategy will strengthen your application.  No one can guarantee the speed of 3 days.  It will depend upon your application.  Thorough preparation in advance will maximize the possibility of success.

Take heart, and apply this strategy.  Give me a call and we can set you up for success!