Saving for a Down Payment

down payment minimum

Mortgage Down Payment

Today’s mortgage market allows potential homeowners to purchase their dream property in Canada with as little as five per cent down.

Any down payment that totals less than 20 per cent of the property value will require mortgage default insurance, and is considered to be a high ratio loan.

A conventional mortgage is defined as a mortgage loan where 80 per cent or less of the property value is financed through a lender. The percentage of your home value that is financed, or not paid for by the down payment, is defined in a Loan to Value ratio (LTV) (loan amount divided by property value). The LTV has a large influence on the mortgage product you will be eligible to qualify for on the purchase of your new property.

The greater the down payment you can accumulate, the greater the contribution you are making toward the principal value of your home, and thus the less of the mortgage loan amount you will be paying interest on over time.
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Refinance and Consolidate Your Mortgage

Refinance / Consolidate
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The Dirty “R” Word

If the word “Recession” fills you with unease, you’re not alone. The word doesn’t sit well with many people. Unless you are in the rare circumstance of having just come into a gratuitous fortune, or you are employed in a sector of the economy that has somehow been unaffected by it, a recession will to affect you. Even then, depending on the severity of the recession, unaffected sectors can be effected by proxy.

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Why wait until New Year’s Day? Start thinking about financial strategy now

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The most popular New Year's resolutions are often the hardest to keep, especially when it comes to counting calories, quitting vices, losing weight and, of course, saving money. Most Canadians' intentions are good enough – save up for a house/renovation/emergency fund/college education/pile of debt – but motivation drops off and people wait until the start of the next year to once again try to get their act together.

But who says people have to wait until New Year's Day to put their good habits into motion? Can't financial stability start sooner – like today? Better yet, how about putting the ball into motion right now?

Top 10 money-saving tips
There are plenty of top-tip lists floating around the internet, all of which are helpful when making or upholding financial goals or resolutions. Although they vary slightly depending on who you talk to and who the tips are aimed toward, go-to tips generally include the following: Continue reading

Don’t forget about life insurance coverage when saving for your dream home

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Young, first-time homebuyers who are saving up for their dream home and brushing up on mortgage terminology may be easily sidetracked by the latest and greatest home projects Pinterest has to offer. Sure, images of lush, budget-friendly gardens and $50 room renovation before-and-after pictures can be lovely to gawk at, but there are more important matters at hand.

Like actually securing a mortgage. And creating a budget. Then getting sufficient life insurance.

"But I'm young and healthy with plenty of home renovations in my future! Why do I need life insurance right now?" first-time buyers may ask.

Actually, the reason is quite simple. Life insurance can offer a cushion of protection for people who aren't lucky enough to die of natural causes at a very old age, according to the Winnipeg Free Press. Regardless of medical advances and disease prevention tips experts constantly promote, the unfortunate fact is that not everyone has their finances in order when they die – ripe old age or otherwise. Continue reading

Older Canadians less likely to pay off loans quickly

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Retirement is meant to be a time for relaxing and enjoying the rewards of your years spent working and building wealth. Unfortunately, some Canadians are relaxing a little bit too much and not taking steps to get out of debt sooner.

A recent study from the Canadian Imperial Bank of Commerce indicated that a significant number of Canadians are entering retirement with debt, and for those individuals, it may be more difficult to pay off their loans and other bills.

Roughly three out of five retired Canadians have unpaid debts, compared to three out of four non-retired Canadians.
Although 42 percent of Canadians said they made a lump sum payment against their home loans and other debts over the last year, only 27 percent of retirees reported the same thing. Continue reading

Managing debt in current economy

BMO Financial Group, in an effort to educate consumers in financial literacy, is issuing one money management tip per week during 2012. The latest: Pay down debts before a rate increase.

One of the best ways for Canadians to reduce their debt burdens in the long term is by changing the amortization period on home loans from 30 years to 25 years, according to BMO. This may have the immediate effect of raising monthly payments, but the savings on interest payments over the life of the loan will more than make up the difference.

Canadians might want to steer away from debt management services as a method for controlling their financial burdens. The Canadian Association of Credit Counseling Services has drawn attention to the possibly dubious practices employed by some of these companies. Many of the services these agencies provide have already been outlawed in the United States and at least two Canadian provinces.

"At issue are services that promise savings of up to 90 percent on unsecured … debt of $10,000 or more," explains the CACCS. "This translates to paying creditors as little as 10 cents per dollar owed, a preposterous expectation in most consumer debt cases, according to many experts in the field."

As builders predict rising house prices, cost-saving options remain for buyers

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Home builders across Canada are reporting that the cost of building a new home is going up, and rising home prices might not be far behind.

The Winter 2012 Pulse Survey, released March 15, polled members of the Canadian Home Builders' Association to gauge the industry's opinion about the general direction of the housing market. This year's results indicate a growing concern over increased costs, dwindling supplies and onerous regulations from Ottawa.

Lot prices are increasing, home builders say, and many expressed their concern in this year's survey. Roughly one third of all home builders say the rising price of serviced lots in particular is critical, but the problem is worse in some areas of the country than in others. Half of all builders in Manitoba and 44 percent in Ontario reported the problem.

Municipalities are passing stricter standards and approvals, which can also hinder home production, builders say. Concern over local regulation has risen from 19 percent in 2011 to roughly 25 percent today, the survey finds.
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Money saving tips for tax payers

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Recently, TransUnion found that the average Canadian carries nearly $26,000 in personal debt – and that doesn't even include home loans. With tax season approaching, the Royal Bank of Canada has some tips to help you save money. 

There are a number of tax credits available to Canadians this year, including children's fitness and arts credits, tuition, education and textbooks credits, as well as first time homebuyer credits. Tax payers should also make sure that any investments they make are as tax-efficient as possible. For example, in a two-income household, investments made by the earner with the lower income will be taxed at a lower rate.

Tax free savings accounts and registered retirement savings plans are also powerful tools to help Canadians reduce their tax burden. Interest on TFSA deposits is tax-free, and there's no tax penalty for withdrawals. Even something as simple as filing tax returns on time can save money. The penalty for late filing is a minimum of 5 percent of the balance owing on your return, plus another penalty of 1 percent of the unpaid tax, multiplied by the number of months the return is not filed, according to RBC.
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Top retirement tips for Canadian consumers

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You know you need to begin saving for retirement, but you don't know where or when to start. Sound familiar? If so, you may want to check out some tips provided by the BMO Retirement Institute's head, Tina Di Vito, about how to successfully save for your golden years.

A recent BMO Financial Group study found nearly 40 percent of Canadians contributed to their Registered Retirement Savings Plans last year before the end-of-February deadline. If you were part of the 60 percent who did not meet the deadline, that's OK. There's plenty of time for you to make a contribution before the 2012 deadline.

Tina Di Vito says understanding the inner workings of a retirement plan is the first key to improving your retirement strategies. Her list of helpful tips also included using common sense, saving for tomorrow rather than living for today, paying attention to statements and learning how much is entitled under the Quebec Pension Plan or the Canadian Pension Plan. Continue reading

Canadians of all ages seek retirement before 65

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Canadian baby boomers and younger members of Generation X and Y disagree on many important national issues, but retirement isn't one of them.

According to a recent TD Bank Group survey, Canadians across all three generations say retiring before age 65 is a significant financial goal, but saving sufficient funds to retire young is increasingly difficult.

"An early retirement is only achievable if you take the steps needed to get there," said Cynthia Caskey of TD Waterhouse Private Investment Advice. "Our research suggests that many Canadians feel they are behind when it comes to getting their finances in order for retirement, but this doesn't have to be the case. Early retirement may be an option, as long as you take the time to do the proper planning." Continue reading