As prices continue to escalate in many Canadian markets, it’s only natural for parents to want to help their kids buy a home. But there are three things parents should bear in mind before doing so, reports The Globe and Mail.
Ask any Realtor or mortgage broker about home first-time homeowners, and you’re bound to hear stories about parents providing financial assistance.
“The bottom line is that when a first-time homebuyer buys a house, the parents more often than not are contributing something to the down payment,” says David Larock, a mortgage broker with Integrated Mortgage Planners.
Some parents are more than happy to help their kids buy that first home. However, there are three good reasons why they should think twice before doing so.
1. It's impossible to help with the biggest affordability issue.
It's not the down payment itself that's the big issue. Rather, it's the income required for a mortgage.
2. You may still need the money for your own financial purposes.
It's better to continue building up your retirement savings. Additionally, any additional money can be given to your children when you pass away.
3. Your thinking on the financial benefits of home ownership may be wrong.
Having a home to raise a family in is one thing, but helping your kids buy a house because it's an investment may burn you financially.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate