As house prices have escalated the prudent approach to mortgage downpayments has rapidly been replaced by additional borrowing. Those who want to buy a home aren’t able to save enough for a downpayment to keep up with the rising prices and are turning to family, friends and credit cards to get the funds.
The Canadian Association of Accredited Mortgage Professionals found that this amounts to around $10 billion annually and 13 per cent of downpayments are funded through borrowing. Around 1 in 5 first time buyers received a loan or gift from family. Average downpayments are 21 per cent for first time buyers rising to 48 per cent for those further up the property ladder. The figures show that first time buyers finance on average 85 per cent of the value of their new home, including the mortgage and borrowing for the downpayment.
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