Have you ever viewed your house as a wealth creation tool? It’s an asset that has value, but most people don’t leverage it! Here are some ideas to help you create wealth with one of your largest assets…
Purchase a rental property
You may know someone who owns a rental property and wondered, “How did they get enough money to buy it?”. Normally the down payment on a rental property is created through the equity in your primary residence. It doesn’t make sense to take the equity out of your property with a mortgage, but to use a secured line of credit instead. You can set up the secured line of credit well in advance before you purchase the rental property to give you the security of knowing exactly how much money you have available for a down payment. The great aspect of this approach is that the interest in the secured line of credit can be tax deductible.
You can buy a cottage or secondary home with as little as a five percent down payment
Yes, that’s right! This program isn’t specific to any bank or wholesale mortgage lender but is a program that’s provided by the default insurers in Canada. When you have less than 20 percent as a down payment in Canada the mortgage must be insured for default. If you have great credit and income stability and have had dreams of buying a cottage, you’ll want us to review this option with you.
Or let’s say your parents have always rented or are looking at downsizing and need the equity in the home they’ve just sold to live on. You can purchase another property for your parents to live in with as little as five percent down payment.
Gift a down payment for your children to buy their first home
You may be thinking, “how do people get into the housing market?”. You want to support your adult children to purchase their first home but don’t have the cash available (or don’t want to take if from your investments). It can be difficult for individuals to save money for a down payment, and adults who have good-paying jobs may not be able to save for a down payment because of the high cost of rent. Many families we work with opt to give their adult children an early inheritance to act as a down payment on their first home and stop the cycle of renting. Accessing the equity in your primary residence is a great way to help your children purchase their first home.
Pay off higher interest debt and improve your household cash flow
You may find yourself with credit card, car loans and a bunch of other debts outside of your mortgage and you just want to “clean things up” and start fresh. Even if you’re worried about your credit score, there are still good options available through our office to help you clear up your debts in an organized way and help you save money on interest. We just completed a mortgage for a family who had about $50,000 of unsecured debts with credit cards and lines of credit but had over $300,000 in equity in their home. It was super easy to wrap the debts into their mortgage and it managed to save them almost $700 per month.
Remember, we’re here to help and we love working with people. The best part of working with our office is that we can collect your mortgage application and income documents in a secure way, on-line. We also meet clients virtually so you can feel comfortable about having a good consultation and not be stuck in a small office at your bank.
To start the conversation, book a complimentary 15 minute call with us today! https://velocity-app.newton.ca/app/en/client/journey?shortCode=ktzwqzg6ndhc