Gift Letters: The New Currency
With the high price of real estate today, buying even an entry-level house or condo is just a dream for many first-time buyers. The solution for the lucky ones? The Bank of Mom and Dad.
A donation towards a home’s down payment, to children from their parents, appears to be growing in popularity. In fact, a recent study discovered that 65 percent of those polled said they would prefer to give a financial gift to their children rather than have their children continue to live at home!*
Whether your down payment is comprised of money gifted to you from your family, from the sale of a car, or from the proceeds of your wedding, it’s important to prove any large amounts deposited into your bank account are actually yours to keep, not loans from friends or family, and that any money gifted does not need to be repaid. After all, your lender needs to be confident your priority is to repay your mortgage, without being caught up in trying to pay back friends and family at the same time.
Buyers saving to purchase a home need to remember that they require a minimum of a 5 percent down payment for a home purchased for $500,000 or less, then a 10 percent down payment for the portion between $500,000 and $999,999. Homes that cost more than $999,999 require a minimum 20 percent down payment.
There’s a home out there for you —and your adult children— whatever the budget. Please call today to find out what’s new on the market! 416-779-8732
*Information provided by Nick Tavernese, RBC Mortgage Specialist*