- Hey, it's Nolan Matthias,from Mortgage360
and welcome to our six part series for time home buyers.
Where we're gonna discuss everything
from how to save for a down payment
to, how to select a realtor,
to how to get pre-approved
to how to find a home and write an offer,
and ultimately how to close in the mortgage
and make your move.
But before we get into it, give me that favor,
hit the subscribe button, hit the notification bell,
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immediately as they come up.
Now before we totally get into it,
the next video is going to be on pre-approvals.
Which is one of the topics
that we get the most questions about.
So if you've got questions on pre-approvals
do me a favor in the comments below,
put your questions down there
and we'll answer them in part two of this series.
Okay, so obviously the reason why we're building this series
is to create a resource for people where they can go
and see what the process of buying a home looks like
from start to finish.
And well I'm mortgage centric,
obviously I'm a mortgage broker.
We're gonna make sure we discuss everything
about the process, including how to select that realtor
and how to write an offer.
Now, for those of you who don't know,
I have run a real estate company in the past.
I ran MaxWell Realty,
which was one of the biggest independent real estate
companies in the Prairie's.
We had over 400 realtors.
So I do have experience on that side as well.
So I'm coming from a place of understanding,
both the mortgage side and the real estate side,
and ultimately that entire first time home buyers process
from saving for the down payment
to actually closing on the loan.
So let's get into it.
Let's start talking about the first step for any home buyer,
which is saving the down payment
or getting the down payment,
depending on how you're going to go about doing this.
And what I've done is I've broken this down
into four main ways to get your down payment.
Number one is the obvious,
which is save, for your down payment.
Obviously we're taught as kids
that we should be saving
and saving for that eventual home purchase
somewhere down the road.
And if we've done a good job,
we've actually been saving since probably our 18th birthday,
if not earlier, for that eventual home purchase.
Now, if you have been doing that, congratulations,
and I hope if you have,
what you've been doing is you've been putting that savings
into your RRSP, because step number two
and way number two to get your down payment
is to take advantage of the first time home buyers program,
where you can use your RRSP
and take basically a 15 year interest free loan
out of that RSP up to $35,000.
And one of the ways you can expedite growing
your down payment is by using your RSP
and taking advantage of the tax rebates
that you get as a result of making contributions.
So let's say you're one of those people
that has saved a bunch of money.
You've got $20,000 sitting in your savings account,
and it's not already in your RSP.
Well, what you can do is you can take that money
contributed to an RSP
and then in April or May, when you get your tax refund back,
which we'll be able to do is add that back into your RSP
and ultimately end up having a greater amount.
So let's say you take that $20,000,
you drop it into your RSP
and you're at a 40% annual tax rate
while you'd get about $8,000 back in return.
So you'd take your $20,000 that you have saved
and almost instantly make it into $28,000.
It's a really quick way to grow
your down payment resources really, really fast.
Now, one thing that you should be considering
if you do have an RSP
and your company offers dollar for dollar matching,
is taking advantage of
every penny that your company will match.
Now, not all people will have this option.
Not all people will have an employer
that is willing to put a dollar in for every dollar
you put in or any amount into your RSPs
for the amount that you save,
but those of us who are lucky enough to have that option
should take advantage of every single penny of it.
Because that will also accelerate the amount of time
that it takes for you to save your down payment.
We've seen regularly people who've gone into a company
saved $5,000 per year for two years,
had dollar for dollar matching
and ended up with a $20,000 down payment within two years.
Basically only putting $10,000 of their own money
into those savings.
Now, one other thing to note is
if you are a first time home buyer
and you buy a property this year, or next year,
you actually can use a $5,000 tax rebate for the year
that you purchased the property.
And that's another added benefit of being
a first-time home buyer.
It doesn't have anything to do with
saving your down payment,
but if you do buy a house,
make sure you take advantage of that.
Now the third way to save for a down payment,
and this is likely one of my favorites,
because I'm all about the hustle,
is getting a side hustle
that allows you to save your down payment faster.
And we've seen many clients come into us and say,
well, I'm going to save for my down payment,
I should have it in six months
because I'm going to get a job at Starbucks in the evenings,
or because they're offering their services on Fiverr
or one of the gig economy websites,
which allows them to go out and put their services out
for tender and allows people who need certain jobs done
to basically hire them for,
small to long-term or medium term jobs.
We've also seen people flip things,
so go on Kijiji, find really good deals on stuff,
and then turn around and sell it
for a profit on Facebook marketplace or somewhere else.
Which I think is really cool
because it takes a little bit of time,
it takes a little bit of hustle,
but if you can find really good deals on things
that people just want to get rid of,
and there's lots of people that just wanna
get rid of stuff, think very condo and tidying up.
Well, you can take those things, turn around
and sell them and if you're patient,
there's a lot of money to be made in that flip economy.
Now the fourth way to get your down payment,
and this is the one that we see most often
and is probably one of the easiest
for first-time home buyers
is to get the down payment or portion of the down payment,
gifted from a close family member.
And we often see this with grandparents or parents
who wanna give a little bit of money to
that grandchild or that child in order to
help them with their first time home purchase.
And this is really one of the most common ways
to get a down payment.
It's simple, it's fast.
All you have to do is get a gift letter written
from your family member, that's gifting you the money,
and then from there, have it deposited into your account
and show that to the lender.
And by all means that is the fastest,
easiest way for some people to get that down payment
that they need in order to buy that first home.
Now on top of those four ways to save for a down payment
or get a down payment gifted for you,
the reality of it is, is the best way
to save for a down payment is to create a budget,
create a plan, and then stick to it.
And we've found that people who decide
that they wanna buy a house
often will be able to save for the down payment
significantly faster than they thought.
As long as they have a plan.
And there's all sorts of resources out there,
to set savings goals.
You can use things like mid.
We personally, we have a handwritten budget plan
that you can download a link it down below.
You can use a spreadsheet if into that sort of thing,
or you can use the jar or envelope method,
which is basically where you take money
and you split it all up between multiple envelopes
for certain things, and then have one
that's specifically for savings,
and you make sure you drop a little bit of cash into
that every single month.
Regardless of how you get your down payment,
the down payment is obviously the first step.
In Canada, you need at least 5% for down payment,
when buying a new home,
you cannot do it with any less than that,
unless you're borrowing the down payment,
which we don't recommend.
And once you've got that down payment all saved up
and ready to go, then it's time to go
and get a pre-approval from a mortgage broker
in order to take that next step,
which will be part two of this series,
which is to get pre-approved for a mortgage.
So in order to make sure that you get that next video,
hit that subscribe button, hit that notification bell,
do me that favor hit the like button
for the YouTube algorithm.
So more, more people see this.
And from there, we're gonna see in the next video
where we'll take you through step-by-step
the pre-approval process
and how to make sure that not only get pre-approved,
but you get pre-approved accurately
and that it's done, right?
So that there's no surprises when you actually go out
and find your home.
Cheers, we'll see you on the next video.