Home buying help for singles
By Helen Morris
National Post
Purchasing a home alone can be daunting but help is at hand to make the most of your single income.
"Get pre-approved -with a single income, many times people are looking at condominiums. The condo fees and taxes need to be included, and, of course, the mortgage payment," says Kevin Suddaby a mortgage broker with Invis in Calgary. "Make sure you've got a complete assessment of what you can afford. Get an interest rate held, so that you are protected while you are looking for a home."
The new mortgage rules effective March 18 need consideration.
"We don't have access to the 35-year amortization anymore. This is impacting singles more than couples who have dual incomes," Mr. Suddaby says. "You can qualify for less property now."
One option may be to ask a co-signer, such as a parent, to help you qualify for the mortgage.
"By co-signing or guaranteeing the debt the parent is obligated as much as their son or daughter with the payments," says Stan Falkowski, senior vice-president, Mortgage Intelligence in Toronto. Helping with the down payment may make more sense.
"We're looking at the baby boomers. Their kids are now buying homes. If parents can afford it and they have assets, it wouldn't be a bad time to gift a down payment," Mr. Falkowski says.
With only your income under consideration, putting together a healthy deposit is more important than ever.
"For those who are looking to buy in the next two or three years, it's a good point to max out on their RRSPs every year if they can," Mr. Falkowski says.
"They can in turn use those funds for the down payment."
If you meet the Canada Revenue Agency criteria as a first-time buyer, you can withdraw up to $25,000 from RRSPs to buy or build a qualifying home. Mr. Suddaby says you may also borrow funds to put into an RRSP and then withdraw those after 90 days to generate a down payment.
"The borrowed loan affects your total debt service," Mr. Suddaby says. "If you contributed to an RRSP earlier this year, there's a chance you would get a tax refund that can also be used as a down payment."
If you are receiving child or spousal support, these can count as income. Mr. Suddaby says many clients come to him too soon after they become single. The separation must be legally documented and the lender needs to see a clear record of payments. Mr. Suddaby says a home with a separate rental unit can generate more income, but it is critical to get good advice on all the expenses involved and work out if the additional time and effort is worth it. If you do not qualify now Mr. Falkowski says don't give up, have a plan.
"If they take a look at their financial situation: They can't get a gifted down payment; their RRSPs are a little low; it's never too late as long as they put a plan in action," Mr. Falkowski says. " 'With what I can put away, I can buy a place in two, three years or whatever.' In the time frame that they're actually starting to save they could meet someone and they could start saving together."
