Giving Your Kids the Best Chance at Homeownership
With housing markets across the country skyrocketing in recent years, it’s becoming a challenge for up-and-comers and young families to plant their roots in homeownership. This is currently affecting younger Millennials the most, but Generation Z is beginning to experience the same roadblocks. The solution: many turn to their parents for some variation of financial support. This is especially prevalent in a market like Ottawa where in May, the average price of a home was reported to be $731,306. In this blog, we will discuss which methods and best practices to consider in order to help your child financially.
As a Millennial/Gen Z, what can they do?
There are many things that young people can do to prepare themselves before taking on a large-scale financial responsibility such as buying a home. First, they should make an effort to pay off any outstanding debts such as student loans so that they aren’t constantly playing a game of catch-up. By the same logic, they shouldn’t take on any other unnecessary financial burdens. Buying a car may not be necessary if they own a bike or have easy access to public transit. We also suggest that they get pre-approved for a mortgage before browsing the market in order to give themselves an advantage over other buyers. We suggest that an effort be made to save for a large down payment as well. If any of these steps are taken, it can reduce a lot of stress for everyone down the road.
As a parent, what can I do?
Luckily, there are a variety of ways in which you can help your child buy a home. It doesn’t necessarily have to be by giving your children a large amount of cash either. Many parents have either given a loan to their children, acted as co-owners, elected to provide the down payment or covered some of the mortgage payments. There may even be investment opportunities or tax benefits based on the method you choose, so make sure to do further research depending on your needs. Just note that their initial down payment must come from their own funds or be a true gift. Most lenders will not accept borrowed money as a down payment.
Remember to consult the experts.
Luckily, there are many different fields of expertise that can be of assistance. There are lawyers that specialize in real estate who can help you through the legal process, mortgage brokers who can help you with the financial aspects of buying a home and many qualified REALTORS® across the city with extensive knowledge in the market. Reach out to one of our qualified TEAM members and schedule a free consultation today, their expertise will help make the process much smoother.