happy-couple-make-decisions

Homebuyers don’t look like the traditional nuclear family of the past. In fact, a quarter of Canadians who bought a home in the last two years — or are planning to in the near future — did so on their own, finds a TD survey. Further, four-in-ten Canadians think buying property with friends or family members is a great way to get started.

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With this shift towards non-traditional ways of purchasing property, helping clients plan carefully can help avoid potential bumps on the road.

“Whether buying a home on your own or together in partnership with family members or friends, many of the guiding principles remain the same,” says Michelle Snow, associate vice president, Retail Products at TD. “Start by setting a realistic budget. The real estate market may move fast, but that doesn’t mean you have to rush your decision.”

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Here are some tips to help clients.

1. Decide how much you’re comfortable spending, and what the down payment will be.

Homebuyers pooling their resources may be able to make a larger down payment on their purchase, and there are benefits to this. For example, homebuyers who put down 20% or more may avoid paying for mortgage default insurance.

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The premiums for mortgage default insurance are calculated as a percentage of the mortgage and paid up front or by adding it to the principal portion of the mortgage. Eliminating or decreasing this premium can result in significant savings over the lifetime of the mortgage.

2. Co-purchasers also need to agree on the key characteristics they want in a property, and what they’re and are not willing to compromise on. For example, will the primary residence be a house or condominium? If it’s a second home to be used as a vacation destination, will it be a cabin in the woods or a cottage by the water?

3. Finally, consider how the associated costs, like taxes, insurance, utilities, repairs and maintenance fees will fit into the overall budget.

Originally published on Advisor.ca

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