Will The New Down Payment Rules Affect Me?

As everyone has heard by now there are new down payment rules coming into effect in February 2016. The question on everybody’s lips is “Will The New Down Payment Rules Affect Me?”

The new rules are as follows:

• 5% on the first $500,000
• %10 on the remainder over $500,000 up to $1,000,000 at which point rules apply.

With or without the new rules the same principles apply.

If you’re a first time buyer the concept of hobbling together a down payment can seem daunting but there are a number of strategies that can be put to use to make it work. The key is focus and discipline. Don’t take your eyes off the prize. Think about it in terms of “needs and wants”.

Let’s start with the old adage “a penny saved is a penny earned”. Have you taken any of those on-line tests to see how much you spend on Starbucks each year? Sure it’s only $5 a day which turns into nearly $2,000 in a year! Let’s say there’re two of you in the equation. There’s nearly $4,000 right there. Now, apply the same principle to beer and wine (nobody smokes any more, correct?) Imagine the savings possible in one year. Don’t get me wrong, we’re all about living a little too but while you way “want” that Starbucks grande you “need” a down payment. Even if you only manage to shave the ancillary spending by half the savings are still substantial. Where there’s a will there’s a way and the savings can be found.

The government offers The Home Buyer RRSP Plan which allows you to withdraw up to $25,000 from your plan with conditions applied (see the link). Even if you’re not a regular saver you can still cycle money through the plan for a 90 day period to open up a tax refund opportunity. Talk to your banker to figure out the options. They’re there to help.

If you can’t manage your potential payments now there’s no way you’re going to manage them with a real mortgage. Figure out what it’s going to take by getting into practice. You may “want” to flip on down to Mexico with the gang for a few days but you “need” to make this month’s payment. Start to budget and live within your means as a guiding principle. You will never, ever go wrong.

Don’t even think about dipping into your cookie jar. Don’t touch it, don’t go near it, don’t even look at it.

At first it may seem like an uphill battle but once you start to realise that small gains quickly compound, the rewards for discipline become self evident.