Helping your kids buy a home: educate yourself.

Today, that often means helping them buy their first home.

A study from the Canadian Association of Accredited Mortgage Professionals shows that 13% of a first-time homebuyer’s down payment comes from family.  As members of the education community, you have an advantage – through its various lending channels. Educators Financial Group offers you and your family access to discounted rates! (Check out the current rates here.)

Amedeo Perfetto, Director of Lending Services with Educators, says, “A lot of the mortgage questions that I get from educators are for their children. They do like to help out their kids in settling down and are hence curious about our specific mortgage plans for educators and their families.”

Four lessons to learn before helping your kids buy a home:

1. It’s not selfish to put yourself first. 

If being generous now means you won’t have enough for your retirement later, think twice. Your children will have the capacity to work and generate a paycheque for a long time after you yourself stop working.  You don’t want to give the kids money now, if it means you have to call on them for their financial support later.

 2. Think about an early inheritance.

It’s called a ‘living legacy’, and it’s becoming popular with baby boomers who have lived through some prosperous times.  Many like the idea of being able to enjoy the happiness their gift gives to their loved ones. There are tax advantages to this practice, too.  Gifting money in small amounts over a period of time can result in a smaller tax bill than what would be due upon your death otherwise.  A tax advisor can tell you how this works.

3. Be careful about gifting the money.

The upside of gifting the money is that in Canada, a gift is not taxed.  However, gifting money to a child to buy a home when they are getting married could result in the two parties splitting any equity in the home in the case of divorce.  Lesson here? Talk to a lawyer about how this could be avoided.

4. Co-signing a loan – are you responsible? 

If you co-sign your child’s mortgage, you should know that you would be liable for mortgage payments if your child defaulted.  It may also impact your ability to borrow for your own needs.

For more information on how Educators Financial Group can help you help your kids buy their first home, speak to an Accredited Mortgage Professional.

Find your team here, or call 1.800.263.9541 today.

The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual.