% Down Vs. % Down - A Comparison

It has always been an issue for home buyers to save their down payment. Many people, on advice from various people wait to save %, rather than moving into the home sooner with % as a down payment This is not always a good idea. Let me explain; We have young couples, the Jones' and the Smiths. They both have the same amount of money to spend on housing and saving ($/month). From that $, they are paying their rent of $/month, and saving the other $ for their down payment. In fact they're identical people. The Jones' and the Smiths are both looking to buy a $, property. As such, they will need $ as a down payment if they purchase at % down, or $, if they wish to have % as a down payment. To date, they have both saved $ with which to purchase a property. The Jones' have decided to buy now and accept that they only have % as a down payment The Smiths' have decided to wait until they can raise %; thus saving themselves some CMHC costs. What the Smiths' aren't realizing is that while they wait, the cost of the property is increasing... thus incrasing the amount of money they need as a downpayment. They've also not taken into account that the money they are paying in rent is being thrown away, while they could have been putting that against their mortgage. Sure, saving the CMHC fees is a good idea. But is it necessarily the right way to go? Not always. If it takes the Smiths an extra years to save up the extra money, the property could have increased by as much as $, in that time.... meaning that they'd need more of a down payment, as well as having a larger mortgage than if they'd bought earlier. If you'd like to read this article in full, including graphs showing the difference between the Smith's and the Jones' then go to our website at www.workingtogether.ca and review the article titled "% Down Vs. % Down - A Comparison". You'll get the idea; and possibly save yourself a lot of money!