Advantages of Putting Down 20% on St. Albert Realty

As a first-time buyer or a new Canadian resident, buying a home comes with all sorts of different caveats that you may be unfamiliar with. Even the simple things like making a down payment have their fair share of fine print. How much you put down on a home happens to be one of these items. With the cost of living trending upwards, you may be wondering just how much you actually need to spend on your down payment. While 20% is usually the standard, is it really necessary in all cases? In this post, we’ll cover all the benefits you should know about when making a 20% (or greater) down payment on St. Albert realty.

Why Should You Make a 20% Down Payment?

There are quite a few reasons why putting 20 per cent down on a home is worth considering. This is especially true if you’re looking to save money and build equity faster. For starters, a greater down payment can make it easier to get approved for a mortgage. Lenders want to see that you’ve got solid financial habits, and having 20 per cent saved up tells them you’re financially ready. It also puts you in a better position to get a lower mortgage rate, since lenders tend to offer better terms to borrowers they see as lower risk.

Then there’s the fact that with a larger down payment, your actual mortgage loan will be smaller, which means your monthly payments will be lower, too. If you put down less than 20 per cent, you’re required to pay mortgage insurance, usually through CMHC or another provider. That’s an extra cost that can range anywhere from 0.6 to 4.5 per cent of your mortgage amount. So the more you can put down upfront, the more you’ll save on insurance premiums. 

Over the long run, you’ll also pay less in total interest. For example, on a $600,000 home at a five per cent interest rate, someone who puts down 20 per cent could end up saving nearly $68,000 in interest compared to someone who only puts down five per cent. That’s no small number. On top of that, with a smaller loan and lower payments, there’s also a good chance you’ll be able to pay off your mortgage faster. Imagine what you could do with six or seven years of mortgage-free living. 

Contact me About St. Albert Realty!

If you’re keen to learn more about making the right down payment, contact me today. I’d be happy to help you get a better understanding of how down payments work in Canada. For more information like this, stay tuned to my blog! Don’t forget to check out my social media for the latest news and updates. I look forward to working with you soon!