More parents helping children purchase homes
Much of the money is going toward the down payment
In the long list of parental responsibilities, helping kids buy their first home is making its way to the top. Competitive housing markets are surely contributing to the need for financial assistance but there are other factors. Compared to previous generations, kids have to stay in school longer to effectively compete in the job market, while the cost of postsecondary education steadily rises. Many university graduates are strapped with student loans that make saving for a home difficult, too.
In varying degrees, parents across Canada are helping kids enter the real estate market. In British Columbia and Ontario, the provinces with the hottest housing markets, 42% and 35% of these home buyers, respectively, received financial help from family, according to research from Ratehub*. The Atlantic Provinces had the lowest rate of assistance at 18 per cent.
Much of the money parents contribute is going toward the down payment, but how much people put down varies from province to province. In British Columbia and Québec, 45 per cent of home buyers put down at least 20 per cent. In Ontario it’s 38 per cent while only 20 per cent of people in Manitoba and Saskatchewan meet the 20 per cent marker*. Those who don’t put down at least 20 per cent are required to pay default insurance premiums. The amount you pay for this insurance declines as your down payment increases.
Parents helping kids buy a house can make sense, but parents do need to consider the financial implications of helping, especially when it comes to three main financial assistance options.