More par­ents help­ing chil­dren pur­chase homes

Much of the money is go­ing to­ward the down pay­ment

The Guardian (Charlottetown) - - BUSINESS - Dick Young

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.

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