Parents Helping Hands

There is a new trend happening in Toronto. As more and more younger Canadians are being priced out of the market in the GTA, they are turning to their parents for help.
There is a stigma there that kids shouldn’t be using “the bank of mom and dad” but reality is that things are different now. Salaries have not kept up with rising home prices and parents now have a large amount of wealth tied up in their own properties. With the average detached home in Toronto reaching $1,573,622 and the average condo apartment reaching $515,424 in February 2017, parents are watching their kids just struggle to afford a down payment. Putting a 20% down payment on a home valued under $1,000,000 to avoid the CMHC mortgage insurance fees means a down payment would have to be $103,084 for an average condo. More and more parents are considering gifting kids with part of that now to avoid large inheritance tax losses. I know a great mortgage specialist who can help you figure out how you can help by making use of the equity in your home while remaining there. Drop me a line and I’ll send you his contact info.
With kids going off to university, once they are out of residence they are going to be renting an apartment. Instead of renting, you might consider buying. You can find a nice condo with mortgage fees for the same price as the rent  The condo will appreciate in value, especially if you find a fixer-upper, and when your child is done school they can either continue to live there and start paying it themselves, you can rent it out as an investment, or you can sell and make a profit, or gift the money to them for their next home. If you’re looking for an investment you can do this at any time and rent it until they are ready for it, even when university still seems far away. Trust me, that time is sneaking up and will be here before you know it.
Don’t worry about spoiling your kids. You are not doing it for them, you are just giving them a helping hand, just like you’ve always done. In today’s market they will still have plenty of responsibility with meeting mortgage payments and property taxes, and you’ll be helping your kids do something that might otherwise take them years and in some cases just might be impossible. You want to help your kids be happy and successful and to have what you had, sometimes, kids just need a helping hand.