100 Equity Home Loan, Possible?



Yes! A 100% Equity Home Loan is still possible, however it is structured slightly differently than before the government changes back in the spring of 2010.

100% Home Equity Loan

I was chatting with a couple who earned good income. Both had been working in their careers for just over 1 year. They had spent most of their disposable income to purchase a new car, pay down student loans and just pay rent.

This couple had good credit and wanted to purchase a home together. They could afford payments from $1500 to $2000 per month. The problem: They didnít have the down payment!

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They had asked their parents if they could provide them with the money they needed to purchase the home. Neither family was able to get the funds together for them.

When I met this couple, they had almost given up their dream of purchasing a home that was just on the market.I explained that there arenít any 100% Equity Home Loan lenders anymore but there are 2 different ways to purchase a home without a down payment.

Have you set up a 100% Equity Home Loan, or Zero Down Mortgage before? Share YOUR experiences with other visitors!

Are you considering a home purchase with Zero Down? Ask YOUR questions here!

There is also an RRSP Strategy that you can utilize to increase the amount of down payment that you have available, Skip to the RRSP First Time Home Buyer Strategy.

Cash Back Mortgage

The first is to utilize a cash back to fund the down payment.

There are a number of lenders that will provide a 5% cash back based on the mortgage amount.

This cash back is used toward the down payment. Not all lenders will allow this, but there are still a few that do.

To take advantage of this program, this couple must have good credit (a minimum beacon score), which they did. They also needed to have enough savings to cover the closing costs.

The closing costs, could be as much as 1.5% of the purchase price depending on where they purchase.

The interest rate for this option is higher than the lowest rates because the lender is providing cash back in lieu of a discount.

For more information about the Cash Back for down payment check out No Down Payment Mortgage Loans. Itís not a 100% Equity Home Loan, but itís still a great strategy for home ownership!

Down Payment Loan

The second option for this couple is to borrow the down payment.

They purchased a car earlier that year and paid cash. This is an asset worth $20k. They can use this asset as collateral for a loan. The loan can then be used for the down payment.

Again, not all lenders will allow a home purchaser to borrow the down payment but many do!

They still need to have good credit, the lenders look for a specific beacon score.

The advantage to this option is that they can still get a very low mortgage rate and the closing costs could be included in the loan, if necessary.

This couple ended up choosing the Down Payment Loan. They could afford the added loan payment, purchase the home they wanted and get a great mortgage rate!

Again, this isnít exactly a 100% Equity Home Loan. They are now building their own equity, instead of their landlords!

For more information about the Down Payment Loan visit No Down Payment Home Loans.

RRSP Down Payment

This strategey doesn't utilize the "Non-Traditional Down Payment". You aren't really arranging a mortgage with zero down, but this is a great way to build up a large down payment by utilizing the Government of Canada's First Time Home Buyer Plan (HBP)

The best time to utilize this program is in the winter (November to February). By contributing to your RRSP near the end of the year (or the very beginning of the year) you will receive a tax refund to grow your savings quickly!

If you have the funds saved outside of your RRSP and you have the room to make RRSP contributions, then you will generally receive a tax rebate approximately equal to your marginal tax rate. For example, if you have a 30% marginal tax rate and contribute $10,000 then you should receive $3,000 back as a tax rebate once you file your taxes. ***Note: It is always best to verify these calculations with your accountant!

If you don`t have any money saved, the you could arrange an RRSP Loan to take advantage of this program!

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For more details about this strategy, visit First Time Home Buyer Loan RRSP Strategy

Return to Home Equity Loans Strategies from 100 Equity Home Loan


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