In the last week, I've see three clients in similar situations. All three clients had good paying jobs, where in their late 30's and had over $20,000 of consumer debt outside of traditional car loans. Should they be considering buying a home? Here's my opinion...if you have any comments on this topic, please share them on my blog!
A home is one of the only appreciating assets you'll own. The trouble with these particular clients is that they have kept waiting to pay off their debt and are now almost 40 years old and still do not own a home. My recommendation would be to review their family budget with them and find a monthly mortgage payment that will help them get into a house, while also developing a plan to pay down their debt.
If they had savings to put as a down payment they could also look at paying their debt down with their savings and getting a cashback mortgage, which gives them the money for the down payment. Remember that you can withdraw up to $25,000 from an RRSP the year you buy a home under the RRSP Home Buyer's Plan. That money does not need to go to the down payment, it could go to paying off debt. Now that's a good idea!
1 comment:
If you have student loans, yes. If you have consumer debt, no. A house wont save you from yourself, that lesson needs to be learned first.
At minus 20k at plus 35 yrs, no minus $280k+ is going to help you into an asset.
Besides the bank will still own the house until you've made your final payment 25 years or more later.
For many people, renting is the right thing to do. You rent money to buy things (rent them), why not rent your accommodations too?
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