Young Canadians who live in hot housing markets are increasingly looking to their parents for help with down payments on first homes, say HomEquity Bank experts.
The experts note they’ve been helping more seniors with reverse mortgages, given home values have risen and such mortgages are seen as an attractive way to assist adult children.
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One advisor is seeing the same trend: “Ten years ago, [reverse mortgages] rarely came up as most seniors were more concerned with remaining self-sufficient,” says Rona Birenbaum, financial planner and founder of Caring for Clients. At that point, she adds, “First time homebuyers were purchasing houses on their own. [But] that’s changed, [with] up to 30% of my clients aged 60 and up now want[ing] to discuss to what degree they can help their adult children financially.”
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Birenbaum brings up the following questions when helping clients figure out whether to give or loan money to children:
- What is a safe amount to provide to adult children?
- How can you be fair and equitable to all of your children?
- How can you protect money that you gift to adult children?
For many first-time buyers, condos are the way into the real estate market, says HomEquity Bank. The average cost of a condo in Toronto is $393,589, according to April 2016 data from the Toronto Real Estate Board. In Vancouver, condos now sell for an average of $466,600, based on January 2016 data from the Real Estate Board of Greater Vancouver.
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