DLC case study on valid sources of down payments

Proper planning and accurate reading of the terrain is a must before purchasing any home, and a mortgage professional is best positioned to navigate the buyer through the transaction.
In his latest case study published on the company’s website, Dominion Lending Centres accredited mortgage professional Gurcharan Singh highlighted the importance of professional advice to avoid any pitfalls far down the line.
“The proper planning of a mortgage is pertinent before anybody signs any agreements – it helps the client and the real estate agent,” Singh wrote.
Singh cited the example of a Winnipeg, MB duo (“Jackson” and “Hailey”) who wanted to purchase the home that they have been renting for over three years. The landlord consented to a $300,000 sale, and both parties signed the Offer to Purchase agreement on August 1, 2015.
“[The duo] deposited $5,000 with the agreement and the possession date was August 31, 2015. If Jackson and Hailey put 5% down, then they need $15,000 as a down payment PLUS 1.5% for the closing costs of the house – 1.5% of $300,000 would be $4,500. To buy this home, Jackson and Hailey need $15,000 + $4,500. Altogether, they need $19,500,” Singh explained.
By July, the couple engaged in a refurbishment project on the property by adding a patio and renovating the interior, spending a total of $5,897.32. The landlord gave Jackson and Hailey a cheque for the exact amount on July 28, and the duo subsequently deposited the cheque on their savings account under the assumption that it was a valid source for their down payment or closing costs.
“No, they can’t use this amount since the landlord paid it for the work they did in that same home,” Singh emphasized. “Under the guidelines, the seller is not allowed to pay any money to the buyer for the sale of this property. Now Jackson and Hailey are short $5,897.32 to buy this home.”
“[The couple] should have gotten some advice from a mortgage professional at Dominion Lending Centres before they signed an agreement to buy this home,” Singh concluded.

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