Should You Buy a House with Your Parents?

August 19, 2019 | Posted by:

Should You Buy a House with Your Parents

Recent graduates and other young individuals/professionals all over the greater Winnipeg area are looking to take advantage of amazing mortgage rates and very affordable housing prices. However, many can use a helping hand with both the downpayment and monthly mortgage, and in turn are considering turning to one trusted resource - the folks. If this is you and you’re a little on the fence about whether or not it’s a good idea, read ahead.

5 Reasons Why Getting a Mortgage With Your Parents May be a Good Idea

Their History and Equity Can Help You Qualify for a Favorable Mortgage

This is the most obvious benefit. Assuming that your parents have been in the home-ownership game for quite some time, they will have built up a good credit rating and established a strong history of making their mortgage payments. Having them on the loan application will look better when compared to going at it alone. The equity they have in their current property (or properties) will also provide lenders with peace of mind that their investment is protected. By reducing your risk profile, you will more than likely be offered better rates, which will result in a lower longterm cost of the mortgage.

Divvied Downpayment and Mortgage Payments

This is the second (or even equal to above) biggest benefit. When partnering with your parents (versus a traditional cosign relationship) you will be divvying up the downpayment and monthly mortgage payment. This frees up capital (downpayment) for other investments you may be interested in, and disposable income (mortgage payments) to ensure you maintain a favorable quality of life - you’re young and should not have to trade travel and leisure for sound financial management. You can have it all when you tap into your parental resources.

Their Experience Will Help With Ease the Stress of Your First Mortgage

The first two benefits (above) are very tangibles one. This one is less tangible, but no less important. Getting a mortgage for the first time can certainly be stressful. The younger you are, the more daunting it can feel. The stress can have you making poor decisions regarding your budget and even have you buying a property that is not right for you. By having seasoned veterans (your parents) involved you significantly reduce this stress and you will be able to make a calmer and more informed decision, together.

Occupancy Options for Changing Times

When you invest in a property with your parents, you immediately gain an affordable residence, a “family home” you can move into (on your own) where you’re a shared landlord. This is a huge benefit for many young buyers. You also have the option of using the property as a rental to generate immediate revenue, which today includes putting the home up on Winnipeg’s lucrative short term rental (STR) market. In the future, when you’ve moved on to your own solely-owned house and start your own family, the original home can be used as a retirement property for your parents. Or, it can simply become a vacation property for all. The future flexibility of this real estate investment is a huge advantage.

Building Generational Wealth

By getting your parents involved in a residential investment you take financially sound steps to building generational wealth. This is the key to sustainable success for your family name, as you keep equity “in the family”, piggybacking from one generation to the next and develop a business model (for a lack of better words) that your children and your children’s children can carry on. This may be a longterm vision but it’s one that your parents probably wish began with their forefathers/foremothers before. 

Building real estate wealth by leveraging your parents’ credit rating, equity, and experience can be a great idea. That said, connecting to a mortgage broker first is a smart move. Ron Chan has direct experience in this matter, and will help you manage the process so that the interests of all parties involved are protected, and will connect you to lenders offering the best possible mortgage rates. Call Ron at 204.290.9950 today to begin with a friendly and helpful conversation.

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