Post-secondary school tuition is expensive. Add to that the cost of school housing and you are looking at a serious bill for a 3 or 4 year degree. But what if you could buy a property, with little down, and build equity while putting a roof over your child’s head? Well, you can!
Here is how it works. First, you have to qualify to carry another mortgage (assuming you already have one on your principal residence), NOT including any rental income (as we are not talking about a rental property). Once you know what you can qualify for, then you find the house that your child will occupy during his/her school career. Working with a realtor who knows the area, especially if your child is going away for their post-secondary education, is usually the best bet – they can do the leg work and pre-screen properties that meet your predetermined specifications. The offer is made and accepted by the vendor, and now the magic begins – time to get the final approval for your new Family Plan mortgage!
The Family Plan mortgage means that you AND your child are on the title of the property and mortgage (or it could be you are buying a home for your parents to live in, that would qualify as well), so all of your and their debts are included in the mortgage application. You can put down as little as 5% on the purchase price, which makes this program very attractive when compared to paying rent (and hence someone else’s mortgage) for the duration of your child’s schooling.
Some considerations here are that your child will no longer be considered a first-time home buyer if and when they do decide to buy their own house sometime in future – so any ‘perks’ that may be offered to this type of buyer would likely not be available to them at that time. Something else to consider when looking at this type of program is that often times people will decide to keep the property as an investment once the child is finished school, so it can be a great way to break into the world of investment property ownership.
It’s a great ‘little-known’ product, so if you find yourself wondering how you will pay for post-secondary residence for your child, this may just be the way to go!