Joel DyckReal Broker SK Ltd.
Saskatoon · From the topic map

Is it worth putting down 20 percent?

Twenty percent down avoids mortgage default insurance entirely, which is the main reason to reach for it. Below that threshold the premium through CMHC, Sagen or Canada Guaranty is added to your loan, and Saskatchewan charges provincial sales tax on the premium in cash on possession day. Whether it is worth waiting to get there is a different question.

The minimums come first. You need 5 percent on the first $500,000 of the purchase price and 10 percent on any portion above that, so at Saskatoon's benchmark of $444,700 the floor is around $22,235. Insured mortgages often carry slightly lower interest rates than uninsured ones because the lender's risk is covered, so the comparison is not simply premium against no premium.

Saving longer has a cost of its own in a rising market. With the benchmark up 2.8 percent year over year and Saskatoon sitting at 1.63 months of supply, the price you are saving toward can move faster than the savings do. Two accounts help: the Home Buyers' Plan allows a $60,000 RRSP withdrawal, and the First Home Savings Account allows $8,000 a year to a $40,000 lifetime limit.

Do not drain the account to hit the number either. You still need cash on possession day for legal fees of $800 to $1,500, adjustments, moving and the repairs a $400 to $600 inspection turns up. Joel Dyck works alongside your mortgage broker so the down payment decision is made against a real closing budget rather than a rule of thumb.

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