It happens to everyone eventually. One day, you’re enjoying your life, renting a not-to-shabby place downtown and then, bam! Something unexpected happens that triggers the mass exodus gene in you. Remember telling your parents (when you were a teenager) that you wanted your own place? It’s a lot like that, but in this case, you feel you just have to move into a place that you own.
But wanting is a heck of a lot different than owning, and if you’re still not there yet in terms of personal savings and other student loan commitments, you’re pretty much stuck in the “wanting” phase and the dream will just go on and on until it fades away or drives you crazy.
Not all credit is bad, and a well thought-out strategic loan can be beneficial to you if you know what you’re doing and don’t over-extend you payment capabilities. With that said, there are a few ways you can secure the money you need to fund your dream place. I use “place” because it really all depends on you. If your dream place is an underground bunker for the apocalypse, go for it.
§ Option One: Mom & Dad
The first option is to go ask for help from your parents only if they can afford to help you. Families are there to support each other, and for an endeavor as big as a house, your parents would be glad to help in any way they can. But please, don’t go to them if they’re retired and living off a pension or don’t have the means. But, if the family business is going strong, or both your parents are successful professionals, it’s OK to ask.
Treat it like any other loan and make a schedule of payment and arrange an auto debit of your bank account so you won’t forget to pay. If you’d like to add a little interest to help your folks out, do it. But I’m pretty sure most parents won’t accept interest from their kids, (no matter how old they are) let alone require swift payment. Oh, and don’t forget to call your mother.
§ Option Two: Your Bank
The second option is to go to your bank and ask for a loan. Just be prepared to be denied, like the Human Torch in Anchorman. Banks also require tons of paperwork and credit checks. If you pass all the requirements and the bank says yes, you have to wait anywhere from three weeks to 45 days for your cash. More anxiety and sleepless nights thinking about your dream home awaits door number 2.
§ Option Three: Your friendly neighborhood Private Lender
The third option is to go to a private lender. Not your local Mob boss, but to a registered and reputable private lender that won’t break your kneecaps or send you the head of a horse when you fail to make timely payments. Private lending is pretty big because of the people’s need for quick cash. Banks are notoriously slow and not everyone’s parents are flush with cash, so people go to private lenders.
Private lenders are more lax with credit checks and don’t require mountains of paperwork for you to get approval. But most of them charge higher interest rates than banks and often require borrowers to pay them quickly, otherwise they won’t be making any money. Whether it’s a private lender in Montreal, Toronto or Calgary, the terms are usually the same, so read and understand the fine print carefully before signing anything.
Would you take the plunge and be a homeowner?
Or, you can just forget about getting your own place and continue renting for the foreseeable future, which kinda sucks when you think about it, because a portion of your hard earned money is going to someone else’s pocket, without you ever getting near to owning anything. here are a lot of rent-to-own properties if you know where to look. In cases like this, borrowing money that can secure a place where you can finally plant your roots seems like a wonderful idea.
Just make sure you don’t bite off more than you can chew when it comes to monthly payments and consider the interest rates you’re being given. If you’re going to end up paying double in 30 years, ask yourself if it’s worth to purchase now. Maybe you can hold off for a few more years so you can save more money to make a bigger down payment.