How to Buy a Home in Peterborough With Help From Family

Many of us are fortunate to have our family members around to share in the joys and tribulations in our lives. They might drive us crazy sometimes, but when push comes to shove, it is always reassuring to know that someone is there when you need a helping hand or a sympathetic ear.

If you’re a first-time home buyer in today’s market, you may need more support from family than ever. That said, the real estate market changes quickly, and well-intended advice can sometimes be a hindrance. In this post, we’ll give you some insider insight to guide your entire family through this exciting milestone.

The Challenges of Buying a House in Peterborough Today

The challenges of the current real estate market in Peterborough can be summed up simply. There are not enough houses for sale, and prices are higher than ever. This scenario is particularly taxing for first-time buyers who don’t know what to expect and have yet to build the equity needed for such a substantial investment.

That’s why nearly everyone gets help from family members when taking that first tentative step onto the property ladder today. When possible, parents and older relatives are providing financial assistance. At the very least, relatives can provide words of encouragement or physical help when packing and moving.

Want to know more about buying real estate in Peterborough? The posts below are a great place to kick off your research:

Peterborough Real Estate Then and Now

As grateful as you are to have support, you’ll want to be on the lookout for advice that might have worked a decade ago but is no longer applicable in Peterborough’s fast-moving market of today.

Some things in real estate will never change. The low cost of living in Peterborough, as compared to Toronto, has always been a draw for GTA relocators. That won’t likely change anytime soon.

In addition, housing values have always fluctuated over time. Conditions could change quickly from a buyer’s market to a seller’s market to a balanced market. This is why many older negotiation strategies simply won’t work today.

Not long ago, a home buyer might submit a low offer in the hopes that the seller would either accept or negotiate. In the current market, that seller is far less likely to entertain a lower amount. In fact, there’s a good chance they are hoping to receive offers above their asking price.

Pricing and offer strategies have changed over the last few years. Conditional offers were once considered best practices but can now cause you to lose out to another buyer if you’re not careful.

One of the most significant changes today is how the Peterborough real estate market breaks down into smaller niches and micro markets. What works like a charm in one neighbourhood could be different from the next. And a month or two from now, it could all change again.

Welcome to the exciting, exhilarating, and often perplexing world of real estate! With this fast-changing and dynamic market, the advice of an experienced and knowledgeable real estate agent is essential.

Financial Help from Relatives

Offering financial assistance is the most concrete way a family member can help you purchase a house of your own. Though this seems simple, there are several ways to go about it, each accompanied by a list of implications. It’s important for each party to know what they’re getting into, both in terms of maintaining a positive relationship and from a financial perspective. Let’s take a look at some of the ways a relative can help you with your purchase.

1. Gifting a downpayment

In this case, you may have to provide a letter to the bank stating that these funds are, in fact, a gift that does not have to be repaid. If your relative is generous enough to open this door for you, it’s important to honour their intentions by buying a house rather than using the money for a new car or fancy vacation.

2. Lending the down payment

Another option is to front the down payment with the intention of being repaid once you have some equity. This is also a generous gesture on their part. However, the bank will factor in these repayments when considering how much they will approve for your mortgage.

3. Co-buying the property

Your relative can help you buy a house while putting their name on the title in return. This way, their financial interests are protected, and you both can build equity as the house rises in value. As your financial situation improves, you might be able to buy out their portion if you want the deed to be 100% in your name. The downside of this option is that you will have to agree on all major decisions regarding the property, such as how extensively to renovate and if and when to sell.

4. Holding the mortgage

Instead of going to the bank for a loan, your family member lends you the funds for your home purchase. This is affectionately known as the “Bank of Mom and Dad” (or Grandma and Grandpa). This is a fantastic way to break into the real estate market when someone is able and willing to do this for you. However, you’ll want to clearly outline all of the terms and repayment arrangements to avoid potential conflicts later on.

A family member lending you money to buy a house indicates a substantial level of trust in you. Crystal clear communication will help to ensure a seamless and successful purchase while maintaining your relationship.

Why choose to live in or near Peterborough? You’ll find plenty of reasons in the posts below:

A Pillar of Support

As much as they may wish to, your family members may not be able to contribute financially to help you buy a home. Fortunately, not everything has to be about money. There are many other ways to ease the transition, from providing emotional support and helping with the planning to being there to pack and unpack on moving day.

Most of all, your family members can be there cheering you on and joining the celebration once you pick up those keys for your brand-new home!

Are you thinking about buying your first home? Our team of Peterborough real estate agents is thrilled to guide you through every step in the process. Reach out today to team@jeffandkatie.ca or call 705-243-9797 to begin a conversation.