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Using LOC for 20% mortgage downpayment


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technically - that isn't allowed if you want the reduced mortgage rate/insurance as it is really a 100% down mortgage. Now clearly you can mask that in some ways but just be aware you cannot just say yeah take it out of the LOC. 

that question is a part of a big overall plan which means you might be stuck with boring answers like "it depends" ha. Your plan doesn't sounds like a bad idea but like anyone it has to fit into some over all structure, and that means personal choices etc :)

will you have a corporation over this time? 

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4 hours ago, rmorelan said:

technically - that isn't allowed if you want the reduced mortgage rate/insurance as it is really a 100% down mortgage. Now clearly you can mask that in some ways but just be aware you cannot just say yeah take it out of the LOC. 

that question is a part of a big overall plan which means you might be stuck with boring answers like "it depends" ha. Your plan doesn't sounds like a bad idea but like anyone it has to fit into some over all structure, and that means personal choices etc :)

will you have a corporation over this time? 

Are there tax advantages to having a corporation and a professional LOC?

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3 hours ago, shematoma said:

Are there tax advantages to having a corporation and a professional LOC?

tax advantages to the corporation yes (defers earnings etc) , using the professional LOC (ie one within the corp structure) I would say no. This is just because primary residencies are not taxed on sale - but property paid for in the corporation would be taxed on sale with capital gains. 

there are a ton of options here really. Some people max out their RRSP using all the prior room they made, and then two years at the max rate of salary (either because they earn salary or they draw it from the corporation) and then use the RRSP homebuyers route to use tax deferred money to put the down payment down - probably can get in 2 years of staff easily the max 50K that way which is a start on down payment. 

There are groups of people that say live for a good "chuck" of years as a resident - so you can "naturally" save the a nice down payment, pay off the loan ideally completely etc. I do recommend some of that personally as that head start leaves you in the end hugely ahead but some people are very eager to buy a home (part of the problem is the instinct to buy a big house - that is a bit of trap of many as it means the rest of your lifestyle will likely be upgraded to that level as well and you lose a key savings time (really hard to down grade lifestyle to save more - much, much easier to let it slowly raise instead but that required education and discipline). You will have everyone everywhere telling you to spend more - bank, realtor, likely yourself, a million targeted advertisers ha. You should see the stuff I get now that I am licensed - they are crawling out of the bushes like a zombie attack ha :) 

 

 

 

 

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Depending where you end up working, you might have access to a signing bonus and other relocation support. I had to put 20% down because I was (still am) new in practice and now "self-employed". As a result, though, my mortgage and property taxes together are $150 less then I paid in rent during residency. And my outstanding mortgage is less than my LOC debt. 

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6 minutes ago, A-Stark said:

Depending where you end up working, you might have access to a signing bonus and other relocation support. I had to put 20% down because I was (still am) new in practice and now "self-employed". As a result, though, my mortgage and property taxes together are $150 less then I paid in rent during residency. And my outstanding mortgage is less than my LOC debt. 

that all sounds like a reasonable place to be in. reasonable choices ha

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Just now, A-Stark said:

I can't say I was prepared to be required to put 20% down though. It's essentially a consequence of the new mortgage rules from January and some related changes at the bank. It seemed pretty unreasonable. 

those new rules are a bit sudden I admit. they also have a lower limit for extra requirements that basically would apply to almost any house in some areas. 

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