When you need your home purchase deposit to buy your next home, but your funds are in the value of your current home. You’ll likely need to borrow for the deposit. In Canada, borrowing money for a home down payment isn’t allowed. However, you can take out a temporary loan for your deposit. So long as it’s paid back once the sale of your current house closes. It’s important to remember that the deposit and the down payment are two separate things.
A home equity line of credit is often a simple and convenient option for financing your home purchase deposit. Lenders can easily assess the line of credit, and you can close it with the sale of your home. This gives lenders the certainty that you are not borrowing your down payment. Another option is a deposit loan. A deposit loan is a short-term loan that must be repaid in full when closing. To qualify for this type of loan, you’ll need a firm sale for your current home in place. You’ll also need to show you have enough property value to finalize the sale and repay the deposit loan.
Borrowing against your RRSPs is also possible if you have a sufficient amount to secure lending in this way. Finally, the last option is to sell your current home and close the sale before looking for your next one.
The last option is selling your current home and closing the sale before looking for your next house. This is the least convenient option as it requires you to find temporary lodging, but it may be the best choice if none of the other financing options are available.
