Question from a reader: “If I bought one property with a 5% down payment, can I buy a second one with a 5% discount?”
Purchasing two properties with a 5% deposit is an attractive option. But what types of properties can be purchased this way? We are referring here to the use of real estate. For example, a main or second home, a property to accommodate loved ones or the purchase of an investment property.
We contacted Charles-Antoine Boudreau, mortgage broker at Planiprêt, for information on this topic. “In fact,” he says, “buying two properties with a 5% down payment is possible, but only in three situations.”
1. Second home
While you remain in your primary residence, you may occasionally purchase a second home to live in. A typical example of this situation is a chalet. We will live there on weekends or even in summer or winter for a vacation.
Please note that this is not a primary residence.
2. Other residential property
It is possible to purchase a second property as long as you live in it. For example, a person rents his house and moves out in a second. He remains the owner of both houses.
In this case, the principle applies that the person who buys the second property must live in it.
3. member of his family
You can also purchase a second property to accommodate a family member. For example: A parent buys a condominium for their child who is studying or to accommodate their elderly parents.
The prerequisite is that there is a family connection.
These are the three situations in which it is possible to purchase two properties with a 5% deposit.
In all other cases, including low-income properties, they are subject to the obligation to pay a deposit of 20%.
In addition to considering how you want to use the second property, the financial institution will proceed as with a traditional mortgage loan to provide you with financing. It checks your credit score and debt-to-income ratio to ensure you can meet your financial obligations. Let’s remember the list of documents that you need to provide:
- Proof of employment income
- List of assets indicating their value
- List of loans with balance
- List of credit cards with balances
- Car loan balance
- Other commitments
Diploma
Investing in real estate is a promising adventure, but also complex. Buying property with just a 5% down payment may seem tempting at first, but it is crucial to approach this option with a clear and solid understanding.
Advice:
1- Clear budget: Before viewing, determine exactly your budget, including the costs associated with the purchase.
2- Inspection: Never skip the inspection step when purchasing a property.
3- Negotiate the price: Even with a 5% deposit, don’t hesitate to negotiate. Every economy is important in the long run.