00:00Folks buy with 5% down let's talk about that and then get into the latest home prices and insights
00:06for condos across the GTA for week ending May the 8th 2024. I saw an ad on social media by a realtor
00:15that said buy with 5% down and I'm thinking about that ad I saw wow you know you can only buy with
00:23a minimum of 5% down up to $500,000 so there's not that many situations in the GTA where you
00:31could buy something for $500,000 so right away that ad would pertain to I don't know 1% less
00:39than 1% of all properties being sold so I'm looking at that and I'm thinking okay well what
00:45if you could buy for 5% down what if it's just let's just talk about buying with the absolute
00:51minimum down because once you get over $500,000 say between $500,000 to $1,000,000 and if we're
00:57talking condos that's the majority of condos out there between $500,000 to $1,000,000 I'm not sure
01:04what the percentage is but by far the majority of condos in the GTA will be within that price
01:09point you can buy with an overall less than 10% down the question is should you and lots of people
01:17do it they don't always know the risk I can tell you there are people today that are in trouble
01:24we've talked about it often on the show they have to sell their condo their house and they're stuck
01:30there the the value just isn't there and they bought it the last one two three years something's
01:38changed in their life and they can't afford their mortgage payments anymore so they gotta sell well
01:44those people that bought within the last few years all they've been paying is interest their
01:49mortgage payment has been almost all interest no equity no principle is being paid down and if the
01:56value of their home has dropped well it's now gonna sell for less than what they bought it for
02:02and if they paid the absolute minimum possible down payment well there's a good chance that
02:09what they sell it for is actually less than what their mortgage is this is the problem we've been
02:14speaking about many situations there are many stories we've talked about this and you see it
02:19out there and many of these people are the ones that got into the market with the just scraping
02:26by the bare bones minimum and and I know lots of people have done it that way and for many it's the
02:32only way to get into the market otherwise you wait another two years three years four years
02:36where prices may be even higher and you're priced out I get it why people do it what I don't get
02:42necessarily is that they really don't understand the risks involved with that they never told
02:48they don't understand that the potential you know the whole story of prices only go up well
02:53the last few years we've seen history that isn't the case sometimes prices do come down and life
02:58is life things happen expenses creep up on you somebody loses a job all sorts of things happen
03:05and those people that paid with the absolute minimum and some of those made it worse by borrowing
03:12private money from family to help that they're also paying back it's like you're stuck you're
03:19absolutely stuck and you're gonna sell and then you can't even cover your mortgage those people
03:26I find and this is an ugly truth about selling at a loss those people that put more money down
03:33say 20 percent for example and the market moved and the market is not so much in their favor and
03:40they're selling less for what they're buying the only person the only family that would sell at a
03:46loss like that is someone that absolutely has to it's not a fun thing to do so if you are forced
03:54to sell you're gonna sell you got no choice well if you put more money down there's a buffer in
04:00there where at least your mortgage gets covered and you can just walk away live to fight another
04:07day but there's other people that put the bare bones minimum as soon as the market moves they're
04:12underwater their mortgage is actually higher than what they're going to sell their house for so to
04:16close they actually got to come up with money from somewhere else and they can't because if they could
04:21have they probably would have continued on with their mortgage payments or you know bought some
04:26more time to find and replace the job that they lost for example they can't and this is where
04:32people get stuck and have no choice but to walk away let the bank take over which is a way way
04:37worse situation I'm not saying because of the down payment you put down that's larger than the bare
04:43bones minimum it's a good situation to be in that you can sell for less than what you bought your
04:49home for but at least you have options and that's the ugly truth about real estate that sometimes
04:54nobody talks about there are people selling right now that are biting into their equity to sell they
04:59they recently put down 20% and and now they're coming out of it because something changed in
05:05their life that was unpredicted and you know not calculated for and how can you calculate for
05:11everything but it's an unforeseen situation they can't afford to keep their house but they have
05:16options better options than say the bank taking over or whoever their lender is going into power
05:22of sale so look there are opportunities and situations and even people advertising buy for
05:29minimum minimum down and I could see how that's attractive because it's really tough to get into
05:34the market but it's not always a smart move and I'm not telling you what to do but if you're
05:39going to go that route understand the consequences if things go sideways if the market moves south
05:46just a little bit you're underwater your mortgage is higher than your home's value and you've got
05:52very little options if you're looking to sell or refinance or whatever it is that can help you
05:57the less money you put down the harder it is to maneuver and fix or save your situation later
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