# How much to put down?



## Jaymac83 (Sep 23, 2012)

Good evening everyone. 

Little back story on us: we are a 33yr old couple with 2 amazing boys aged 4 and 7. 

We have recently sold our home mostly because the housing market is so hot right now and we are happy that we decided to take this leap. 

We had struggled for the last few years with debt that was actually getting out of control to be honest. 

We have learned a lot about life since having kids and being in such a bad spot financially for what feels like an eternity. 

The sale of our home has allowed us to push the "reset button" on our financial state and start fresh. 

So onto my question. 

We sold our home and will come out with $190k clean and clear from paying off every single debt we've incurred over the past 8-10 years, along with our real estate agent, lawyer fees etc. 

We purchased a new home for $590k and are on the fence of whether or not to put 20% down or not. If we did we would be left with about $70k for a basement Reno. 

We are both on a db pension and have been told to steer clear of rrsp's. 

Our kids resp's are valued at approx 15k currently and will grow with our contributions until they are done school. 

So at the end of the day I'm just curious of what you would do if you were in our position. Put the 20% down? Put 5,10,15 and put this funds somewhere else? 

We are very new to this and really haven't had an opportunity to handle this kind of money.


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## none (Jan 15, 2013)

With your history just get the 20% down. Avoiding CMHC insurance is bonus in the bank,

Also, your RESPs are super low. I have one kid and he's 6. He's RESP is 34K. You need to save cash for that in the future.


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## DollaWine (Aug 4, 2015)

What do you plan on doing to the basement? It shouldn't cost anywhere close to 70k to do it up pretty nice... my parents' did their basement, starting from empty concrete. Laminate flooring, a mini kitchen, a washroom with shower and 2 bedrooms for under $20k with a contractor. (They weren't the most professional though.. in retrospect they should have hired better guys, probably would've costed a bit more). The house is around 1,500 sq ft.

Anyway, unless you have other major financial goals in the near future, the safest bet is to usually put as much down as you can while still leaving yourself with a comfortable safety net for emergencies. Avoiding mortgage insurance would be ideal, so you could put down 20%, have 70k, use maybe 30k at most for a basement reno and still have 40k left. It really depends on what your next financial goal(s) are though.


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## My Own Advisor (Sep 24, 2012)

I would absolutely try and put 20% down. Priority #1. Your future self will thank you.

20% of $590K = $118.

$72K or close to your $70K.

Then I would put $10K in an emergency fund, in a higher interest bank account with PCF, EQ Bank, Tangerine, other. Don't touch it! It's for emergencies 

Use the remaining $60K as follows:

1. Put at least $10K each into your kids RESPs. Time invested will be your friend. 
2. With $40K left, you can decide to do the fence, get new furnishings for the house you will enjoy, and keep some money aside as a block of money for the basement in the future.

In fact, the money you have save borrowing costs, for the mortgage if you didn't put 20% down, can be saved over the next couple of years to reno the basement 

I don't agree with the RRSPs comment, it's an enabler for an earlier retirement but you are very fortunate to have DB plans so you can consider those your forced savings for now.

To summarize:
-put 20% down
-put some money away for emergencies only
-put some money into your kids RESPs
-put the rest away for house improvements over the coming years.

A well balanced approach.


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## OptsyEagle (Nov 29, 2009)

Great move on the reset button. You deserve high marks for identifying this opportunity and taking it. The story is not over yet, as you have revealed by asking the questions you have. So be careful not to repeat past mistakes. 

CMHC is too expensive so the most you can put down to eliminate that is my suggestion. That does sound like a nice basement. If it is to be a kick *** man-cave then perhaps it is worth it (just kidding), but for a regular family room it does sound like perhaps some past behavours and beliefs might be making its way into your new house. I can't say for sure but just be careful. Instant and perhaps a little excessive gratification may have got you to needing a reset button and life may not provide you with another one in the future. From the sounds of your posts it seems to me that you will not be comfortable unless you can ensure that your family has a sound financial safety net and things like expensive renovations or expensive anything will always take that financial security away from your family and transfer it to the contractor or retailer providing those expensive things.


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## redsgomarching (Mar 6, 2016)

OptsyEagle said:


> Great move on the reset button. You deserve high marks for identifying this opportunity and taking it. The story is not over yet, as you have revealed by asking the questions you have. So be careful not to repeat past mistakes.
> 
> CMHC is too expensive so the most you can put down to eliminate that is my suggestion. That does sound like a nice basement. If it is to be a kick *** man-cave then perhaps it is worth it (just kidding), but for a regular family room it does sound like perhaps some past behavours and beliefs might be making its way into your new house. I can't say for sure but just be careful. Instant and perhaps a little excessive gratification may have got you to needing a reset button and life may not provide you with another one in the future. From the sounds of your posts it seems to me that you will not be comfortable unless you can ensure that your family has a sound financial safety net and things like expensive renovations or expensive anything will always take that financial security away from your family and transfer it to the contractor or retailer providing those expensive things.





DollaWine said:


> What do you plan on doing to the basement? It shouldn't cost anywhere close to 70k to do it up pretty nice... my parents' did their basement, starting from empty concrete. Laminate flooring, a mini kitchen, a washroom with shower and 2 bedrooms for under $20k with a contractor. (They weren't the most professional though.. in retrospect they should have hired better guys, probably would've costed a bit more). The house is around 1,500 sq ft.
> 
> Anyway, unless you have other major financial goals in the near future, the safest bet is to usually put as much down as you can while still leaving yourself with a comfortable safety net for emergencies. Avoiding mortgage insurance would be ideal, so you could put down 20%, have 70k, use maybe 30k at most for a basement reno and still have 40k left. It really depends on what your next financial goal(s) are though.



sound advice as always from these two. they have some years behind them and experience.

I personally would do 20%. there is no need for CMHC if you don't have to. Furthermore, the larger down payment will reduce your mtg payment and leave you cash flow to either 1. pump into your kid's RESPs, 2. save for your reno (i do like Only my opinion's breakdown though) 3. you will reduce amortization of mortgage.

i do have a question regarding the basement, is is a necessity to be renovated now? is it something you can wait on?


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## Jaymac83 (Sep 23, 2012)

Sounds like the advice is similar in opinion to keep the 20% down as initially planned. 

The home is brand new (1 yr old) is an 1800 sq foot bungalow. We are somewhat downsizing from a 2 story home... so the basement is something that would need to be done quite quickly. We have budgeted 25-30k for the basement which will include 2 bedrooms, Rec room, full bath - already roughed in for 4 pieces and a bar if I can swing it. 

If I don't do it right away I will get back into my procrastinating ways and it'll take years to complete.


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## OptsyEagle (Nov 29, 2009)

$25K sounds a lot better then the $70K originally mentioned. Go for it.


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## Mortgage u/w (Feb 6, 2014)

If you already paid CMHC insurance on your previous home, you can transfer the premium and pay very little or nothing at all depending on your new mortgage amount vs old balance. You can go back to your original LTV. This way, you can save on the premium and keep the funds in your pocket to invest elsewhere. 

If you never paid the premium, stick to 20% down and avoid it altogether.


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## lifeliver (Aug 30, 2010)

I had a lot of clients who did these type of resets via house sale or refinance and a year or two later would come back to me in the exact position as before. Whatever you decide to do with the money is up to you. My advice is to start tracking every penny you spend. And figure out exactly why you ended up in debt in the first place and how to avoid getting back there. Lots of great blogs and books out there about personal finance.

I actually think that people that grind their way out of debt through discipline are much more likely to stay debt free than people who do a "reset" type of situation.


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## BeautifulAngel (Jun 30, 2017)

My Own Advisor said:


> I would absolutely try and put 20% down. Priority #1. Your future self will thank you.
> 
> 20% of $590K = $118.
> 
> ...


I agree with this post, very smart way to use your money and you'll also be able to keep saving


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## mikep (Mar 13, 2017)

70K for the basement? that's nuts. 
do this:
http://www.connectamat.com/ - order up a section of that foam mat flooring and let the kids bounce off the walls. that's whole sale price there. 
get a rug. 
learn how to install a shitter - https://www.youtube.com/watch?v=cA_k6qKz0yk
get a dehumidifier
take the kids to see mickey. 
invest the rest of in some mawer.


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## none (Jan 15, 2013)

^ I like this guy


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