Wow. The average selling price of a home in Canada is now $678,091, which is a 26% increase vs the prices in February 2020. In Ontario, the average selling price is $864,159, an increase of 24.5% year over year, and in BC it’s $886,695! For those who have a house, this is great news. For those who dream of owning one, it’s a great source of frustration. As a parent, your fear and anxiety aren’t about being able to get a home for your family, but whether your child will ever be able to own a home without giving them the money for a down payment.
According to a Genworth Canada First-Time Homeownership Study completed in collaboration with Royal LePage in 2017, 37% of homeowners had help from family when buying their first home, and this was when the average home price was $495,000 in Canada.
In 2020, an RBC study showed that 58% believed they couldn’t buy a home without the financial support of their parents and 25% of parents were willing to give their children up to $60,513 as a gift to help them buy their first home.
Now comes the hard part for parents. Where will you get the money when you are in your 60’s to give your kids $60,000 to buy a home? What happens if you have multiple children? You can’t give money to some and not to the others, it’s either all or nothing.
The math is simple. You need at least $60,000 by the time your child is 35. The question is, do you wait for that challenging moment when they ask, or do you start planning for that day when they are still young?
That’s where ChildPlan™ from Hudsons’s Bay Financial Services can be a massive help. ChildPlanTM is the only tax-free investment that parents can open for their children in Canada. From the day you open a ChildPlanTM, your child will receive a tax-free dividend for life, and they can use the cash value of their plan to buy her first home.
If you start a ChildPlan™ when your child is 9 months old, and deposit $250 per month until the age of 20, then their plan is paid off for life.
By the time they are 35 their ChildPlan™ will have a cash value of $190,172, which can partly or entirely be used to purchase their first home.
It’s simple, you can start now or wait to have the conversation when they are 35 and have to either draw down your retirement account or disappoint your child. And as a parent, our mission in life is to give our children a better life.