How to Get Into the Market: The “MDB” (The Mom & Dad Bank)


Published September 15, 2023


When Harry and I decided to buy our first home, after years of student housing in university and then advancing to nicer rentals as newlyweds, we were totally NOT prepared. The market, even in Saint John, New Brunswick, was not an easy one to get into with interest rates at the astronomical rate of 21%! Yes….21%  . Student loans bit into our savings….particularly since Harry had been a professional student for sooooo long! So downpayment? Hmmmmm not impressive. Our Godsend was called “Mom & Dad”. Their contribution allowed us to buy our home in Westfield, overlooking the St. John River and more importantly it allowed us to get into the real estate market.

Sure, today’s interest rates are NOTHING like the rate of 21% BUT the common view is that it is almost impossible for someone to get into the real estate market for the first time. The key words here are “view” and “almost”.  What is required now is for individuals to be creative about how they can get into the market.  Barb and I decided to put together a series of blogs on HOW to break into the real estate market in today’s market in Ontario.

Downpayment Woes? MDB (The Mom & Dad Bank) can be helpful in a variety of ways. The downpayment could be through   a “gifted downpayment”. Watch the following video with our amazing mortgage broker, Julie Sheremeto, with several wonderful ideas: 

The BMD could also lend money from their own RRSPs . This would be repaid by the buyer, with interest, in the same manner as monthly mortgage payments.

Things to keep in mind:

  • Financing isn’t cheap for MDB. All expenses need to be taken into account.
  • If you can’t afford to lose the money do not lend the money. Things happen.
  • Make sure that all spouses are on board with the loan.
  • Have everything in writing. Consult a mortgage broker or lawyer if needed. We can help with that! 

And some key points to remember:

  1. This first house will NOT be their last house nor their dream house! We always stress that this first house is to be viewed as an investment to get the buyer into the market, so should be a “wise” purchase. A good investment!
  2. A MDB down payment gift cannot be a loan masquerading as a gift though. It MUST be a gift or an advance on inheritance.

We completely understand that not all parents, especially these days with longevity and the expenses tied to aging, are in the financial position to gift or become a MDB. Watch for our upcoming blog on alternatives to help get into the real estate market!

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