Advice Needed on Handling ETFs/Shares for Home Down Payment

Hi everyone,

I'm in the process of buying a home (in live in) and am trying to figure out the best way to manage my assets for the down payment. I currently have $60,000 in cash and $100,000 invested in ETFs and shares. I'm planning to use these investments for the down payment, so total $160,000

My question is: Do banks typically require these investments to be converted into cash before I apply for a mortgage, or can I hold onto my ETFs/shares and sell them just before I need the deposit? I'm concerned about the timing and potential market fluctuations.

Has anyone here gone through a similar situation? How did you handle it, and what did your lender require?

Thanks in advance for your insights!

Thanks

 

A lender could have issues with the sum of tax on the ETFs (capital gains). Tjis could affect the equity in the shares & ETFs if you dont have cashflow and cash to pay the tax when it falls due.

Discuss with broker. It may not come up. BUT do consider how much the tax will be and when it can be deferred until.

 

Paul said..

Yes some lenders accepts it as a form of deposit and don't need to sell it and covert it to cash until its needed....

However lenders will question your tax liability for any gains...but more importantly even if they don't ask ...you need to keep some aside for taxes.

 

You might need to show funds to complete which you can indicate will be coming from the sale of shares. Never seen a lender question the tax aspect before

 

At the pre approval stage (which I assume you are referring to) they will want to see evidence of ownership in the same way you'll need to show evidence of deposit.

I've been through it in the past (backed out of the actual purchase however) and wasn't asked anything of tax liability... but it would obviously be worth budgeting for regardless.

 

Do you need to sell all of your holdings to be able to buy?
First thing to check is what you can afford to borrow and how much of a deposit you actually require.

Again, just engage a good Mortgage Broker already, they will walk you through the process and what's required. No need to wait until you've got all your ducks in a row before speaking to a Broker, they should be engaged early in the process.