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Frequently Asked Questions

General Questions

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A home inspection is a visual examination of the property to determine the overall condition of the home. It should be done by a professional home inspector.

In this process, the inspector should be checking all major components, such as roof, ceilings, walls, floors, foundations, crawl spaces, attics, and retaining walls. And all systems, such as electrical, heating, plumbing, drainage, and exterior weather proofing. The results of the home inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.

A home inspection before firm offer helps to protect your interests in an impending property investment, by uncovering minor or significant issues (including major structural repairs) that may factor into your decision.

It can also add peace of mind to your choice, and help you plan for any repairs or maintenance that may be needed. A home inspection helps remove several unknowns and increases the likelihood of your successful purchase.

A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. Other situations, such as being self-employed or having poor credit may also impact the required down payment amount.

New Down Payment Rules as of February 2016: 5% down payment is available for homes up to $500,000 purchase price. Homebuyers will have to put 10% "on the portion" of the price over $500,000.

For example: On a purchase price of $700,000, minimum down payment will be calculated as below: 5% on the first $500,000 = $25,000 10% on the next $200,000 = $20,000 A total of $25,000 + $20,000 = $45,000

In addition to the down payment, you must also be able to show that you can cover any applicable closing costs, such as legal fees, disbursements, appraisal fees) and a survey certificate, where applicable.

Regardless of the amount of the down payment, at least 5% of it must be from your own cash resources, or it can be in the form of a gift from a family member. For non-residents and Newcomers to Canada, that amount typically rises to 10%, and cannot be borrowed.

Lenders will generally accept a gift from a family member as an acceptable down payment. In this case, the donor will need to provide a signed letter stating that it's a true gift, not a loan.

Mortgages with less than 20% down must have mortgage loan insurance provided by either CMHC, Sagen (Formerly Genworth’s Mortgage Insurance) or Canada Guaranty.

The Non-Residents speculation Tax (NRST) is a tax on the price of homes bought anywhere in Ontario purchased by people who aren't citizens or permanent residents of Canada or by non-Canadian corporations. This new tax is in addition to Ontario's land transfer tax payable. Effective October 25, 2022 this tax is 25%.

There are some exemptions from the foreign buyer's tax. Purchasing a property on behalf of a Canadian-controlled limited partnership or becoming a permanent resident within one year of buying the property.

Mortgage default insurance is legally required on mortgages with a Loan-to-Value (LTV) ratio greater than 80% (often called a high-ratio mortgage). It protects lenders against the risk of mortgage default and foreclosure by the borrower.

Usually paid by the borrower, the premiums for default insurance range from 0.50% to 7.0%. They can be added directly onto the mortgage amount or paid as a lump sum before the mortgage is advanced.

In Canada, mortgage default insurance is provided by three companies: Canada Mortgage and Housing Corporation (CMHC), Sagen and Canada Guaranty. CMHC is a Crown corporation, while the other two are approved private corporations.

A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price, with a Loan-to-Value (LTV) of 80% or less. It typically does not require mortgage default insurance, and so the borrower does not have to pay these insurance premiums. Mortgage interest rates may be slightly higher, however, for lenders to offset the lack of default insurance.

After bankruptcy, it can be a challenge to re-establish your credit in securing a funded mortgage. However, depending on the circumstances surrounding your bankruptcy, some lenders may consider providing mortgage financing. Contact one of our expert brokers for more details.

For child support and alimony paid by you to another person, this amount is typically deducted from your total income before determining the size of mortgage you can qualify for.

If child support and alimony are received by you from another person, the amount is typically added to your total income before determining the size of mortgage you can qualify for - provided proof of regular receipt is available for a period determined by the lender.

Yes, subject to qualification. With current low rates, even purchasers with 5% down may qualify to buy a home and make improvements to it. Any down payment under 20% will need mortgage default insurance obtained through CMHC, Sagen or Canada Guaranty.

If you're a first-time home buyer, there are government programs and incentives to help you get into the real estate market.

If you already own your home, and want to purchase your next one to live in, you'll have a few more details to think about this time around.

If you're buying a home that needs renovations right off the start, a Purchase Plus Improvements mortgage can include these upgrade costs along with home price (some conditions will apply). This option eliminates the need to finance the home and renovations separately.

Most lenders will accept down payment funds that are a gift from family. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. If mortgage default insurance is needed (with down payment less than 20%), the lender or insurance provider may require the gift money to be in the purchaser's Banks Account before the application is sent to them for approval.

A pre-approved mortgage is the maximum amount of mortgage that you qualify for, along with an interest rate guarantee from a lender for a specified period of time (usually 60 to 120 days). It's usually one of the first steps a home buyer should take when looking for a home or property.

A pre-approval does not absolutely guarantee that you'll receive the funds (as the final amount may be subject to conditions), but it's a very good indicator of the maximum amount you should consider when looking to purchase.

Your pre-approval process requires that you provide financial and credit score information in order to determine what size of loan you're eligible for, based on lender and Insurer requirements. And your down payment will be factored into the mortgage amount.

You can start your mortgage renewal process as early as 120 days (4 months) before the end of your current term, even if you haven't yet received your renewal offer. Lenders are only legally required to send your renewal statement at least 21 days before the deadline. Starting earlier provides more time to negotiate or look around for a better rate or mortgage fit.

A down payment is the portion of the purchase price that you provide, which secures at least a small amount of equity in your home or property. It also indicates your financial commitment towards such a large purchase and resulting mortgage loan. The amount of your down payment should be determined well before you start hunting a house, or before getting a pre-approval.

If you're a first-time home buyer, the federal government has programs to help, including the Home Buyers' Plan (HBP). This program allows you to withdraw up to $35,000 in RRSP savings ($70,000 for a couple) to help finance your first down payment, and to repay the withdrawn funds within a 15-year period.

Do you already have money saved for your first down payment? It may make good financial sense to apply your down payment through the Home Buyers' Plan — provided you have enough RRSP contribution room for the intended amount. You may receive a tax deduction that could be applied back to repaying the RRSP withdrawal amount or put towards other home expenses.

There are several costs that you'll be responsive for when buying a home or property. Here's a quick list for your reference.

  • Down payment. You'll need to have at least 5% down, maybe more, depending on your situation. To qualify for a conventional mortgage, you will need a down payment of 20% or more.
  • Deposit. that counts towards your down payment, that is required by the seller to show your commitment to buy their property.
  • Home inspection fee. We highly recommend a professional home inspection, which will bring to light areas of repair or maintenance and to ensure the house is structurally sound. Ask for a written report for your future reference. Home inspection fee is between $300-$500
  • Mortgage default insurance. (Including PST) if you are putting less than 20% down. These premiums factored into your mortgage payments but the PST on the premium must be paid upfront as part of your closing costs.
  • Land Transfer Tax (LTT). Calculated as a percentage of the purchase price of the property, with the amount varying depending on the province. amounts up to and including $55,000: 0.5%  amounts exceeding $55,000, up to and including $250,000: 1.0% amounts exceeding $250,000: 1.5%
  • Legal fees, disbursements and title insurance. These are costs that are associated with or are obtained through your solicitor. Fees for these services may vary significantly.
  • Other costs may be involved in closing your mortgage, such as property insurance, tax or utility adjustments.
  • Moving costs. Don't forget to include the cost of moving your belonging, or paying for cleaning or upgrading before you officially move in.

The length of a mortgage term can vary from six months up to 10 years. The term you choose will depend on your current financial situation, your short and long-term goals, your tolerance for risk, and even a choice between a variable vs. fixed rate. Most homeowners opt for a 5-year term to settle.

In deciding on which term is best for you, here are some questions to consider:

  1. Do you plan to sell your house in the short-term without buying another? If so, a shorter mortgage term (6 months to 3 years) may be the best option.
  2. Do you believe that interest rates have bottomed out and are not likely to drop more? Then a longer mortgage term (4-10 years) may be the right choice for you.
  3. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term, with the hope that rates drop by the time your term expires.
  4. Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses.
  5. To save some money, are you willing to follow interest rates closely and risk having increased mortgage payments following a renewal? Then a shorter mortgage term will provide you with the ability to reduce your period of higher risk.

The interest rate on a fixed-rate mortgage is set for a pre-determined term, usually between 6 months to 10 years. A fixed rate offers the security of knowing what you will be paying for the term selected.

The interest rate on a variable-rate mortgage is tied to the prime lending rate and will increase or decrease along with it. Its payment doesn’t change when prime rate changes. The only exception is when rates soar so much that you’re not paying all the interest. Then the payment generally rises to cover the interest due.

The interest rate on a adjustable-rate mortgage is tied to the prime lending rate and will increase or decrease along with it. If prime goes up, so does your payment.

Let’s compare a VRM to an ARM. Assume a $300,000 mortgage with a 25-year amortization at a rate of prime – 0.90%. If rates jumped 2%

VRM & ARM (Initial Payment) - $1,427 & after rate jump ARM payment will be $1,727. Approximately $300 monthly payment difference.