INTRODUCTION

Homes come in every size, style and price range. Knowing what you can afford at the beginning of your search saves you time and disappointment later on.

PRE-APPROVAL

It is very important to be qualified or pre-approved for financing before starting the search for a home. This allows you to to confidently and comfortably assess how much you can afford and lets your agent know what exactly to send your way in terms of listings or potential future homes. The pre-approval generally also provides a written confirmation for a fixed interest rate that is good for a specified period of time. This can be considerably important at times when interest rates are lower and are on the verge of increasing in the near future. Do not hesitate to contact me for our list of preferred mortgage lenders. 

CONVENTIONAL MORTGAGES

The maximum amount of conventional mortgage is 80% of the purchase price. With every mortgage comes an amortization period or in simple terms, the length of time to repay the loan. This period of time is traditionally 25 years but can be shorter or longer depending on your lender and your preference. A shorter period, such as 15 years, will increase monthly payments but reduce the amount of interest paid at the end of the period. Conversely, a longer period, such as 30 years, will reduce monthly payments but increase the amount of interest paid at the end of the period. Amortization period is not to be confused with 'mortgage term', which is the number of months or years for which the interest rate is set. This period of time is generally 5 years, at which point the mortgage is to be renewed with a new interest rate.

FIRST TIME HOME BUYERS - HIGH RATIO MORTGAGE

As a first time homebuyer, trying to come up with a 20% downpayment on a home to secure an 80% mortgage can be difficult, especially in our current market. As a first time home buyer, you are offered mortgage loan insurance, which allows you to put down as little as 5% down. Your are then obligated to pay mortgage loan insurance which comes in the form of a premium. The premium is calculated as a percentage of the principal and can be paid in single lump sums or can be added to the mortgage and included in your monthly payments. 

USING RRSP TO PURCHASE A HOME

This program allows each RRSP plan holder to borrow up to $35,000 from their plan to use toward the downpayment of a home. It is important to note that couples with seperate RRSP plans can each borrow this amount to a total of $70,000. Home buyers who use this program then have up to 15 years to return the money back into the RRSP account, interest free. This allows the participants to retain the tax advantages that RRSP offers in the long term, while getting some added tax benefits in the short term when they're buying their first home. 

QUESTIONS? 

Buying a home, whether it be pricinple or as an investment, can already be a very complicated process. Making sure you understand the ins and outs of the financing aspect of a purchase is integral to making the best decision. 

Looking to buy or sell soon and have questions regarding what it can mean financially for you ? Don't hestiate to ask any questions you may have and we'd be more than happy to help.