First Time Home Buyers

After you've made the big decision about the type of house you want, the first step is to use our Maximum Mortgage calculator (link to calculator) to determine how much you can afford and then how you will finance the purchase. The following information will also assist you in understanding what your options are with respect to mortgage financing.

Pre-Approvals
Home-Buyers Plan
Buying with 5% Down
Closing Costs

Pre-Approvals

Anyone contemplating the purchasing of a home should be pre-approved for a mortgage. It only takes a few minutes with our mortgage application on our secure server and you'll be approved within hours. Upon submitting your application, one of our mortgage consultants will be in touch with you directly to discuss your options, and request that you send proof of your income and employment. We will then submit a pre-qualification application directly to the lender that best meets your needs.

A mortgage pre-approval provides you with two main benefits. Firstly, it locks you into a rate guarantee for a specified period of time which protects you in case there is an increase in mortgage rates. This offers you peace of mind because if rates go up, you're protected, and if they go lower we'll always get you the best available rate up to the day of closing.

Another reason a pre-approval works to your advantage is that it enables you to make a firm offer for the home of your choice. As most Realtors will tell you, a firm offer adds an awful lot of leverage to price negotiations, especially when the real estate market is hot.

First time buyers should always be pre-approved. Not only for the above reasons but because we'll go through all the fine print of mortgages to ease your mind about the different products, rates and terms. You can then be assured that you are making the right choice.

Home Buyer's Plan

The Federal Home Buyer's Plan allows first time home buyers to withdraw up to $20,000 from their RRSP for the purpose of buying or building a qualifying home. The primary benefits are that the RRSP issuer will not withhold tax on the amount nor will you have to claim the amount as income. The amount must be repaid to the RRSP within 15 years with a minimum annual payment of 1/15th of the amount withdrawn. If a repayment is not made for a given year the minimum repayment is included as taxable income for that year.

Provided you buy or build a home and meet all the conditions for making a withdrawal under the Home Buyer's Plan, you can use the funds for other purposes that you choose. For example; your RRSP funds can be used not only for the down payment of your home. Your RRSP can also be used for such things as furniture, appliances, and closing cost such as legal and moving expenses.

Conditions

For more information on the Home Buyer's Plan please click here.

Buying with 5% Down

For most people, the hardest part about buying a new home is saving the necessary down payment. A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property. If you have less than 25% of the purchase price to put down, you will be required to purchase mortgage insurance through the lender as this insurance protects your lender against payment default.

You can now purchase a home with as little as 5 % down. These mortgages are considered to be high-ratio and are insured by one of two companies, Canada Mortgage & Housing Corporation (CMHC), or GE Mortgage Insurance. The insurer will charge a fee for this insurance and the amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 0.5% and 3.75% of the principal amount of your mortgage. This amount can be paid up front or added to the principal portion of your mortgage

How do you qualify?

Closing Costs

This is a list of possible extra costs involved in buying a home. Some of them are one-time costs and others, such as condominium maintenance fees and property insurance, will be ongoing monthly expenses. Not all of these costs may apply in your circumstances.

Goods & Services Tax: The 7% GST applies to new housing. However, there is a rebate, to a maximum of 2.5%, if your home costs less than $450,000. There is no GST on resale housing unless the home has been substantially renovated, and then the tax is applied as if it were a new home. In some provinces, the GST has been replaced by a Harmonized Federal and Provincial Sales Tax known as the HST. Also in other provinces, provincial taxes may be applicable.

Appraisal fee: If your loan is not insured, the lender may require a property appraisal at your expense. A basic appraisal for mortgage purposes will probably cost between $150–$250. Actual cost should be confirmed as it may vary with the location and complexity

Property taxes: Taxes are always a certainty. If you have a high-ratio mortgage, the lender may require that you have your property tax installments added to your mortgage payments.

Survey fee: Your lender will require an up-to-date survey. Ask the vendor to provide one as a condition of your Offer to Purchase, or you will have to pay to have one done.

Property insurance: This insurance covers the replacement value of the structure of your home and its contents. Your lender will insist on this because your home is the security for your mortgage.

Prepaid taxes or utility bills: You will have to reimburse the vendor on a prorated basis if some bills have been prepaid beyond the closing date.

Land transfer tax: This applies in most provinces. It varies as a percentage of the property's purchase price. It is usually about 1% – 4%.

Service charges: You'll be charged a fee to hook up new services and utilities, such as your telephone, at your new home.

Lawyer (notary) fees: Even a straightforward home purchase requires a lawyer to review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details. Lawyer's fees for a mortgage range widely depending on the complexity of the deal but will probably be at least $500.

Mortgage loan insurance premium and application fee: If you have a high-ratio mortgage, the lender will require mortgage loan insurance provided by CMHC or a private company. The insurance will cost between 0.5% and 3.75% of the amount of the total mortgage (additional charges may apply) and can be included in the mortgage. The application fee will range from $75 to $235 depending upon how the lender processes your application

Moving costs: Don't forget the cost of a professional moving company or a rental truck if you move yourself. Fees for a professional mover can range from $50 – $100 an hour for a van and three movers. These costs may be 10% – 20% higher at the end of the month and in the summer.

Estoppel certificate: A certificate that outlines a condominium corporation's financial and legal state. The certificate and supporting documents will cost you up to $50. (Does not apply in Quebec.)

Condominium fees: Condominiums charge monthly fees for common-area maintenance, such as groundskeeping and carpet cleaning. Fees range widely depending on the type of structure but will probably be at least a few hundred dollars per month.

Home inspection fee: Inspectors are unregulated in many provinces, so fees range widely, from about $150 – $350 for a home priced under $300,000. Larger, more expensive homes cost more to inspect. A two-hour inspection carried out by an engineer who provides a written report will cost closer to the upper limit. Municipalities can also supply any available inspection reports on the property for a fee.

Renovation and repairs: A home inspection may indicate that the home needs major structural repairs such as a new roof. Don't forget to factor these costs into the price of the home.

Water quantity and quality certification: If you're buying a home with well service, you'll have to pay a fee from $50-$100 to certify the quantity and quality of the water.