Do you want to leave apartment life behind and buy a home?
Buying a home is one of the most important transactions you will ever make. Being prepared will make the process easier and help you make educated choices.
Getting a mortgage?
Are you searching for the home of your dreams, a home that will be yours and offer you freedom and peace of mind?
Becoming a homeowner for the first time requires time and energy. To help you in the process of obtaining a loan, you can choose to work with a mortgage broker. He or she will give you the tools need to go through this process and will guide you at each step of the home-buying process. Your mortgage broker will also help you choose the mortgage product that will meet your needs and correspond to your situation from among a wide range of products.
To make it easier to assess your file and advise you properly, your broker will require several documents. Here’s a non-comprehensive list of documents that your broker may request during your first meeting, that you can get together beforehand:
Your new property: signed offert to purchase, information sheet, municipal and school tax account, your lawyer or notary’s contact information, etc.
Your job: confirmation of employment (hire date, gross salary and position), paystub, etc.
Your financial situation: origin of your down payement, list of your assets and debts, void cheque, etc.
Minimum down payement
When buying a home, a minimum of 5% down payment is required for a single-family home. A down payement is an amount of money not financed by your mortgage that you must pay to purchase your home. The minimum down payment varies based on the purchase price. If the purchase price of the desired property is $500,000 or less, the required minimum down payment is 5% of the purchase price. If the purchase price of the desired property is between $500,000 and $999,999, the required down payement is 5% of the first $500,000 and 10% for the amount over $500,000. If the purchase price of the desired property is $1,000,000 or more, the required minimum down payement id 20% of the purchase price.
If you make a down payement of less than 20%, your loan must be covered by a mortgage insurer like CMHC or Genworth. This insurance will cover the lender’s risk with respect to repayment of the loan. The insurance premium will be financed by your loan and is calculated based on the percentage of your down payement.
It can vary between one and five years. Closed terms offered better interest rates. Open terms are usually used for short term. The difference between the two is as follows: an open-term loan can be repaid at any time penalty-free. However, the interest rate for an open term is higher that for a closed term.
Fixed or adjustable rate mortgage?
A fixed rate guarantees that you pay the same rate and make the same payement for the duration of the term. An adjustable rate is based on the Bank of Canada’s prime rate less a discount established with your lender at the start of the term.
Home insurance protects you against damages to your home and provides legal liability coverage that protects you against accidental physical injury to or damages to property belonging to another person. In general, if you take out a mortgage to buy your home, your lender will require you to take out home insurance.
There are different coverage options available to you, including named-peril and all-peril coverage (covers most incident that can damage your property).
For more information please contact one of our financial advisor at www.ethicor.com