The Home Buyer’s Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plan (RRSP), tax-free, to use for a down-payment. You must meet certain conditions to be eligible for the HBP.
You can withdraw up to $25,000 from your RRSP. Contributions must be in your account for at least 90 days before they can be used for the HBP and you must pay back all withdrawals from your RRSP within 15 years by making RRSP deposits each year.
One of the key reasons to use the services of a mortgage broker is for their access to the entire mortgage market. If you deal with only one bank, then you are limited to the product offerings of that bank. That could result in you missing out on a much better option through a mortgage broker who has access to many different lenders and often special product/rate offerings not available on the open market.
No. Using the services of a mortgage broker is free for the vast majority of our clients.
Our service is free to you, but we are compensated with a finder’s fee by the financial institution that we place your mortgage with. This fee is not added to your mortgage in any way, and those finders’ fees are fairly standard throughout the industry regardless of which bank we arrange your mortgage through.
For 95% of our clients, it’s always free to use our services. However, there are instances where the mortgage that a client requires dictates that a fee be incurred for our services. In these instances, this fee is always disclosed to the client in advance and in writing before fees of any kind are incurred.
The interest rate on a fixed-rate mortgage is set for a pre-determined length. In Canada, the term on fixed-rate mortgages is usually between six months to 10 years.
In addition to your down-payment and mortgage loan insurance (if you are purchasing a home with a down-payment of less than 20%), there are several one-time closing costs that you need to be prepared for. Some typical costs are legal fees and disbursements, title insurance fees, and land transfer tax.
Closing costs vary, but we recommend that you should budget a minimum of 2% of the purchase price for closing costs.
A variable mortgage rate is based upon a bank or lender’s prime rate. That means if the prime rate goes up (bank prime rates are based on changes made to the Bank of Canada’s overnight rate), then variable rates will go up. Conversely, if prime rates go down, then your rate (and mortgage payment) will go down as well.
A conventional mortgage is where the down-payment is equal to 20% or more of the purchase price and does not normally require mortgage loan insurance.
A high-ratio mortgage is when the mortgage amount to be borrowed is greater than 80% of the purchase price or appraised value. A high-ratio mortgage generally requires mortgage loan insurance, which is provided by CMHC, Genworth, or Canada Guaranty. The insurance is required by law to protect lenders against defaults on high-ratio mortgages.
A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (most often the period is 120 days) and for a set loan amount. The pre-approval is based on information provided by you in the initial mortgage application and is generally subject to certain conditions such as income and down-payment confirmation.
A down-payment is the amount of money that you contribute at the time of purchase toward the price of your home. Your mortgage loan covers the balance. You should have a good idea of how much you can put toward the down-payment before starting the house-hunting process.
The minimum down-payment is at least 5% of the purchase price. For example, to buy a home that costs $300,000, you will need a minimum of $15,000 as your down-payment.
When you are ready to make an offer to buy a home, you will need to provide a deposit. The deposit forms part of your down-payment, with the rest to be paid when you close the purchase of your new home.
Mortgages with less than 20% down must have mortgage loan insurance provided by CMHC, Genworth, or Canada Guaranty.
Your down-payment is the portion of the home purchase price that you pay for yourself. You can use money from your personal resources, monetary gifts you have received from immediate family members, and/or withdraw funds from your Registered Retirement Savings Plan (RRSP) under the Home Buyers’ Plan (HBP). Personal resources generally include savings from your chequing or savings accounts, the sale of your existing home, equity in your existing home, or in an investment property and non-registered investments (stocks, bonds, mutual funds, etc.).
The Home Buyers’ Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plan (RRSP) tax-free to use for a down payment. You must meet certain conditions to be eligible for the HBP.
You can withdraw up to $25,000 from your RRSP. Contributions must be in your account for at least 90 days before they can be used for the HBP and you must pay back all withdrawals from your RRSP within 15 years by making RRSP deposits each year.
Your mortgage payments are calculated based on a number of factors. These includeyour interest rate (whether you want a fixed rate mortgage or variable rate mortgage), the amount of the mortgage you need, your payment frequency, your term, and your amortization period.
Use our online calculator help you determine what your payments will be.
Payments for property taxes and/or condominium fees would be in addition to mortgage payments.
A home inspection is a professional consulting service that determines the present condition of the home’s major systems, based on a visual inspection of accessible features. It focuses on the performance of the home, rather than cosmetic, code, or design issues. The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.
A home inspection is always recommended and is a great tool to help make a difficult decision that much easier.
There are several things you can do to pay off your mortgage faster and reduce your interest costs.
The most common method used to pay off your mortgage faster is by taking full advantage of the prepayment privileges available to you.
You can increase the amount of your payments. By doing this, you may be able to shorten your amortization period, which reduces your interest costs over the life of your mortgage. With most lenders, you can increase your regular payments by up to 20% each year.
You can make lump-sum principal payments. By reducing the principal balance of your mortgage, you reduce your interest costs and shorten your amortization period. Again, with most lenders you can pay up to 20% of your original mortgage amount towards the outstanding principal of your mortgage each year.
You can also pay off your mortgage faster by increasing your payment frequency. By doing so, you pay down your principal faster and therefore reduce your interest costs over the life of your mortgage. Payment frequencies offered by most lenders are as follows: weekly, accelerated weekly, bi-weekly, accelerated bi-weekly, semi-monthly, and monthly.
By choosing a shorter amortization period, you can also take years off the life of your mortgage and save in interest costs. The shorter the amortization period you choose, the more you save over the life of your mortgage. With a shorter amortization period, your mortgage payment will be higher, but your mortgage will be paid off sooner and you will pay less in interest costs.