What is the minimum down payment needed for a home?
A minimum down payment of 5% is required to purchase a home. In addition to the down payment, you must also be able to show that you can afford all closing costs such as legal fees and disbursements. There are many new programs available in Canada that help individuals purchase a home sooner than they thought possible.
What is mortgage loan insurance?
Mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC)
, Genworth Financial
, and Canada Guaranty
. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums range from .50% to 7% and are paid by the borrower and can be added directly onto the mortgage amount.
What is a pre-approval?
A pre-approval provides an interest rate guarantee from a lender for a specified period of time, usually 120 days and for a set amount of money. The pre-approval is calculated based on information provided by you and is subject to certain conditions being met before the mortgage is officially approved. Conditions would include things like employment and income confirmation, proof of down payment, property confirmation, and more.
Many real estate agents will require you have a mortgage pre-approval in place before they will work with you. This is to ensure that they are showing you properties within your affordable price range.
How can I pay off my mortgage sooner?
There are many ways to pay down your mortgage sooner. You will be able to significantly reduce your mortgage by following these easy tips:
- Select an accelerated bi-weekly or weekly payment schedule
- Make principal lump sum prepayments
- Make double-up payments
- Selecting a shorter amortization at renewal
What is a fixed rate mortgage?
The interest rate on a fixed-rate mortgage is set for a predetermined period of time. Terms available are 1 to 5 years, 7 year and 10 year. This offers the security of knowing what you will be paying for the term selected.
What is a variable rate mortgage?
The interest rate on a variable-rate mortgage will fluctuate with Canada’s prime lending rate as set by the Bank of Canada. As this rate changes, so will your mortgage rate. This product is usually setup as either a 3 or 5 year term, with a discount offered depending on term. This allows you to take advantage of falling interest rates but also comes with the risk of an increase in rates which results in a higher mortgage payment.
What is title insurance?
Title insurance protects your ownership or title against losses incurred as a result of undetected or unknown title defects, for as long as you own your home. Even if you are the rightful owner of your home, there are instances such as real estate title fraud, when your title can come into question.
What is a home inspection?
A home inspection is a visual assessment of the overall condition of a home. This is a vital step in the home buying process to ensure the home you want to purchase doesn’t have any major issues or concerns that will lead to costly repairs in the future. Read More…