Frequently Asked Questions

To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation. ​Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines. In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries.

A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection. ​A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. In addition to the down payment, you must also be able to show that you can cover the applicable closing costs (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable). Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or a gift from a family member. It cannot be borrowed. Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor. Where the mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC), the gift money must be in your possession before the application is sent in to CMHC for approval. ​Mortgages with less than 20% down must have mortgage loan insurance provided by either CMHC, Genworth, or Canada Guaranty.

Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. 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, ranging from .50% to 4.25%, are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.

A conventional mortgage is usually one where the down payment is equal to 80% or more of the purchase price, a loan to value of or less than 80%, and does not normally require mortgage loan insurance.

Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for. Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. where the mortgage requires mortgage loan insurance, Canada mortgage and housing corporation requires the gift money to be in the purchaser's possession before the application is sent in to them for approval. where mortgage loan insurance is provided by GE Capital this is not a requirement. See 'what is mortgage loan insurance?' for further information.

There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by: Selecting a non-monthly or accelerated payment schedule Increasing your payment frequency schedule Making principal prepayments Making Double-Up Payments Selecting a shorter amortization at renewal

Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. If you are a first-time home buyer, the Home Buyers Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plan (RRSP) tax-free to make your down payment. The HBP is administered by the Canada Revenue Agency (CRA). ​There are certain conditions you must meet to be eligible for the HBP. For more information, contact CRA at www.cra.gc.ca.

You can withdraw up to $25,000 from your RRSP. If you buy the home together with your spouse, partner, or someone else, each of you can withdraw up to $25,000, for a total of up to $50,000. The withdrawal from your RRSP does not need to be included in your income on your annual income tax return, and no tax is taken off the money you withdraw.

You don't have to start paying back the money to your RRSP until two years after the purchase of the home. You must pay back all withdrawals from your RRSP within 15 years by making RRSP deposits each year, starting the second year following your withdrawal. CRA will determine what your minimum yearly repayment will be and will notify you once you need to start repaying the amount. ​If you do not repay the amount due in a given year, it is included in your taxable income for that year and you'll have to pay income tax on this amount.

The interest rate on a fixed-rate mortgage is set for a pre-determined term - usually between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected.

A variable interest rate is based on a benchmark rate or index, such as the prime rate, published by the Wall Street Journal. When that index rises or falls, it affects the interest rate paid by the borrower. The benefit of a variable rate is that as it drops, so does the borrower’s interest payment. Some variable-rate loans, however, have terms that limit rate drops. ​Our variable rate mortgages offer a simple 3-month interest penalty to exit out of the term early. The variable rate interest is also calculated monthly not semi-annually; therefore, paying more down on your principle.

Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing.

A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually up to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation' and 'down payment from your own resources', for example. ​Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range. In summary, a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.

First and foremost, you have to make sure you have enough money for a down payment - the portion of the purchase price that you furnish yourself. ​To qualify for a conventional mortgage, you will need a down payment of 20% or more. However, you can qualify for a low down-payment insured mortgage with a down payment as low as 5%. ​Secondly, you will require money for closing costs (up to 1.5% of the basic purchase price). ​If you want to have the home inspected by a professional building inspector - which we highly recommend - you will need to pay an inspection fee. The inspection may bring to light areas where repairs or maintenance are required and will assure you that the house is structurally sound. Usually the inspector will provide you with a written report. If they don't, then ask for one. ​You will be responsible for paying the fees and disbursements for the lawyer or notary acting for you in the purchase of your home. We suggest you shop around before making your decision on who you are going to use, because fees for these services may vary significantly. ​There are closing and adjustment costs, interest adjustment costs between buyer and seller and (depending on where you live) land transfer tax - a one-time tax based on a percentage of the purchase price of the property and/or mortgage amount. ​Finally, you will be required to have property insurance in place by the closing date. And you will be responsible for the cost of moving.

Needless to say, you'll have financial responsibilities as a home owner. ​Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses. ​The Mortgage Payment For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization. ​Property Taxes Property tax, including school taxes, can be paid in two ways - remitted directly to the municipality by you if you qualify or in most cases are collected by the lender with your mortgage payment. ​Utilities As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable. Maintenance and Upkeep You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighbourhood and, depending on the kind of renovations you make could add to the worth of your property.

Losing a loved one is one of the most difficult experiences most of us will face in life. While there’s nothing you can do to make your death easier on your loved ones, you can spare them the financial stress by having life insurance. ​When a loved one dies, the expenses can add up: Funeral costs Taxes owing at death Debt repayments (e.g., credit cards, mortgage, personal loans) You can also choose a life insurance amount that will make sure your loved ones won’t have to go into debt or sell off assets. If you’ve accumulated a lot of wealth, a life insurance policy is a smart way to continue growing your assets and leave behind a tax-free inheritance for your loved ones.

Determining how much life insurance you need requires an examination of your current and future financial obligations, along with the resources your family could tap. ​Your future obligations are a combination of what it would cost to help your surviving family members meet immediate and ongoing needs like funeral costs, taxes, food, clothing, utilities, mortgage payments, and your future obligations like college and retirement funding. The resources that your surviving family members could draw on to meet those obligations include your spouse’s or partner’s income, savings and investments, other income producing assets, and any life insurance you might already own. The difference between the two—your financial obligations minus the resources your family has to meet those obligations—is the approximate amount of additional life insurance you need. If this sounds confusing, you’re not alone. That’s why most people turn to a qualified insurance professional when they want to figure out how much insurance they need.

Because if you’re like most people, you have monthly bills to pay! Think about your monthly obligations such as Mortgage/rent Groceries Car payments Personal loan or other debt payments Childcare expenses or tuition fees Utilities, phone, etc. What would happen if you were unable to work? That’s where disability insurance comes in. It provides an income replacement so that you’re able to stay on top of your everyday expenses. Disability is more common than you might think. People often have to take time off work due to an accident or illness, or for problems like stress, fatigue or back pain.

Unfortunately, our healthcare system doesn’t cover everything. If you were to suffer a serious illness like cancer, a heart attack or a stroke, you could run into unexpected expenses or have to make a serious lifestyle change. ​With critical illness insurance, if you’re diagnosed with a covered illness, you’ll receive your policy’s insurance amount, tax-free. You can use the money however you want. For example: To get access to the best possible care, without having to wait To focus on your recovery without worrying about lost income (your own or that of a caregiver) To avoid having to dip into your savings To pay for unexpected expenses like prescription drugs not covered by an insurance plan, physiotherapy, travel to medical appointments, childcare while you’re receiving treatment, etc.