7 Steps to Becoming a Homeowner

General Trish Pigott 9 Aug

Becoming a homeowner is one of the most exciting and rewarding moments in life! While people don’t always dream of the perfect mortgage, we do grow up dreaming of a white picket fence and our dream home. Even if you imagined your dream home as a 6-bedroom mansion, we all have to start somewhere!

This post will take you through the important steps and considerations for your first home.

1. Are You Ready to Become a Homeowner?

Before you jump on in, there are some things you should ask yourself. As amazing as it is to be a first-time home buyer, it is important to remember that this is likely the largest financial decision you will ever make. There are a few questions you can ask yourself to make sure you’re ready to take this leap!

  1. Are you financially stable?
  2. Do you have the financial management skills and discipline to handle this large of a purchase?
  3. Are you ready to devote the time to regular home maintenance?
  4. Are you aware of all the costs and responsibilities that come with being a homeowner? Let’s find out!

2. Do You Know the Costs?

There are two major costs associated with being a new homeowner:

Upfront Costs: The initial amount of money you need to buy a home, including down payment, closing costs and any applicable taxes.

Ongoing Costs: The continued cost of living in a home you own, including mortgage payments, property taxes, insurance, utility bills, condominium fees (if applicable) and routine repairs and maintenance. It is also important to keep in mind potential major repairs, such as roof replacement or foundation repair, that may be needed now or in the future. In addition, if you choose a property that is not hooked up to municipal services (such as water or sewer) there may be additional maintenance costs to consider.

3. The Down Payment

The minimum down payment on any mortgage in Canada is 5% but putting down more is beneficial whenever possible, as it will lower the amount being borrowed. However, if you can only afford the minimum that is perfectly okay! Just remember, if you are putting down less than 20%, default insurance will be mandatory to protect the investment (also known as CMHC).

RRSPs can be a great resource for first-time home buyers and can be cashed in up to $35,000 individually towards a down payment. In fact, most mortgage professionals will tell you nearly half of all first-time buyers use their RRSPs to help with the payment. Those first-time buyers who choose this option will have 15 years to pay it back and can defer these payments for up to two years if necessary. Always remember though, deferring a payment can increase the time to pay off the loan and you will still owe the full amount!

Another option for securing your down payment is a gift from an immediate family member, typically a parent. All that is required for this is a signed Gift Letter from the parent (or family member) providing the funds, which states that the money does not have to be repaid and a snapshot showing that the gifted funds have been transferred.

4. Mortgage Pre-Qualification

This process provides you with an estimate of how much you can afford based on your own report of your financial situation. The benefit of this is that it sets the baseline for a realistic price range and allows you to start looking for that perfect home within your means! Now, it’s important to note that this process is not a mortgage approval, or even a pre-approval, it just helps to establish your budget.

5. Mortgage Pre-Approval

While this may seem similar to pre-qualification, the pre-approval process requires submission and verification of your financial history to ensure the most accurate budget to fit your needs.

As a result, getting pre-approved can help determine:

  • The maximum amount you can afford to spend
  • The monthly mortgage payment associated with your purchase price range
  • The mortgage rate for your first term

Getting pre-approved doesn’t commit you to a single lender, but it does guarantee that the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still shopping.

After  You Have Been Pre-Approved:

  • Refrain from having additional credit reports pulled
  • Refrain from applying for new credit, closing off credit accounts or making large purchases
  • Be prepared to show a paper trail – any unusual deposits in your bank account may require an explanation

6. Financial Approval

You’re almost there! Financial approval is the last step to getting your mortgage and buying your first home! You will need to keep in mind that just because you are pre-approved, it doesn’t guarantee that the final mortgage application is approved. Being entirely candid with your home-buying team throughout the process will be vital as hidden debt or large purchases during your 90-120-day pre-approval can change the amount you are able to borrow. It is best to refrain from any major purchases (such as a new car) or life changes (such as changing jobs) until after closing and you have the keys to your new home.

7. Closing Day For the New Homeowner

Phew, you made it. Closing day is one of the most exciting moments where all the house hunting and paperwork really pays off! It is on this day that you will want to make use of your lawyer or a notary.

To complete the process of closing the sale, your lender gives your lawyer the mortgage money. You would then pay out the down payment (minus the deposit) and the closing costs (typically 1 to 4% of the purchase price). Typically, this payment is done through a bank draft, which will require a bank run ideally 10 days before closing. This is then brought to the lawyer on your closing date. From there, the lawyer or notary then pays the seller, registers the home in your name, and gives you the keys!

Congratulations, you are now a homeowner!

Rising Interest Rates? Do Not Panic!

Mortgage Tips Trish Pigott 27 Jun

With the recent changes in interest rates by the Bank of Canada, variable-rate mortgage holders have started to panic. We wanted to address these concerns, to assure you that the sky is not falling. Despite what you see in the news, you do not need to panic! There is still lots of opportunity in this market.

Inflation across North America is affecting everyone.  On June 15th, the U.S. Federal took an aggressive step of boosting its interest rate by 0.75%.  Federal Reserve Chair, Jerome Powell, also indicated there could be more, bigger-than-normal, increases in the future.

The U.S. increase follows a 0.5% rate increase by the Bank of Canada at the beginning of June.  Both central banks are engaged in a serious fight to bring inflation back to a 2% target.  Right now, inflation is nearly 7% in Canada and almost 9% in the U.S.  This month’s hike by the U.S. Fed is leading many to believe that Canadians may see another 0.75% increase sometime this year.

This information does not help relieve anxiety from homeowners here in Canada, as a recent survey from Manulife suggests more than 20% of Canadians expect rising rates to have a negative effect on their mortgage, debt, and financial situation. Few Canadians “feel prepared for rising rates.”

However, these fears may be the result of a lack of knowledge rather than any real risk.  This survey conducted by Manulife also reveals that nearly a third of respondents admit that they do not understand how inflation or interest rates work.  Many do not have a household budget or a written financial plan.  This is critical in planning for the future of rising rates in your household.

Want to understand more about our economy and inflation?  CLICK HERE to check out this report from Dr. Sherry Cooper, our Chief Economist.

Here are 5 tips to help plan for the future:

1. First, contact us if you would like your mortgage reviewed.  We can quickly spot different ways to help improve your monthly cash flow including changing your payment frequency or extending your amortization.

2. Consider a debt consolidation – this can save you thousands  in unsecured debts with high-interest by rolling them all into one monthly payment.

3. Prepare a monthly household budget – This is lacking in the majority of Canadian households!  CLICK HERE to get started on tracking your expenses and ensuring your hard-earned income is going to the right places.

4. Hold off on unnecessary purchases for now.  No matter how big or small, now is the time to reign it in.

5. Increase your payments to absorb rising rates if you are in a variable rate mortgage and worried about future payment increases.

Please share this with your friends, family or coworkers who are feeling worried about the rate changes and their current financial situation. We can help put them at ease! And don’t hesitate to contact us with any questions.  When in doubt, call us at 604-552-6190 and we will help ease your stress!

How Bridge Financing Works

Mortgage Tips Trish Pigott 9 Jun

In life, things rarely go as planned. This is especially true when it comes to real estate, so we have bridge financing to help us. When it comes to buying a new home, most of us would like to take possession of it before having to move out of the old one. This makes moving a lot easier and allows time for painting or renovating prior to moving in. Unfortunately, the transition is not always that smooth.

What is Bridge Financing?

Most people need money from the sale of their existing property to come up with a down payment for the new purchase. This is where bridge financing comes in. It allows you to ‘bridge’ the financial gap between the firm sale of your current home and the firm commitment to purchasing your new home.

What are Bridge Loans?

Bridge loans are short-term solutions that range from 90 days to 12 months, with an average of six months in length. This allows you to access some of the equity in your existing property and put it towards the down payment of your new home. However, to be eligible for a bridge loan, a firm sale agreement MUST be in place on your existing home. This means that all subjects have been removed. A purchase agreement for the new home will also be required to verify the amount needed.

If you have not yet sold your home, you will not be eligible for bridge financing, as the lender needs to accurately calculate how much equity you have available and if you can afford your new home.

If you have a firm sale and are considering bridge financing, it is important to understand that unless you can qualify and pay for two mortgages, you should always sell your existing home first. There are a couple of reasons for this:

1. Property values are constantly changing. You won’t know how much money you have until you sell your home. Past sales and future guesses don’t count!

2. You need the proceeds from your existing home to help pay for the down payment on your new home, as well as renovations, moving costs and to determine the size of mortgage you qualify for.

If you have sold your existing home but the closing date is after the one on the new property, bridge financing will likely be your best option. However, not all lenders allow bridge financing. It is important to consider whether or not you think you need it so you can ensure you sign with the appropriate lender. We will help you find a lender that provides the options you need.

Costs of Bridge Financing

It is important to mention that bridge financing typically costs MORE than your traditional mortgage. It is best to expect the prime rate plus 2-4%, as well as an administration fee. In some cases, if you require a loan over $200,000 or a loan for more than 120 days, your lender may register a lien on the property until the loan is repaid. In order to remove this lien, you will need to consider the added costs of paying for a real estate lawyer.

Private Financing

If you have purchased your new home and are closing the deal, but your existing home has not yet sold, you would not qualify for bridge financing but could consider a private loan. Private financing is expensive, but is generally a more affordable option. Often, if you need to sell your property first, you may be pressured into reducing the sale price and losing thousands.

Private loans do have a much higher interest rate than traditional mortgages, which averages anywhere from 7-15%. The costs associated with a higher interest rate is in addition to an up-front lender fee and potential broker fee. These amounts will vary based on your specific situation with consideration to the loan term, amount, loan-to-value ratio, credit bureau, property location, etc.

When it comes to bridge financing and private lending, don’t waste time trying to figure it out on your own. Give us a call and we will help you determine your best option!

June 1st Interest Rate Update

Latest News Trish Pigott 3 Jun

Bank of Canada Announcement

On Wednesday, the Bank of Canada (BoC) increased it’s prime interest rate by 0.50%.  As mentioned in our previous blog post, this has been widely expected since April.  This change affects variable rate mortgage holders, home equity lines of credit and any loans that are attached to the bank’s prime lending rate.  If you have a fixed rate mortgage, this will not impact your current rate or mortgage payment.

As our economy recovers from the pandemic and inflation across the country becomes higher than expected, the BoC’s rates will continue to increase until inflation falls back to a reasonable level.  There is speculation that we will see further rate hikes throughout the rest of the year until consumer spending is under control.

Here is an example of how the new prime rate of 3.70% affects mortgage payments:

Current Prime Rate at 3.20%
$100,000 Mortgage amount
3.20% Prime rate
25 year Amortization
$483.57 per month

New Prime Rate at 3.70%
$100,000 Mortgage amount
3.70% Prime rate (increased by .50%)
25 year Amortization
$509.88 per month

Payment will rise by $26.31 per month for every $100,000 in mortgage.

If you have a discount off of the prime rate for your mortgage, you will still get that discount off of the new rate.  For example, if your mortgage rate is currently prime minus 0.50%, your new rate would be 3.20% (prime of 3.70% – 0.50% = 3.20%).

It’s easy to panic when you hear this all over the news and social media, but rest assured, you are still in a great position with a variable rate mortgage. If you do feel like you want to look at locking in a fixed rate mortgage, please reach out to us.  Right now, lock in rates for a five year term are around the mid 4% range; This depends on your down payment and equity.

Another option is to set your payment as if you are in a fixed rate. This allows you to not be as heavily impacted by future rate increases, while paying down your mortgage quicker and saving on interest.

It’s important to note that 73% of Canadians break their mortgage term at the three year mark, triggering a penalty that can be very large.  By remaining in a variable rate, you would only be subjected to a 3-month interest penalty which is about a quarter of the penalty when in a fixed rate.

Unfortunately, no one has a crystal ball to predict what will happen in the next 12 – 24 months, but we do know that the government will make every attempt possible to curb spending and bring our inflation back to a more reasonable effort.

While we are in a transition state, here are a couple of tips to follow:

  • Round your payment to the nearest $100 if possible
  • If you want to be more aggressive, set your payment like you have a fixed rate
  • Think twice before making large purchases
  • Budget ahead of time rather than make spontaneous spending decisions
  • Reduce debt in as many cases as you can
  • If you have to make a large purchase (such as real estate), be sure to run all scenarios to ensure affordability and qualification, and make sure you have a professional representing you

If you want to read the full report from our very own economist Dr. Sherry Cooper, please CLICK HERE.

The next interest rate announcement from the Bank of Canada is July 13, 2022.  Feel free to share this information with your friends, family or coworkers, and don’t hesitate to contact us with any questions at all!

A Look at Mortgage Jargon

Mortgage Tips Trish Pigott 19 Apr

We often get caught up using mortgage jargon that is not a part of your everyday vocabulary. Some terms that are commonly used in our industry are listed below.

Amortization Period

This is the number of years it will take to repay the entire mortgage in full. A longer amortization period will result in lower payments but it will take longer to pay off, so the interest is higher. The typical amortization range is 15 to 30 years.

Closed Mortgage

This is any mortgage where you have agreed to pay the lender for a specified period of time. This means that you cannot pay it off, refinance or renegotiate before the mortgage term ends without incurring a penalty. Depending on the lender, there may be options for accelerated payments but it depends on your particular mortgage contract. While these mortgages tend to be a lot stricter, they can often provide lower interest rates.

Conventional Mortgage

The loan covers no more than 80% of the purchase price on the property. This means the buyer has to put 20% (or more) down on the property. These mortgages do not require default insurance due to the amount down.

Default

Failure to pay your mortgage on time will result in defaulting on the loan.

Derogs

Short for ‘derogatory’, it refers to an overdue account or late payments on your credit report.

Down

Short for down payment. In Canada, the minimum down payment is 5%.

Fixed

A fixed-rate mortgage means that you are locked in at the interest rate agreed.

Flex Down

This refers to a borrowed down payment program, which allows homeowners to “borrow” money for the down payment from a credit card, line of credit or other loan. In this case, the repayment of the loan is included in the debt calculations.

Foreclosure

This refers to the possession of a mortgaged property by the bank or lender if a borrower fails to keep up their mortgage payments.

High-Ratio Mortgage

A high-ratio mortgage is where the buyer has provided a down payment of less than 20% of the purchase price and needs to pay Canada Mortgage and Housing Corp (CMHC) to insure the mortgage against default.

MIC

Short for Mortgage Investment Corporation, this is a group of investors who will lend you the money for a mortgage if a traditional lender will not due to unusual circumstances.

Open Mortgage

An open mortgage means you can pay out the balance at any time, without incurring a penalty.

PIT

Principal, interest and taxes— a calculation representing the amount you can afford to pay monthly on your home.

Pull

Also known as a ‘credit check’ or ‘credit inquiry’, a ‘credit pull’ refers to the act of checking a credit report to determine if the borrower is a viable investment prior to approval of the mortgage.

Term

Term is the length of time that a mortgage agreement exists between you and the lender. Rates and payments vary with the length of the term. The most common term is a 5-year, but they can be anywhere from 1 to 10 years. Generally, a longer term will come at a higher rate due to the added security.

Trade Lines

This refers to any credit cards, loans, wireless phone accounts, or mortgages that appear on your credit report.

Underwriting

This refers to the process of determining any risks relating to a particular loan and establishing suitable terms and conditions for that loan.

Variable

A variable-rate refers to an interest rate that is adjusted periodically to reflect market conditions.

20/20

A condition that refers to repaying 20% of the mortgage balance OR increasing your payment by 20%, without incurring a penalty.

If you hear any mortgage jargon that you’re unsure of, don’t be afraid to ask questions! At the end of the day, your  mortgage contract is unique to you so it’s important that you understand it. Contact us today to discuss your situation and answer any questions you may have. You can call us at 604-552-6190, email us at support@primexmarketing.com or fill out this form.

Getting a Mortgage Pre-Approval

Mortgage Tips Trish Pigott 31 Mar

We recommend getting a pre-approval to have the best success with your mortgage. This can be done through us, to ensure that you get the best mortgage product FOR YOU; from the best rate to the best term agreement.

Benefits of Getting a Pre-Approval

While getting pre-approved might sound boring (and you might be asking ‘why can’t I just get approved instead!?’), there are many benefits that make searching for your perfect home that much easier.

  • Pre-approval helps to confirm your budget (Quick Tip: Don’t forget about the closing costs! These range from 1 to 4% of the purchase price and should be factored into your budget)
  • Pre-approval guarantees your rate for up to 120 days. This protects you from any increases in interest rates while you are shopping (phew!)
  • Pre-approval gives confidence to both you and the seller, knowing that financing should not be an issue

What to do After You’re Pre-Approved

You should note that nothing is fully approved until an accepted offer is presented to the lender and signed off on. To ensure that the rates and terms are guaranteed upon final financing, we recommend the following.

  • Refrain from having additional credit reports pulled after your pre-approval
  • Refrain from applying for new credit, closing accounts or making large purchases until after the sale is complete
  • Be prepared to show a paper trail – any unusual deposits in your bank account may require an explanation

Once you have qualified for a pre-approved mortgage, you are ready to start searching for your perfect home. It’s important to stick to your budget! You went through a lot of effort to get everything prepared, so don’t look at anything over your budget (even if that house has a REALLY great pool!). Send us a message if any questions pop up along the way – just click here. We’re here for you!

Mortgage Refinancing 101

Mortgage Tips Trish Pigott 11 Mar

Mortgage refinancing refers to the process of renegotiating your current mortgage agreement. It allows you to pay off your existing loan and replace it with a new one that better suits your needs. When done properly, it can help reduce financial stress and get you back on track for your financial future.

Reasons to refinance:

  • Leverage large increases in property value
  • Use home equity for upgrades or renovations
  • Your kids are heading off to college
  • You’re going through a divorce
  • You want to convert your mortgage from fixed to variable (or vice-versa)

Additional refinancing benefits include:

1. Lower Your Interest Rate

One reason to refinance your mortgage is to get a better interest rate. As your dedicated mortgage professionals with access to several lenders, we can shop the market for you to see if there is a better mortgage product that fits your needs.

2. Consolidate Your Debt

From credit cards and lines of credit to school loans and mortgages, there are many different types of debt. Did you know that most types of consumer debt have much higher interest rates than your mortgage? Refinancing can free up cash to help you pay these off. While it may increase your mortgage, your overall payment could be lower.

3. Modify Your Mortgage

Have you come into some extra money and want to put it towards your mortgage? Or maybe you’ve heard interest rates are rising and want to lock in at a fixed-rate for security. Talking to a mortgage specialist (like us!) can help determine what the penalties of a change may be, and if it’s worth making before your term is up.

4. Utilize Your Home Equity

Your home’s equity is the difference between your property’s market value and the balance of your mortgage. If you need funds and have equity, you can refinance your mortgage to access up to 80% of your home’s appraised value in cash.

 

While refinancing can help you tap into 80% of your home value, it does come with a price. If you opt to refinance during your term, it is considered to be breaking your mortgage agreement and it could end up being quite costly.  It is always best to wait until the end of the mortgage term before refinancing. Make sure you’ve planned several months in advance so you have time to weigh your options before you need to renew.

In addition, refinancing can prevent you from qualifying for default insurance. This can limit your lender choice. Lastly, you’ll be required to re-qualify under the current rates and rules. This includes passing the “stress test” again to ensure you can carry the refinanced mortgage.

If you are wondering if mortgage refinancing is right for you, please don’t hesitate to reach out to us today at 604-552-6190. We would be happy to review your current mortgage, financial goals and future plans, to help determine the best solution that fits your needs.

Check Out Our Mortgage Toolbox App

Mortgage Tips Trish Pigott 4 Mar

Mortgage Toolbox App

Did you know that we have a mortgage toolbox app? 📲 It gives you access to premium tools to help plan your mortgage. Click here to download it today and have all things mortgage-related at your fingertips.  Available on the App Store and Google Play.

By using our mortgage toolbox app you can:

  • Calculate your total cost of owning a home
  • Estimate the minimum down payment you need
  • Calculate land transfer taxes and the available rebates
  • Calculate the maximum loan you can borrow
  • Stress-test your mortgage
  • Estimate your closing costs
  • Compare your options side by side
  • Search for the best mortgage rates
  • Email summary reports (PDF)
  • Use the app in English, French, Spanish, Hindi and Chinese

Mortgage Terminology: Breaking Down the Anatomy of the Mortgage Process

Mortgage Tips Trish Pigott 14 Oct

Buying a home is one of the most important financial decisions you will make. It’s common for a first-time homebuyer, or even someone who is experienced in the process, to feel overwhelmed when it comes to industry jargon.

To help you understand the process and have confidence in your choices, I have put together some of the more common mortgage terminologies you will encounter during the homebuying process! While I don’t expect you to read all of these now, I hope that this will be a helpful resource for you throughout your homeownership journey.

General Mortgage Terms

Amortization: The number of years that you take to fully pay off your mortgage (not the same as your mortgage term). Amortization periods are often 15, 20, or 25 years long.

Assuming a Mortgage: Taking over the obligations of the previous owner’s (or builder’s) mortgage when you buy a property.

Buy Down Rate: The portion of the interest rate on a buyer’s mortgage that you assume when they buy your home. If you’re selling your home and the prospective buyer doesn’t like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage. You can add a maximum of 3%.

Closing Date: The date on which the sale of a property becomes final and the buyer takes possession of the property.

Down Payment: The money that you pay up front for a house. Typically range from 5%-20% of the total value of the home.

Home Insurance: Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

Inspection: The process of having a qualified home inspector identify potential repairs to the property you are interested in and their estimated cost.

Lump Sum Payment: An extra payment that you make to reduce the amount of your mortgage principal.

Mortgage: A loan that you take out in order to buy property. The collateral is the property itself.

Mortgage Life Insurance: This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.

Pre-Approved Mortgage Certificate: A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage allows you to shop for a home without worrying about how you’ll pay for it.

Offer to Purchase: A legally binding agreement between you and the person who owns the house you want to buy. It includes the price you are offering, what you expect to be included with the house, and the financial conditions of sale (your financing arrangements, the closing date, etc.).

Porting: Transferring an existing mortgage from one home to a new home when you move. This is known as a “portable” mortgage.

Pre-Payment: Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a prepayment cost for pre-paying.

Refinancing: The process of paying out the existing mortgage for purposes of establishing a new mortgage on the same property under new terms and conditions. This is usually done when a client requires additional funds. The client may be subject to a pre-payment cost.

Renewal: Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the balance outstanding.

Term: The length of time during which you pay a specific rate on the mortgage loan (i.e., the number of years in your mortgage contract). This is different than amortization; mortgages are amortized over 20-25 years, with a shorter term (typically 6 months to 5 years). After the term expires, the interest rate is usually renegotiated with the lender.

Mortgage Types

Closed Mortgage: This type of mortgage must usually remain unchanged for whatever term you agree to. Prepayment costs will apply if you payout, renegotiate, or refinance before the end of the term.

Convertible Mortgage: These offer the same security as a closed mortgage, but allows you to convert that to a longer, closed mortgage at any time – without prepayment costs. Typically associated with fixed rate mortgages.

High-Ratio Mortgage: This is the mortgage obtained when you have less than 20% of the total purchase price to put down as your downpayment. These mortgages must be insured, typically through CMHC, Genworth Financial or Canada Guaranty.

Open Mortgage: This type of mortgage may be repaid, in part or in full, at any time during the term without any prepayment costs.

Rate Types

Fixed Rate Mortgage: An interest rate that does not change during the entire mortgage term.

Variable Rate Mortgage: An interest rate that will fluctuate in accordance with the prevailing market prime rate during the mortgage term.

Mortgage Rate: The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.

Closing Costs

These are costs that are in addition to the purchase price of a property and which are payable on the closing date, such as the following:

Appraisal: The process of determining the lending value of a property. There is usually a fee to have an appraisal done.

Interest Adjustment: The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage, so an extra payment may be required to cover this. The payment is generally due on your closing date. You can avoid all this by arranging to make your first mortgage payment in exactly one payment period (e.g., one month) after your closing date.

Land Transfer Tax: Tax that is levied (in some provinces) on any property that changes hands.

Legal Fees and Disbursements: Some of the legal costs associated with the sale or purchase of a property. It’s in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

Prepaid Property Tax and Utility Adjustments: The amount you will owe if the person selling you the home has prepaid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Property Survey: A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Sales Taxes: Taxes applied to the purchase cost of a property. Some properties are sales tax exempt (GST and/or PST), and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST. Always ask before signing an offer.

If you are looking to purchase a new home (or your first one!), please don’t hesitate to reach out to me directly to set up a phone call to discuss your needs. I would be happy to help you find the best mortgage to suit your needs!

 

Refinancing – Process, Consideration, and Benefits

Mortgage Tips Trish Pigott 13 Oct

Refinancing your mortgage refers to the process of renegotiating your current mortgage agreement for a variety of reasons. Essentially, refinancing allows you to pay off your existing mortgage and replace it with a new one.

There are a variety of reasons to consider mortgage refinancing, such as wanting to leverage large increases in property value, taking out equity for upgrades or renovations, expanding your investment portfolio, consolidating debt, getting a better rate, paying for post-secondary education, managing a divorce or changing your mortgage from fixed to a variable (or vice-versa).

Refinancing allows you to access up to 80% of your home’s equity. This can help with reducing financial stress and getting you back on track for your financial future, while still allowing you to manage your current needs. Beyond helping you get a better financial footing, refinancing has additional benefits including:

  1. Access a Better Rate: One reason to refinance your mortgage is to get a better rate – this is especially true when done through a mortgage professional such as myself. On average, I have access to over 90 lenders! This allows me to find the best mortgage product for your unique needs.
  2. Consolidate Debt: There are many different types of debt from credit cards and lines of credit to school loans and mortgages. But, did you know that these types of debt have much higher interest rates than those you would pay on a mortgage? Refinancing can free up cash to help you pay out these debts! While it may increase your mortgage, your overall payments could be far lower and would be a single payment versus multiple sources. Keep in mind, you need at least 20 percent equity in your home to qualify.
  3. Modify Your Mortgage: Life is that it is ever-changing and sometimes you need to pay off your mortgage faster or change your mortgage type. Refinancing can help with this too!
  4. Utilize Your Home Equity: If you need funds, you can refinance your mortgage to access up to 80% of your home’s appraised value!

As with everything, refinancing comes at a price! If you think that refinancing your mortgage could be the right solution, it is important to talk to us before making any changes to ensure you are not hit with surprise penalties. Talking to a mortgage broker about refinancing also ensures expert advice, plus access to even greater rates and mortgage plans to best suit your refinancing goals.

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