Why use a mortgage broker?
- Power of professional negotiating expertise.
- One stop convenience for access to numerous mortgage products.
- Unbiased knowledgeable advice.
- Access to unadvertised rates.
- Work for you, not the Bank.
- The Home Buyers Plan is a federal government program that allows homebuyers to use $25,000.00 for each purchaser from his/her own RRSP.
- You must not have owned a principal residence within the last 5 years.
- You must intend to occupy your home as a principal residence.
- Minimum repayment is 15 equal annual installments. This schedule can be accelerated.
- The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.
- You must complete a Form T1036.
Do I qualify for the 5% downpayment program?
- The home must be located in Canada and is to be occupied as your principal residence.
- You have from your own resources a down payment of at least 5% of the purchase price of the home.
- Your mortgage payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees (if applicable).
- You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
- You meet the lender’s eligibility requirements regarding income, employment and credit worthiness.
What should I expect for closing costs?
Closing costs are approximately 1.5% of the Purchase Price. The following are approximate costs:
- Appraisal Fee: $200.00
- CMHC FEE (if applicable): $165.00
- Survey Certificate (if applicable): $250.00
- Home Inspection $250.00
- Legal Fees (approx): $750.00
- Tax Adjustment (if applicable)
- Interest Adjustment (if applicable)
- Property Transfer Tax (if applicable)
What is Property Transfer Tax and do I have to pay it?
- This tax is charged by the Provincial Government and is collected by your lawyer at closing.
- Each Province varies as to the amount but it is usually a percentage of the purchase price. For example in British Columbia, the amount the purchaser must pay is 1% of the first $200,000 and 2% of the balance.
- You are exempt from paying PTT in British Columbia if you have never owned a home anywhere. You must finance at least 70% of the purchase price and the maximum home price must not exceed $300,000.00.
What type of income proof do I have to provide?
In most situations lenders require a comfort level that the borrower has sufficient income and cash flow to service the mortgage as well as any other obligations that they may have. The higher the Loan to Value (ie mortgage amount vs. purchase price) the more important this becomes as the lender is placing less reliance on the value and equity in the property and more on the earning power of the borrower. The following is a summary of what Lenders require depending on what type of job you have:
- Job Letter – Lenders use 100% of the income. Verification is made on company letterhead, signed by appropriate individual. If you are a recent hire, the letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
- Pay Stubs – Many Lenders will also require your most recent pay stubs.
- Pay Stubs – showing year-to-date income verification.
- T4’s and/or Personal Tax Returns (T1 Generals)- 3 years to take an average.
- Notice of Assessment – (NOA) – most recent to confirm no taxes owed.
- T4’s and/or Personal Tax Returns – 3 years to take an average.
- Job Letter – confirming position.
- Notice of Assessment (NOA) – optional depending on Lender.
- Financial Statements of Company – 3 years average of net income used. Depending on Lenders policies, The add-back of various personal expenses run through the company may or may not be allowed (eg’s of allowable addbacks – Depreciation, Amortization, CCA (Capital Cost Allowance).
- NOA’s (Personal Notice of Assessments).
- Personal Tax Returns ( T1 Generals showing personal net income).
Overtime – Will be used as long as there is a proven track record – 3 years evidence (T-4’s).
Bonuses – Once again a 3 yr track record required.
Part-time Job – should be in place for a couple of years before using the additional income.
Tips – generally not recognized unless declared for tax purposes.
Car Allowances – This varies from lender to lender.
Alimony and Support – Evidence that payments have been made regularly and a copy of divorce agreement is required. Investment Income – must be received continuously. This source of income is limited to interest, dividends or some type of ongoing revenue. Capital gains, which result from the liquidation of an asset is a 1 time occurrence and can’t be used.