Do you know all the costs of buying a home?

Before you take possession of your new home, you need to consider any and all additional costs of obtaining your mortgage – closing costs..

Home inspection

It is advisable to make an offer on a home conditional on the outcome of an independent home inspection. A home inspector looks for items that could affect the price and desirability of a home, such as outdated wiring, shabby roofing, an old furnace or cracks in the foundation. The fee depends on the home’s size, age and the amount of time it takes to do a thorough inspection. Approximate cost are $400 to 700.

Insurance costs

Mortgage loan insurance: A mandatory expense if you make a down payment of less than 20% and is charged on the amount of the mortgage. Administered through Canada Mortgage and Housing Corporation (CMHC), Genworth Financial or Canada Guaranty.

Title insurance: Protects you from any unpleasant revelations about your property’s history. Unless you pay for a survey, it’s difficult to get a comprehensive history of your property. This insurance is obtained through your lawyer and is approximately $200 to 250.

Home insurance: You must have fire insurance in effect upon taking possession of your home. This cost will vary depending on your insurer.

And don’t forget to consider…

Deposit: Due upon the acceptance of your purchase offer, a deposit is essentially a gesture of good faith between the buyer and the seller. A minimum deposit is usually around 5-10% of the purchase price. This is something your Realtor will help you with.

Appraisal: An appraisal may be required to determine the market value of the property you are buying. If you are putting more than 20% down the appraisal is at your cost and they generally start at $350 and go up depending on the appraisal company, the size of the property and its location. For example, properties over 1800 square feet have a higher cost as well as acreages depending on the amount of land and where they are located.

Legal costs and disbursements: A lawyer or notary is vital to any home deal.They are drafting the title deed, preparing the mortgage documents, mediating with the seller’s attorney, and transferring the land title and much more. Approximate cost $800 to 1,300.

Taxes: GST is payable only on new build homes but is often absorbed by the builder. Be sure to clarify who is handling this. In Ontario, HST of 8% is charged on your mortgage. If the mortgage is insured, the HST is also applied to those fees.

Land Transfer Tax: Most provinces charge a land transfer tax, payable by the purchaser, and the amount varies from province to province. This tax is based on the purchase price. In some provinces, first time home buyers who purchase a new home will receive a refund.

And don’t forget your moving, mail transfer and utility setup costs!

I can help you manage your closing costs! These costs will vary depending on where you are purchasing your home. I will explain each of these costs to you in greater detail to help you manage your financial obligations.

Use these saving tips to become mortgage free!

Good news! It only takes small changes for you to become mortgage free and save thousands of dollars in interest. In December, Mortgage Professionals Canada released its annual state of the housing market report and found that in 2015, 36% of homeowners took actions to reduce their mortgage debt. Here’s how you can do the same.

You may think of simply making lump-sum payments, but there are other ways you can save money on your mortgage including:

Renegotiating for a lower interest rate
Switching to accelerated weekly or bi-weekly payments Increasing your regular payment
Lump-sum payments
DID YOU KNOW: Increasing your payment by just $20 a month can have a positive impact because the extra money is applied directly against the mortgage principal decreasing the amount of interest you will pay over the life of the loan.

Other tips:

Annual or periodic lump sum payments: You may make lump sum payments of 10% to 25% of the original principal amount each year.Increase your payment: You may also increase your current payment by up to 15%, 20%, or even 100% each year.

Double your payments: Some lenders also offer the option of doubling any and all payments.

Accelerated payments: With a weekly or bi-weekly payment option you may switch to an accelerated payment whereby you apply a small incremental amount of money directly to the principal. This payment is designed so that every 12 months you make the equivalent of 13 payments.

Here is an example that shows you how much you can SAVE by simply increasing your payment frequency over the term of your mortgage. Figures have been rounded off.

Let me help you save! The freedom that being completely debt-free brings is a dream for many Canadians. If you’re unsure of what your next step should be, let’s talk. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.

Tips to help you buy your first home

Buying a home is one of the biggest financial decisions you will make, so it pays to make an informed decision. I will assist you with the entire home buying process from the moment you decide to buy your home to the moment you move into your new home!

Why work with me? I will assist you in the home buying process by:

explaining the various mortgage products available to you and provide you advice on the product best suited for your financial circumstances;
advising you on the documentation you must provide to obtain a mortgage approval;
customizing your mortgage options to make sure your mortgage works for you;
and explaining all the costs that exist over and above your down payment.

Put together your home buying team
It helps to organize your home buying team of professionals to assist you with the process at the start. Your home buying team includes myself, your Realtor, a home inspector, a lawyer or notary and an insurance agent!

Here are several key points to keep in mind as you start the home-buying process and how working with a mortgage broker can help you. Keep in mind, in most instances, my services are no cost to you with no risk and obligation.

Know what you can affordGet a rate guarantee of up to four months
Ensure all credit approval documentation are in place sooner than later including documentation required for different income types i.e. salaried vs. self-employed
Open vs. closed mortgage, fixed rate vs. variable rate mortgage
Conventional vs. high-ratio mortgageLength of repayment (amortization) – up to 30 yrs
Your mortgage term – from 6 months to 10 years
Other costs you need to consider such as legal fees, land transfer tax, survey, title insurance, fire insurance, home inspection and HST
Overwhelmed? Let’s chat and I will clarify each one of these points for you! Together we can review your options and create a mortgage financing plan that works for you.

Millennials need help with home ownership

Recent reports from two of Canada’s major banks – CIBC and ScotiaBank – offer a glimpse into the world of millennials and home ownership as well as the impact of the Internet on mortgage hunting. Bottom-line: Nearly two-thirds of millennials plan to own a home in the next five years, but don’t have the money for a down payment yet. Ninety-six per cent of Canadians rely on the Internet for information but 70% of those still rely on advisors for mortgage advice.

Among Canadians aged 18-24, two thirds (64%) of them plan to make the move to home ownership, with 63% looking to buy in the next five years, but nearly half (44% ) say they have not started to save. The down payment is the biggest obstacle; however, rising prices is seen as having an impact on their ability to buy.
A majority (56%) of Canadians are sympathetic and say something should be done to help the younger generation enter the housing market. Seventy-seven per cent believe that buying a home is more difficult for young Canadians today than it was for previous generations.
Here are the key findings from the CIBC poll about millennials and home ownership:

64 % of Canadians aged 18–34 say that their future plans include buying a home. Among them: 63% plan to do so within the next five years, and 44% have not started to save yet for their down payment.
54 % of millennials planning to buy a home say that saving enough for the required down payment is the biggest obstacle to home ownership. Other roadblocks include: Job security and earning enough to afford mortgage payments (53%) and rising real estate prices (46%).
56 % of Canadians say something should be done to help young Canadians get into the housing market.
77 % of Canadians say buying a home today is more difficult for young Canadians than it was for previous generations.
So what does this mean for mortgage brokers and consumers? It’s actually good news for consumers. As competition increases, mortgage products may become more tailored with more options available. Competition is a good thing because it gives you choice. Brokers can help facilitate that choice.

With historically low interest rates, it’s easy to shop the market to find a low advertised rate, whether from your local bank or from your mortgage broker. However, mortgages are not as simple as some make them out to be, especially when rate is all that is considered.

It’s important that home buyers educate themselves about mortgages including the following areas: pre-payment terms, penalties, fixed vs. variable, open vs. closed, etc. Each situation is as unique as each borrower and each needs a unique strategy.

Again, the sheer volume of information online can be overwhelming.While getting informed through Internet research is a good thing, once armed with that information, it’s still important to work with a licensed mortgage professional who will ask the right questions to tailor a custom-fit mortgage that works for short and long term goals.