FIRST TIME HOME BUYERS GUIDE
AN OVERVIEW OF HOME OWNERSHIP SO YOU CAN BUY WITH CONFIDENCE
If you’re looking to buy your first home, this Guide is for you. Go ahead and browse the Guide below or feel free to download it so that you can print it and work through it at your own pace. If you have any questions at all please feel free to contact me.
HOME OWNERSHIP GUIDE
D I A N E G O G A R
mortgage professional
Solutions to Help You Get Approved Quickly
Diane Gogar MORTGAGE AGENT
C 416.464.8898
Email: diane@dianegogar.com
Website: dianegogar.ca
40 Queen Street West, Brampton ON L6X 1A1
WHY USE A MORTGAGE BROKER
✓ PURCHASES
✓ REFINANCES
✓ RENEWALS
✓ DEBT CONSOLIDATION
✓ SELF-EMPLOYED
✓ NEW TO CANADA
✓ HOME RENOVATIONS
✓ INVESTMENTS
✓ CONSTRUCTION
TALKING MORTGAGES - UNDERSTANDING THE LINGO
Below is a quick reference list of the most used mortgage terms.
- Amortization: Length of time over which the mortgage will be repaid.
- Mortgage term: Length of time that the mortgage contract conditions and interest rate is fixed.
- Closing Costs: Costs in addition to the purchase price of the home that are payable on closing day. See the Process & Costs worksheets for more details.
- Down Payment: The portion of the home price that is not financed by the mortgage loan. It must come from the buyer's own funds or other eligible sources before securing a mortgage.
- I Equity: The difference between the price for which a home could be sold and the total debts registered against it.
- Fixed / Variable Mortgage Interest Rate: A fixed rate is a locked-in rate that will not increase for the term of the mortgage. A variable mortgage interest rate can fluctuate based on changes to the prime rate at the lending institution.
- High-ratio mortgage / Conventional Mortgage: A high ratio mortgage is a mortgage loan higher than 80% of the lending value of the property. A conventional mortgage is a mortgage loan up to a maximum of 80% of the lending value of the property.
- Open / Closed Mortgage: An open mortgage is a flexible mortgage that allows you to pay off your mortgage in part or in full before the end of the term. A closed mortgage, in some cases, cannot be paid off in whole or in part before the end of the term. In other cases, the lender may allow for partial prepayment of a closed mortgage in the form of an increased mortgage payment or a lump sum prepayment.
THE IMPORTANCE OF A PRE-APPROVAL
How Much House Can You Afford
Getting a mortgage pre-approval is a great first step (even before you see a realtor) when you're looking to purchase a home. With a pre-approval you'll find out the amount you can borrow so you can shop for your dream home with confidence.
Hold That Rate
Your pre-approval holds the rate for 60-120 days, so if rates go up while you were shopping for a home, you can still get the low rate you were offered on your pre-approval. However, if rates go down you can definitely take advantage of low market rates. So win win.
Your Realtor Will Love You
Nothing makes a realtor happier than a serious buyer. A mortgage pre-approval saves time for everyone involved and will allow for a more efficient house hunt.
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FIRST TIME HOME BUYERS INCENTIVES
Less Than $500,000 Homes
If you're purchasing a house for less than $500,000, the minimum down payment is 5%.
Homes Between $500,000 - $999,999
If the house purchase price is between $500,000 and $999,999 then the minimum down payment is:
- 5% on the first $500,000 - plus 10% on the remaining amount over the $500,000.
Over 1 Million $ Homes
If the purchase price is $1 Million or more, the minimum down payment amount is 20%.
DOWN PAYMENTS LESS THAN 20%
All mortgages with down payments less than 20% are called high ratio mortgages and require Mortgage Default Insurance. This amount is usually added on to your mortgage.
FIRST TIME HOME BUYERS INCENTIVES
First-Time Homebuyer Incentive
The NEW first-time homebuyer incentive program allows eligible buyers to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada. The program offers 5% for an existing home, or 5% or 10% for a newly constructed home. For full details, visit www.placetocallhome.ca/FTHBI.
$5000 Income Tax Credit
To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit — a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual,* the credit will provide up to $750 in federal tax relief.
RRSP Withdrawals
The Government of Canada has set the Home Buyers' Plan withdrawal limit to $35,000 per person for withdrawals to provide first-time homebuyers with greater access to their RRSP savings to purchase or build a home. You have 15 years to repay the amount you with-drew from your RRSP.*
Land Transfer Tax Refund
Depending on your province, a land transfer tax refund may be available for first time homebuyers.
*For more information on the First-Time Home Buyers' Tax Credit and the HomeBuyers' Plan visit www.cra.gc.ca
BUYING YOUR NEXT DREAM HOME
Finding a new place to call home is exciting. Whether you're moving to a new neighbourhood, moving up or moving to the house next door, we will help you make the right move when it comes to your mortgage. Here are a couple of options we will explore:
Breaking Your Mortgage
You can pay off your existing mortgage (if permitted), pay the penalty for breaking the mortgage and get a brand new one. We would usually go that route if the interest saved on the new mortgage outweighs the penalty cost.
Port Your Mortgage
You can avoid paying the penalty by taking your mortgage with you to the new property. There are several porting options depending on which lender you're currently with.
Ultimately the move we make will be the one that saves you the most money.
YOU'LL NEED A TEAM
Me! Your Mortgage Professional
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Real Estate Agent
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Lawyer
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Home Inspector
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Insurance Broker
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The Appraiser
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PROCESS & COSTS WORKSHEET
Get pre-approved and find your dream home.
COST:
Get a mortgage approval.
You will need a formal mortgage approval to ensure the lender approves the required financing on the property you chose. A mortgage appraisal, might be requested by the lender at this stage.
Cost: Mortgage appraisal (if needed) - average $250 - $450.
COST:
If required
Arrange for a home inspection
It's always advised to get a home inspection to make sure there are no surprises.
Cost: Average $500.
COST:
Make the deposit
A deposit must be made when you make the offer to purchase. This will count as part of your down payment.
COST:
Shop for home insurance
Start your search for home insurance. This needs to be in place at closing and will be requested by the lawyer and lender.
(Diane Gogar Client Perk - special discounts might be available. Ask me for details.)
COST:
Wait to close ...tic toc ....tic toc
TOTAL UPFRONT COSTS
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PROCESS & COSTS WORKSHEET
ON CLOSING
Make your down payment
Your down payment amount must be made at closing. Remember your deposit will be part of that amount.
COST:
Get title insurance
Covers any loss caused by problems in the ownership of the property.
COST:
Reimburse pre-paid property taxes
Reimburse the seller for any amounts already paid for in advance.
COST:
Land registration / transfer
Only required in some provinces and is a percentage of the home price. Remember if you are a first time buyer, you may qualify for a rebate.
COST:
If required
Pay your lawyer
Once the sale is complete you will need to pay legal fees.
Cost: Average $1200.
COST:
Get your keys and celebrate
TOTAL UPFRONT COSTS
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WE LOVE TO SAVE YOU MONEY - ENJOY
Government Savings
GST/HST New Housing Rebate If you're purchasing a newly built home for less than $450,000 you can get a rebate on GST/HST paid on the purchase. Visit www.cra-arc.gc.ca for more information.
Up to 25% CMHC Refund
Get up to 25% refund on your CMHC mortgage loan insurance premium when you purchase an energy-efficient home or complete energy-saving renovations. Visit www.cmhc.ca/greenhome for more details.
FREE CREDIT SCORES & PROPERTY VALUATIONS
ON MY FREE APP
✓ FREE home valuations (updated monthly)
✓ Find out how upgrades affect your home value
✓ FREE credit score (updated monthly)
✓ Apply online anytime anywhere
✓ Inventory tracker to keep a record of your valuables and warranties
✓ Access current rates, easy to use mortgage calculators and more!
Download the #1 mortgage app in Canada using my personal install buttons above so you can get exclusive access to all premium features.
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MAKE IT YOUR DREAM HOME
YOU'VE GOT OPTIONS
- Refinance
- Equity Take-Out
- Purchase Plus Improvement
- Home Improvement Financing Up to $35,000
