Why you need a Mortgage Pre-approval?
Being pre-approval for a mortgage determines how much you can afford before you go house hunting. This will help you search and visits homes/condos within your budget and comfort zone, except if you pay for your purchase in cash.
Knowing how much you can afford based on your income or a virtual mortgage calculator is very different than meeting with a mortgage lender.
Applying for a mortgage pre-approval is free and it doesn’t commit you to a single lender, but if you are pre-approved the mortgage rate that you are offered by the lender will be valid and locked in for at least three months while you shop for a home. If the mortgage rate goes up during the 3 months you will be protected, but if the rates go down during this time, the lender will honor the lower rate.
Call us for free information session
What is Mortgage Amortization Period?
In a simple term Amortization refers to the length of time set by your lender to repay the mortgage on a regular basis.
Normally in Canada with an insured mortgage (down payment less than 20%) amortization is 25 years, however, if you put a down payment of more than 20% of the home value some lenders will amortize the mortgage to 30-35 years.
The longer amortization period reduces your monthly payments because you are paying your mortgage over a longer period of time.
Mortgage Nonpayment/Default Insurance
Mortgage default insurance is normally purchased through Canadian housing and Mortgage Company CHMC.
CHMC protects the lender or financial institution in the case the borrower defaults on the mortgage and allows a buyer t purchase a home with a minimum of 5% down payment. Mortgage default insurance is required on all mortgages with down payments of less than 20% of the purchase price.
The mortgage insurance rate is generally cost between 0.6% - 3.85% which spread over the amortization term.
Home Buyers Tax Credit & GST/PST Rebate
The Home Buyers' Tax Credit is based on the personal income tax return rate, and at current taxation rates, rebate works out to be $750 for first-time homebuyers. The rebate must be claimed within the year that you purchase the home and have not owned another home in the previous four years.
If you are purchasing your first home by yourself or with a partner, friend, or spouse, the combined claim cannot exceed $750.GST/PST New Housing Rebate applies to brand new homes, or extensively renovated existing homes, you could qualify for a portion of sales tax. GST/PST rebate is available to all Canadians who qualify regardless of whether they have owned a home before or not.
The purchase price must be $450,000 or less.For more information contact us
Should you choose Variable Mortgage or Fixed Term Mortgage?
Fixed term mortgage is the length of time you are committed to a mortgage rate and when the term is up you must renew your mortgage with a new rate, or even new institution, just read your fine prints very closely. Normally fixed term mortgage is 5 years, but you can choose a longer fixed term Mortgage.
In Fixed mortgage rate, the rate and payment will stay the same for the term of your mortgage
In Variable Mortgage Term the rate can fluctuate with the bank of Canada rate.
Watch this informative video and call us for more information.
Can you Port or Transfer Your Mortgage?
Let say you want to move to a new home after three years into a five-year mortgage term, can you transfer your mortgage from your actual home to the new one? A portable Mortgage is an option that the homeowner has and might be able to transfer their mortgage from one property to another.
A portable Mortgage is an option that the homeowner has or can add to their contract which allows them to transfer their mortgage from one property to another.
But if your mortgage is not portable you will have to pay the full penalty for breaking your mortgage early.