Why do I offer a variety of mortgages?
Everyone's a little different, with different goals, aspirations and tolerance for risk.
Because of this, I have access to a variety of mortgages that are customized to meet your needs. I have access to short, medium and long-term mortgages with fixed and variable rates. I will help you decide which one is right for you.
You might also want to factor in whether or not you think interest rates are going to go up or down. And take into account your short and long term plans.
What can a mortgage broker do for you?
Buying a home is probably one of the largest investments you'll ever make. As a broker I am here to help you make your dreams a reality.
I will guide you through your purchase — whether you are buying your first home, your second home or refinancing.
I will look at your situation from every angle to help you choose the best mortgage for your financial situation and your goals. A mortgage customized with the right combination of options and features.
I am committed to making your dreams a reality. I can offer you valuable assistance with things like home appraisals, realtors, lawyers and anything else that has to do with the purchase of your home.
When it's time to renew, they are there to guide you through the entire process. If you're refinancing, I will help you determine what the best option is for you — exploring all the possibilities available, including using your personal line of credit or your home as equity to purchase another property.
How much can you afford?
Buying a home could be the largest purchase of your life. That's why you want to be sure that you own a home that's compatible with your financial situation.
The simplest way to determine this is to compare your gross income to your total debt.
It's something you can do using the calculator found below.
CMHC Calculator: Click Here
How can you acquire a home with less than a 20% down payment?
Very few home buyers have the cash available to buy a home outright. Most will turn to a financial institution for a mortgage. If you have a down payment of 20% or more, you will have a conventional mortgage.
If you have less than a 20% down payment, you will need a low down payment insured mortgage. Low down payment mortgages must be insured to cover potential default of payment. The mortgage default insurance premium can be added to your mortgage amount or paid upfront.
What will your mortgage payments be?
What you pay each month for your mortgage will depend on several things: the size of your mortgage (total purchase price minus down payment amount), the amortization period and the interest rate.
You can use this handy calculator to determine your mortgage payment.
Kal-Mor Mortgage Payment Calculator: Click Here
How can you pay off your mortgage sooner?
There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by:
- Selecting a non-monthly or accelerated payment schedule
- Increasing your payment frequency schedule
- Making principal prepayments
- Making Double-Up Payments
- Selecting a shorter amortization at renewal
How will the amortization I choose effect my payments, and the total interest costs I pay?
The longer the amortization, the lower the monthly payment. Longer amortizations increase the amount of interest you pay. Total interest costs are significantly increased beyond 25 years.
How can you use your RRSP to help your buy your first home?
Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $25,000 in RRSP savings ($50,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP.
To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.
Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $25,000 for a down payment — and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan.
The advantage? Your $25,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.
While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your financial planner whether this strategy makes sense for you, given your personal financial situation.
For more information, visit Canada Customs & Revenue Agency.
Link to Canada Customs & Revenue Agency: Click Here
What are the costs associated with buying a home?
First and foremost, you should consider how much money you have for a down payment — the portion of the purchase price that you furnish yourself.
To qualify for a conventional mortgage you will need a down payment of 20% or more. However, you can qualify for a low down payment insured mortgage with a down payment as low as 5%.
Secondly, you will require money for closing costs and other costs:
- If you want to have the home inspected by a professional building inspector you will need to pay an inspection fee. The inspection may bring to light areas where repairs or maintenance are required and will assure you that the house is structurally sound. Usually the inspector will provide you with a written report. If they don't, then ask for one.
- You will be responsible for paying the fees and disbursements for the lawyer or notary acting for you in the purchase of your home.
- There are closing and adjustment costs, interest adjustment costs between buyer and seller and (depending on where you live) land transfer tax — a one-time tax based on a percentage of the purchase price of the property and/or mortgage amount.
- You will be required to have property insurance in place by the closing date. And you will be responsible for the cost of moving.
- Remember, there will be all kinds of things you'll have to purchase early on — appliances, garden tools, cleaning materials etc. So factor these expenses into your initial costs.
What should the length of your mortgage term be?
The length of mortgage terms varies widely — from six months right up to 25 years. As a rule of thumb, the shorter the term, the lower the interest rate, and the longer the term, the higher the rate.
While four or five year mortgages are what most home buyers typically choose, you may consider a short-term mortgage if you have a higher tolerance for risk, if you have time to watch rates or are not prepared to make a long-term commitment right now.
Before selecting your mortgage term, I suggest you answer the following questions:
- Do you plan to sell your house in the short-term without buying another? If so, a short mortgage term may be the best option.
- Do you believe that interest rates have bottomed out and are not likely to drop more? If that's the case, a long mortgage term may be the right choice for you. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term hoping that rates drop by the time your term expires.
- Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses.
- Are you willing to follow interest rates closely and risk their being increased mortgage payments following a renewal? If that's the case, a short mortgage term may best suit your needs.
What is cash back?
Cash back mortagese gives you cash that you can use towards anything you want! Use the money for renovations, closing costs, furniture, appliances, or anything else you choose. You can even apply it to your mortgage as an immediate prepayment of the principal.
What are the monthly costs of owning a home?
Needless to say, you'll have financial responsibilities as a home owner.
Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses.
The Mortgage Payment
For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization.
Property tax can be paid in two ways — remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment.
In some municipalities, these taxes are integrated into the property taxes. In others, they are collected separately and are payable in a single lump sum, usually due at the end of the current school year.
As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable.
Maintenance and Upkeep
You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighbourhood and, depending on the kind of renovations you make could add to the worth of your property.
Where can you find money for your down payment?
For a conventional mortgage, you'll need a down payment of 20% or more of the purchase price of the home. Or, you can apply for a low down payment insured mortgage with as little as 5% down.
Here are some common strategies to assist you in raising money towards a down payment:
- Set up a regular automatic savings plan.
- Use your RRSPs as a down payment. With the federal government's Home Buyers' Plan, you can use up to $25,000 in RRSP savings ($50,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP. To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.
- Get a 'nest egg' from a parent or relative.
Should you have my mortgage pre-approved before you look for a home?
It makes a lot of sense!
Once you apply for a pre-approved mortgage, you'll know how much you can reasonably borrow to buy a home. It tells you what your payments will be, and it defines a realistic price range for your financial situation.
With a pre-approved mortgage, you can lock in at today's rates.
If rates go down before you complete the purchase, you will automatically get the lower rate for the term you selected. This protection could save you a substantial amount of money if interest rates fluctuate while you're house shopping.
With a pre-approved mortgage, you're much better prepared to shop for a home:
- You'll have a clear idea of what you can afford in terms of price, down payment, legal fees and other expenses.
- You'll be able to make an offer when you find a perfect home.
Because you have all the financial facts in hand, your purchase commitment is far more likely to be one you can live with comfortably.
A pre-approved mortgage puts you under no obligation and is available to you at no cost.
You can apply on right now: Click Here
Should you go with a short or long-term mortgage?
A longer-term mortgage is worth considering if you have a busy life and don't have time to watch mortgage rates. For example 4, 5 and 7-year mortgages let you take advantage of today's rates, while enjoying long-term security knowing the rate you sign up for is a sure thing.
If you want to keep your mortgage flexible right now, you can explore a shorter-term mortgage.
What is a fixed rate mortgage?
The interest rate on a fixed-rate mortgage is set for a pre-determined term - usually between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected.
What is a variable rate mortgage?
A mortgage in which payments are fixed for the term although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest.