payment calculator

Before an application gets filled out, it’s important to first assess yourself financially. Figure out how much money you have and how much you need to borrow. It’s always critical to sort out how much you can afford so that when you apply for a mortgage you will be able to financially sustain yourself. A mortgage associate will then take an application by phone, in person, or online. Once it has been received, the mortgage application process will begin by verifying the information you have provided.

A down payment of at least 5% on the purchase price is the minimum required to in order for banks to mortgage the remainder - however, 5% will require a CMHC insurance premium that gets tacked onto your mortgage. The benefit? Getting into the housing market sooner, home ownership, and the ability to pay a set amount of fixed living costs as opposed to renting. 

To avoid CMHC payments, the threshold for that would be to come up with 20% downpayment against the purchase price. 

Are you a first time homebuyer? 

- Speak with your mortgage specialist to find out about incentives geared towards first time homebuyers 

- Speak with your lawyer about first time homebuyer incentives

- Think about contribute to an RRSP 90 days prior if you'd like to offset some income taxes 

Did you know?

Maximum amortization allowed on CMHC-insured mortgages is 25 years while a conventional (20% or more downpayment) allows for 30 years. Amortization can greatly help with budgeting what you can buy in a tight housing market! 

Like all homes, mortgages also come in all shapes and sizes. You have to pick which loan is more aligned with your financial situation and goals. There are four basic types of home financing loans.
 

A) Fixed Rate Mortgage
 

Fixed Rate mortgages usually have terms that can last from 1 year to 10 years. As the name suggests, the interest rate and monthly payments will remain the same for the specified term. 

This type of loan should appeal to you if you: 

Plan to live in the home for more than 5 years 

Like the stability of a fixed interest payment 

Think your income and spending will stay the same 

Don’t like the risk of having a higher monthly payment
 

B) Variable Rate Mortgage
 

An Adjustable Rate Mortgage (ARM) lasts for 3-5 years. But during these terms, the interest rate on the loan can go up or down which means monthly payments can increase or decrease. 

This type of loan should appeal to you if you: 

Plan to say in your home for less than 5 years 

Don’t mind having your monthly payment increase or decrease 

Are comfortable with risk of possible payment increases in the future 

Think your income will probably increase in the future
 

C) Lines of Credit
 

Utilizing a Line of Credit is becoming an innovative way to finance your home purchase. You can take the amount you need from the credit limit that you were granted. You only pay interest on what you use and this money can be put towards things like home renovations, a child’s education, and debt consolidation.

Once you select the appropriate mortgage program, you will submit this information to your mortgage associate along with any other required documentation. You will then wait for the mortgage approval from the mortgage associate either through email or fax. 

After the approval, the associate will also review your commitment to the mortgage. Any additional documents that are required by the lender should be sent to the associate as soon as possible. 

The associate will send the mortgage instructions to your lawyer to review and sign the documents. 

First you will review all the terms and conditions prior to signing to make sure the interest rate and loan terms are what were promised. Double check to see that the names and address are correctly spelled on the documents. 

Signing takes place in front of a notary public or lawyer. There will be several fees with obtaining a mortgage and transferring property ownership which will be paid at closing. 

Bring a bank draft check for the down payment and closing costs if required. Personal cheques are not accepted. You will also need to show homeowners insurance policy and other requirements such as flood or fire insurance and proof of payment.