Here are some basic calculations you can do that will help you determine exactly how much house you can afford.
1) The Down Payment
If you have a down payment of 25% or more, you may qualify for a conventional mortgage loan which does not require mortgage loan insurance. A minimum down payment of 5% is required for a high ratio mortgage and you'll have to pay to insure the mortgage.
2)Maintenance Costs
You may want to start a separate maintenance fund, particularly if you're buying an older home, by setting aside $500-1000 and adding to it regularly.
3) Renovation Costs
Renovations always take longer than, and costs more than, you think.
4) Don't forget the Tax
The 7% GST applies to new housing. However, there is a rebate, to a maximum of 2.5%, if your home costs less than $450,000. There is no GST on resale housing unless the home has been substantially renovated, and then the tax is applied as if it were a new home.
In B.C. there is a PPT on all real estate, which is 1% to $100,000 and 2% on the remainder. This is due when you pay your funds to the lawyer.
5) Appraisal Fee
If your loan is not insured, your lender may require a property appraisal at your expensee. The cost is between $150-$250.
6)Property Taxes
Your realtor will provide you with this amount.
7) Survey Fee
Your lender will require an up-to-date survey. If the Seller does not have one, you will have to pay to have one done.
8)Property Insurance
This covers the replacement value of the structure of your home and its contents.
9)Service Charges
You'll be charged a fee to hook up new services and utilities.
10)Lawyer's Fees
Lawyers review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details. Fee will be at least $500 plus Land Titles disbursements.
11) Moving Costs
Moving companies charge between $50-$100 pr hour for a van and 2-3 movers. The rates are higher at month end and in the summer.
12)Condominium Fees
Charged monthly. The proerty manager will provide you with a Form B, stating the fee.
13)Home Inspection Fee
Around $280-$350.
For more information on Closing Costs and helpful Worksheets, visit Canada Housing & Mortgage Site.
Reducing the CMHC fees on your purchase
When you require a mortgage for more than 80% of the purchase price of a property, that mortgage must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. The premium charged by these company`s decreases as the down payment increases. When you finance your property at 95%, a premium of 3.75% is added to the mortgage. By increasing the down payment to 10% of the purchase price the premium can be reduced to 2.5%. If you can put down 20%, you can avoid any additional insurance fee. Depending on your situation there are ways that you can structure this financing to avoid the CMHC or GE insurance premium.
Making Extra payments
Paying extra amounts on your mortgage can make a big interest saving over time. When we select a mortgage company, privilege payments options are something that we look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster.
Bi-weekly and weekly payments
Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you paid.
Variable Rate Mortgage
There has never been a better time to take advantage of the variable rate mortgage. With the lowest rate available, it is simply the most effective mortgage product on the market!
Here's how it works...
The variable rate mortgage is based on a 5 year term, however, only the first 3 years are closed. years 4 and 5 are open with absolutely no pre-payment penalty. As an introduction, the first 3 months are set at 2.24%. After this great initial rate, your payments are based on PRIME less .40% for the remainder of the term.
What if Prime Rate goes up?
At any time, without penalty, you can convert into a closed mortgage 3 years or greater. When you decide to convert, you automatically get mortgage broker wholesale rates not bank posted!
Pre-Payment Options
Pre-pay up to 15% of your mortgage, without penalty, on an annual basis. You can also have the ability to DOUBLE your monthly mortgage payment on any payment date. (banks terms may vary).
