Plan for these unanticipated costs when creating your budget.
A number of first time homebuyers are often shocked when they see the total cost of their home purchase, including the additional expenses, on closing day. Here’s a list of a few of the “hidden” expenditures you should expect to pay.
Despite the fact that most lenders may agree to the existing property survey, depending on when it was last conducted, it might be necessary to have another survey completed.
The majority of lenders will request a home inspection, but even if they don’t, it’s worth the peace of mind to obtain another one.
If you are applying for a high-ratio Canadian mortgage rate (with a down payment of less than 20 % of the purchase price), your lender will require you to purchase mortgage default insurance. While mortgage default insurance provides protection for the lender, you may wish to consider the mortgage rate life insurance for your own protection.
Your lawyer will do a title search, register and prepare your low mortgage rate, and prepare the title deed.
Land transfer tax must be paid by everyone who purchases property in Canada.
HST (harmonized sales tax)
HST was put into effect in July of 2010 in Ontario and British Columbia, HST (Harmonized Sales Tax) is applied to the purchase price of all new homes.
Your lender will only lend you a percentage of either the appraised market value of your home, or the home’s purchase price– often, the lesser of the two.
Unsure of how these additional costs will impact your home purchase? A mortgage broker can help. Contact a FamilyLending.ca mortgage specialist today.
Do you have what it takes to win a bidding war?
Bidding wars occur when multiple offers are placed on a house. The seller can take any offer, depending on the best conditions proposed.
Do’s and Don’ts.
Be careful not to allow multiple bids steer you into a spiral of “ignorant bidding”. Do your financial homework and know your limits.
How to Determine if Your Bid Fits Your Budget
For argument’s sake, let’s imagine that you have a budget of $400,000.
Step One: Determine Your Monthly Payment
Let’s say the best five year variable closed low mortgage rate, amortized over 25 years is only 2.15 %, making your monthly low mortgage rate payments $1722.98. You may have the opportunity to place a bid as high as $465,000, calculating your monthly payments to be $2002.87.
Step Two: Determine Your Cost in the Long Run.
Using our Mortgage Calculator, you determine that with a $465,000 mortgage, at 2.15 %, you will be paying a total of $600,860.46 over your 25-year amortization period. However, with a $400,000 mortgage, you will be paying a total of $516,869.11 in interest payments. Use our mortgage calculator to calculate your payment schedule.
Step Three: Determine What You Can Afford.
Take a look at the possible shifts in interest rates.
For instance, if you decide to put an offer for $400,000 at 2.15 %, the rate could fluctuate. Those rates could raise to 3.75 %, calculating your monthly Canadian mortgage rate payments at $1987.84. With a $465,000 mortgage, you’re payments would increase to $2,310.87 per month. Planning for the future is a fundamental part of your mortgage strategy. Just because you can afford to place a high bid today (based on current interest rates) doesn’t mean that it is sustainable option for the long term.
Be sure you have a clear understanding of the maximum best mortgage rate you can afford BEFORE you start bidding. Remember to take both your current and future finances into consideration.
Considering building a new home? Here is what you will need to understand.
Building a home is complex; your low mortgage rate shouldn’t be.
Let’s take a look at three different ways to finance your newly constructed home in Canada:
- Builder/Contractor built a home with your money: Customer has made an agreement with a registered builder to construct their home.
- Mortgage Options: Completion Mortgage or Progress Draw.
- Self-Built Home: Customer would like to act as his/her own contractor.
- Mortgage Options: Completion Mortgage or Progress Draw.
- Builder constructed home with their money: Customer requests funds when the home is 100 % complete.
- Mortgage Options: Completion Mortgage.
After you have purchased or built your new home through a residential homebuilder you will then require Canadian mortgage rate funds when the house is finished.
Progress Draw Mortgage
This mortgage is a type of funding that is advanced in intervals.
- Solicitor: A progress draw requires a solicitor.
- Progress Inspection Report: Details progress before the advancement of the best mortgage rate funds.
- Interest on Draws/Advances: Interest is charged on total amount advanced.
- Final Advance: Released upon final inspection after verifying that the job is complete.
- Mortgage Insurance: Land draws are not available under CMHC guidelines.
There are generally 3 stages to building a house:
- Roof Stage / Roof Tight— Approximately 35 % complete.
- Intermediate / Lock Up— Approximately 65 % complete.
- Final Occupancy / Completion— 100 % complete.
- Written employment and income confirmation
- Proof of down payment or equity
- Copies of quotes
- Full appraisal
- Plans / House specifications
- Fire insurance certificate
Do you need help working out the details of your construction mortgage? Contact FamilyLending.ca for expert advice.
The DIY guide for selling and buying a for sale by owner property
When it comes to selling your home, a growing number of people are opting for the do it yourself approach.
The private sale of homes is becoming relatively common thanks to advances in Internet technology and an increase in For Sale By Owner (FSBO) companies.
If you are successful in making the sale, you could save yourself a real estate commissions of 3-5 percent.
How For Sale By Owner Works
Generally, private sellers will make use of one of the various For Sale By Owner network websites. These companies will provide different service plans to assist you in selling your home. Standard plans consist of exposure through their website, lawn signs, and a personalized consultation with sales representation. The premium plans provide additional advertising support (i.e. in local papers, or real estate magazines), and they perform a competitive market analysis.
According to research studies, 45 % of Canadians would consider bypassing real estate agents to sell privately with the guidance of a real estate lawyer. A good lawyer can make all the difference for a private seller.
This system also weighs heavily on the communication between the seller and their lawyer. A lawyer is best equipped to manage situations of legal concerns.
Considering Selling Your Home Privately?
When it comes to deciding whether to try and sell your home without the services of a real estate professional, consider the following:
- You could possibly save thousands of dollars in commission fees.
- You’ll be able to maintain control over all aspects of the sale.
- You’ll have the flexibility to show the house at your own convenience.
- You have the opportunity to highlight, from your experience, everything your home has to offer to prospective best mortgage rate home buyers.
- More buyers are internet savvy and are familiar with private sales sites, as well as online auctions and complimentary classified websites.
- If you pass some of the savings onto the buyer you open up your reach to buyers at lower price points.
- Prospective buyers might not find your home.
- Real estate agents understand the market and what price points will sell.
- Upfront advertising costs, without any guarantee of visibility.
- Potential low mortgage rate buyers have to call you.
- No one to prepare agreements or advise you on negotiating.
- You might have to negotiate a commission for the real estate agent of a potential buyer.
The Safety of an Agent
For many, a real estate agent is the most comfortable choice when making such a substantial transaction. They can guide you through the process and negotiate the sale on your behalf.
Essentially, only you can make the decision if the service of an agent is worth the fee.