First Time Home Buyer

Should you get a pre-approved mortgage?
Definitely. Obtaining a mortgage pre-approval is an important initial step in securing a mortgage to buy a home in Toronto. The lenders will analyze your current income, debt situation and credit history in order to qualify you for a maximum loan amount. This will give you a clear picture of your financial parameters and an idea of your purchase price range.  More importantly, with a pre-approval, we can hold your interest rate for upto 120 days.  So, if rates go up from now until you buy a property, you are protected.

What is the minimum amount of money needed to buy real estate ?
In most situations, you only require 5% of the purchase price as your down payment. In some instances, you may qualify to purchase a home with no money down! We are committed to providing our customers with the creative resources in order to obtain the financing they desire.  

100% Financing Available through 5% cash back mortgages
You can now borrow the full amount of the purchase price of the property you want to buy. This is done by actually getting back the 5% back on your deposit when the house closes.  And what's better you get to choose any fixed or variable rate mortgage product.  Please contact us to obtain more information on 5% cash back mortgages.

How can you determine how much of a mortgage you qualify for?
Several factors are involved in determining your purchase potential or how much you Qualify for. Please contact us to get a fast and accurate estimate.

How can a Cash back Mortgage assist a first time homebuyer?
Institutions have developed a product called the "Cash back Mortgage" so a buyer with the down payment but no cash to cover closing costs can still purchase a home in Toronto. As long as you have the minimum down payment required, institutions are now giving you a cash reward to assist you in paying for your closing costs. You can also use this money to purchase furniture or appliances.

Convential vs High Ratio Mortgages:
If you have at least 20% of the purchase price (or appraised value if this is lower than the purchase price)
as a downpayment, you can apply for a conventional mortgage.

Mortgage Insurance
If you have between 5% and 20% of the purchase price as your downpayment, you can apply for a high-ratio mortgage. Usually these have to be insured through CMHC (Canada Mortgage and Housing Corporation) or Genworth(GE Capital). These are mortgage insurance companies. Purchasing insurance is a common way of qualifying for a mortgage when you have less than 20% equity. The insurance premium is charged when the mortgage funds are advanced. The funds are usually added on top of the mortgage. The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.


RRSP Home Buyers Plan
The Home Buyers' Plan allows eligible individuals to withdraw up to $25,000 (changed from 20,000 on Jan. 27, 2009) tax free from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home.

Eligibility
The Canada Revenue Agency considers the following persons first-time home buyers:
• persons, including former homeowners, who have not owned a home they occupied as a principal place of residence at any time during the four-year period before the date of withdrawal of funds
• disabled persons acquiring a more accessible home
• persons acquiring a more accessible home for a disabled person related to them by blood, marriage, common-law partnership or adoption
• persons providing funds to a disabled person related to them by blood, marriage, common-law partnership or adoption, to build or purchase a more accessible home

Dates and Deadlines
• Participants must begin repayment two years after withdrawing the funds.
Amounts withdrawn under the Plan must be repaid over a period of no more than 15 years.

Ontario Land Transfer Tax Credit (up to $2000)

The Land Transfer Tax Refund is the amount of tax payable that is being claimed as a refund up to a maximum of $2,000. The first time home purchaser may claim the full maximum amount or a  proportion of the maximum refund amount.

The refund amount is reduced when one or more of the transferees are not first-time home purchasers. The reduction will be proportionate to the interest in land acquired by the individuals who are not first-time home purchasers. For example, a parent who is not a first-time home purchaser and child who is a first-time home purchaser, purchase a home with equal 50/50 interests, the child may claim 50% of the land transfer tax refund. The child’s claim cannot exceed 50% of the maximum allowable refund, i.e., 50% of $2,000.

Click the link for more information on the Ontario Land Transfer Tax Credit.

Follow the link for more information on the Ontario Land Transfer Tax Rate.

Toronto Land Transfer Tax Rebate (up to $3725)

First time home buyers of a newly built or residential re-sale property can qualify for the Toronto Land Transfer Tax Rebate. The property must be owner occupied. The maximum rebate allowed is $3,725.00.

If you are eligible for a rebate of all or a portion of the MLTT you owe, your lawyer will be able to claim the rebate electronically through Teraview version 6.0 software when he/she registers your transfer/deed.

More information on the Toronto Land Transfer Tax Rebate and the Toronto land transfer tax rate can be found on the City of Toronto website.

Zero Down Payment or 5% Cash back mortgages

Although zero downpayment mortgages are no longer insured by CMHC, 5% down payment mortgages with a 5% cash back component are.  CMHC also permits down payments to come from borrowed sources (Visa, Line of Credit, family) provided this is disclosed to the lender. 

Used in conjunction a home buyer can borrow their down payment and obtain a 5% cash back mortgage allowing them to pay off the money they borrowed once the home closes.  Or you can use your own cash and get your 5% back upon closing. 5% cash back mortgages are available from many lenders and will usually carry a premium charge of about 1.5% or higher over normal mortgages.

For more information on these mortgages, call today or apply online.

Buyers Checklist
What you will need before or on closing. Usually you will need approximatley 1.5% of the purchase price for closing costs.
Visit our Home Buyers Closing Checklist to see what to expect

Here are few things you will need to expect:

• Deposit on Purchase
• Legal Fees
• Title Search
• Title Insurance
• Land Survey (does not apply to condos)
• Realty Tax Adjustment
• Appraisal Fee
• CMHC Insurance
• PST on CMHC Insurance
• Home Inspection
• Interest Adjustment
• Property Insurance
• Moving Costs

And any broker/lender fees depending on credit problems/history. If your getting turned down by everyone chances are there will be a broker/lender fee due to difficulty in getting you a mortgage.



                                            Video on Renting VS Buying

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