First Time Home Buyer
What we’ll need to get started on your pre-approval Verification of employment income: most recent T4 / Tax Return / Notice of Assessment and either a Pay Stub or Letter of Employment stating guaranteed hours
Verification of additional income: Child Tax Benefit Notice Verification of Investment: Most recent Investment Statement
Verification of down payment: Gift Letter, most recent Savings Statement/ RRSP statement
Depending on your down payment, you may have a conventional mortgage or a CMHC insured mortgage:
Conventional mortgage – down payment is at least 20% of the purchase price or appraised value and a 3rd party certified appraisal is required.
CMHC mortgage (Canadian Mortgage and Housing Corporation) - is Canada’s national housing agency that provides mortgage loan insurance which enables borrows to realize their dream of home ownership with as little as 5% down. CMHC also assists homeowners in renovating or refinancing their property with as little as 20% down.
With less than 20% down your mortgage will need to be insured by CMHC, premium will apply (insurance premium =.60 % to 3.35% of loan amount, depending on percentage of down payment)
With a 20% down payment or more, your mortgage may or may not have to be insured by CMHC, this is based on your credit qualifications.
Conditions apply, so ask your Austin Credit Union Mortgage Specialist for details.
Once you have found your dream home, you’ll be ready to sign an Offer to Purchase Remember this is a legally binding contract.
Even if pre-approved, we recommend that the offer to purchase is subject to financing at Austin Credit Union.
In most cases, your realtor will prepare the offer to purchase.
Now that you have an accepted offer to purchase, it’s time to see us again with: Cost estimates/quotes for any renovations you’re wanting to make
immediately (within the first couple of years) Solicitors name and contact information Accepted Offer to Purchase
Set up an appointment with our mortgage specialist who will guide you through the process step by step.
Possible costs to consider when purchasing a home Legal fees
Land transfer taxes
Value of Property Rate On the first $30,000 0% On the next $60,000 (i.e. $30,001 to $90,000) 0.5% On the next $60,000 (i.e.$90,001 to $150,000) 1.0% On the next $50,000 (i.e. $150,001 to $200,000) 1.5% On amounts in excess of $200,000 2.0% Disbursements
GST if applicable (new home) Property taxes
Appraisal fees Home Inspection fee Property (fire) Insurance Mortgage administration fee Condo fees
Survey/zoning memorandum or title insurance/water quality test Mortgage payment protection (life and disability insurance) Service hook-up (hydro, telephone, interenet,tv,gas,water) Lawn Care / Snow Removal
Any initial renovations /repairs which could include paint, flooring, window coverings etc
Furniture
The down payment – where will it come from?
Gifted down payment – requires confirmation letter, this letter will confirm the gift amount and that the amount is not repayable. (letter available at branch)
Personal savings – verification of your down payment will be required if it is not on deposit at Austin Credit Union.
RRSP Funds – first time home buyers can use RRSP funds as a down payment. Ask for the Home Buyers’ Plan for more information go to
www.cra.gc.ca
Your down payment is important, as the amount will determine if you need to have your mortgage insured by a third party such as CMHC.
Other important information pertaining to your mortgage Amortization
The maximum amortization is 25 years for CMHC insured and all other mortgages. This means your payments may be extended over a 25 year period. Keep in mind, the shorter your amortization, the faster you pay off your mortgage and the more you save on interest costs, but the higher your payment will be.
Payment frequency
Choose a payment frequency that suits you cash flow and budget. For ease of budgeting, have the payment dates coincide with your payroll schedule. Options include: monthly, semi-monthly, bi-weekly, and weekly.
Serviceability
How much house can I afford? Here are two guidelines that you will need to consider: GDSR (gross debt service ratio): the total monthly home related expenses
including mortgage payment, heating cost, property taxes and condo fees, should not exceed 35% of your gross family income.
Choosing a mortgage product Fixed vs. Variable
Fixed Rate Mortgages
A fixed rate is a locked-in interest rate that will not increase for the term of the mortgage loan.
Variable Rate Mortgage
A variable rate fluctuates based on prime rate, payment may change to have loan paid off in the correct amortization period.
Open vs. Closed Open Mortgages
An open mortgage is flexible. That means that you can usually pay off part of it, or the entire amount of it at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage loan. An open mortgage can be converted to a closed mortgage at any time.
Closed Mortgage
A closed mortgage cannot be paid off before the end of its term. A closed mortgage is a good choice if you’d like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. A closed mortgage may be a poor choice if you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates.
Property Taxes
Property taxes are based on a calendar year – Jan 1 to December 31. Each municipality will have their own property tax due date. Only one party (vendor or purchaser) will pay the taxes. Therefore, the party that is actually paying the taxes is entitled to a credit by the other party.
ACU Tax Account- a tax account can be set up to collect property tax payment, at the same frequency as your selected mortgage payment.
Mortgage payment protection
Protecting your self and your home is important. No one can foresee the future, so you want to ensure that you and your family are well prepared in the event of a death or injury. Austin Credit Union offers life and disability coverage.
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Life coverage – pays outstanding insured loan amount tax-free in the event of your death, freeing your family from financial stress.
Disability Coverage – pays you insured monthly payment tax-free while you are off work due to sickness or injury, protecting your assets and credit rating.
See lender for details
Closing Day
These are things that happen on or before closing day:
Austin Credit Union will forward the mortgage proceeds to your lawyer. Your down payment is to be given to lawyer by either your lender or
yourself (minus your deposit) to your lawyer. You must also give the remaining closing costs/legal fees. Your lawyer will also be requesting confirmation that you have adequate fire/home insurance in place. Your lawyer
Pays the vendor
Registers the property in your name
