FAQ's

1.	What are the monthly costs of owning a home?
2.	How can you use your RRSP to help you buy your first home?
3.	Should I wait for my mortgage to mature?
4.	What is a pre-approved mortgage?
5.	Can I use gift funds as a down payment?
6.	Can I get a mortgage to purchase a home and make improvements?
7.	How will child support and alimony affect my mortgage qualification?
8.	How does bankruptcy affect my ability to qualify for a mortgage?
9.	Apply online - How secure is it?
10.	How long it takes to complete a mortgage transaction?
11.	How long it takes to complete a mortgage transaction?
12.	How can a mortgage broker get a better rate than my own bank?
13.	How Much does it cost to use a Centum HiLite Mortgage consulatant.
14.	Does Centum HiLite Mortgage charge a Broker Fee?
15.	When is mortgage insurance required?
16.	What types of mortgages are available to me?
17.	What is mortgage loan insurance?
18.	Can I change my mortgage payment frequency?
19.	What should I budget for a home purchase?
20.	How can you pay off your mortgage sooner?
21.	How much better off am I with weekly vs. monthly payments?
22.	What is meant by amortization?
23.	How much of a down payment do I need when buying a home?
24.	What is a down payment?
25.	What is a home inspection and should I have one done?
26.	How much can I afford to pay for a home?

 

1. What are the monthly costs of owning a home?

Needless to say, you'll have financial responsibilities as a home owner.

Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses.

The Mortgage Payment
For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization.

Property Taxes
Property tax can be paid in two ways - remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment.

School Taxes
In some municipalities, these taxes are integrated into the property taxes. In others, they are collected separately and are payable in a single lump sum, usually due at the end of the current school year.

Utilities
As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable.

Maintenance and Upkeep
You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighborhood and, depending on the kind of renovations you make could add to the worth of your property.

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2. How can you use your RRSP to help you buy your first home?

Today, many first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP.

To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan.

The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.

While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your financial planner whether this strategy makes sense for you, given your personal financial situation.

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3. Should I wait for my mortgage to mature?

Lenders will often guarantee an interest rate to you as much as 90 days before your mortgage matures. And, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.

Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always investigate the possibility of a lower interest rate with the lender or another lender. If you don't you may end up paying a much higher interest rate on your renewing mortgage than you need to.

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4. What is a pre-approved mortgage?

A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 90 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation' and 'down payment from your own
resources', for example.

Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range.

In summary, a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.

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5. Can I use gift funds as a down payment?

Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. Where the mortgage requires Mortgage Loan Insurance, Canada Mortgage and Housing Corporation requires the gift money to be in the purchaser's possession before the application is sent in to them for approval. Where Mortgage Loan Insurance is provided by Genworth this is not a requirement. See 'What is Mortgage Loan Insurance?' for further information

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6. Can I get a mortgage to purchase a home and make improvements?

Subject to qualification, yes. In fact, even purchasers with 5% down may qualify to buy a home and make improvements to it. For high-ratio financing, both Canada Mortgage and Housing Corporation and Genworth, insured mortgages are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or improvements that the purchaser may wish to make to the property. This option eliminates the need to finance the renovations or improvements separately. Some conditions apply.

Where the improvements are cosmetic, the Mortgage Loan Insurance Premium is unchanged from the standard schedule. Where the improvements are deemed to be structural, the Mortgage Loan Insurance Premium is increased by .50% over the standard schedule. For information on Mortgage Loan Insurance Premiums see High-Ratio Home Mortgage Financing.
 

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7. How will child support and alimony affect my mortgage qualification?

Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for.
Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

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8. How does bankruptcy affect my ability to qualify for a mortgage?

Generally some lenders would consider providing mortgage financing, depending on the circumstances surrounding your bankruptcy,  The best way to determine whether or not you qualify at this time if you are a previously discharged bankrupt is to discuss your situation with a  Centum Hilite Mortgage Consultant. We have many lenders to approach based on your circumstances. For more information on how we can help you, contact Centum Hilite Mortgage Consultant Today

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9. Apply online - How secure is it?

Very. Your private personal and financial information is not sent anywhere without your express permission. And all information you provide on line is encrypted for the greatest possible security

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10. How long it takes to complete a mortgage transaction?

If all information requested by the lender (i.e. Income verification, down payment verification and property details) are given to the broker in a timely matter than the transaction can be completed in as little as 2 weeks.

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11. How long it takes to complete a mortgage transaction?

If all information requested by the lender (i.e. Income verification, down payment verification and property details) are given to the broker in a timely matter than the transaction can be completed in as little as 2 weeks.

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12. How can a mortgage broker get a better rate than my own bank?

The mortgage lenders that we use do not have local branches in each city or town, they have no large overhead and are in the business of lending money for mortgages only. This, combined with their large volumes, allows them to discount the rates far better than your own bank can provide.

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13. How Much does it cost to use a Centum HiLite Mortgage consulatant.

The vast majority of mortgage clients do not pay a fee for the services of a Mortgage Consultant. To gain a larger market share, the majority of financial institutions pay a finder's fee to Mortgage Consultants and at the same time offer them their best discounted rates and fast approvals in order to gain their business. This allows the Morgage Consultant to shop among the various financial

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14. Does Centum HiLite Mortgage charge a Broker Fee?

Our fully qualified clients don't pay us a fee on residential mortgages because we are paid by the lenders. Qualified clients are individuals with good credit, verifiable and taxable income and sufficient down payment (if required).
In the case of a commercial mortgages or where private funding is necessary as a result of previous credit problems, fees would apply. We will always be up-front where fees are concerned.

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15. When is mortgage insurance required?

 If the amount of the mortgage exceeds 80% of the lending value of the mortgaged property, the mortgage is considered "high ratio". Accordingly, and as required by law, mortgage insurance must be purchased for the full amount of the mortgage.
Mortgage insurance is available from CMHC and Genworth. An application fee and an insurance premium (which can be added to the mortgage amount) are payable to the insurer.
In some cases, Lenders may require a mortgage to be insured even if the loan-to-value ratio is less than 80%. For example, the Bank may require insurance as a condition of the loan if the property is considered higher risk (e.g. the home is in a highly volatile real estate market).

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16. What types of mortgages are available to me?

• Conventional - 'Low Ratio' - The mortgage loan amount is equal or less than 80% of the lesser of: a) what the appraiser states is the value of the home, or b) what it actually costs to buy. In other words, you have a down payment of 20% or more.
• Insured - 'High Ratio' - The mortgage loan amount is greater than 80% but less than 95% of the lesser of: a) what the appraiser states is the value of the home, or b) what it actually costs to buy. In other words, you have less than 20% of a down payment. High ratio mortgages can be insured by Genworth Financial Canada, a private insurer, or Canada Mortgage and Housing Corporation (CMHC), which operate under the National Housing Act (NHA).

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17. What is mortgage loan insurance?

Mortgage Loan Insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and Genworth Mortgage Insurance Company, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums, ranging from .50% to 2.90%, are paid by the qualified borrowers and are higher for self employed and commissioned individuals can be added directly onto the mortgage amount. This is not the same as Mortgage Life Insurance.

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18. Can I change my mortgage payment frequency?

You can always alter your payment frequency to suit your needs. When you make adjustments to your payments, there may be an interest adjustment amount owing for the period from your last payment date to the revised payment date. For instance, if you switch from weekly to monthly payments, you may owe interest on your first monthly payment.

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19. What should I budget for a home purchase?

Before making a home-buying decision, calculate both the one-time and ongoing costs associated with buying and maintaining the home you want.

One-time costs may include:
 

• Appraisal fees
• Cost to obtain a survey
• Land transfer taxes
• CMHC / GENWORTH mortgage insurance application fee and insurance premium (if applicable) – may be added to the mortgage amount
• Moving expenses
• Legal fees
• Property and School Tax Adjustment
• Heating, Hydro and Water Adjustment
• Title Insurance
• Utility Connections
• Home Inspection Fee, if necessary
   

Ongoing housing costs include:

• Mortgage payments
• Home Insurance
• Property taxes
• Mortgage life insurance (if applicable)
• Heating, hydro and water costs
• Condominium fees (if applicable)
• Maintenance costs

Telecommunication costs - phones, internet access, cable (if necessary

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20. How can you pay off your mortgage sooner?

There are ways to reduce the number of years to pay d mortgage. You'll enjoy significant savings by:

Selecting a non-monthly or accelerated payment schedule
increasing your payment frequency schedule
Making principal prepayments
Making Double-Up Payments
Selecting a shorter amortization at renewal
 

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21. How much better off am I with weekly vs. monthly payments?

Despite popular belief, and a lot of vendor marketing, the advantage in weekly vs. monthly payment frequency is slight. It is not really the frequency that makes a big difference but how much you pay. Any extra payment towards your principal dramatically improves your amortization period. Think payment amount not frequency of payment

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22. What is meant by amortization?

The amortization period is the number of years it takes to repay your mortgage in full. Often when you first get a mortgage it is amortized over 25 years. This means that if you maintained those terms and payment periods, your mortgage would be paid off in 25 years. However, in most cases the amortization period changes because different borrowing terms, interest rates and payments

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23. How much of a down payment do I need when buying a home?

How much of a down payment do I need when buying a home?
A conventional mortgage requires a down payment of 20% or more of the purchase price of a home. But mortgages with down payments as low as 5% may be available when certain authorized insurers – such as Canada Mortgage and Housing Corporation or Genworth Financial Canada – insure the mortgage against default. This insurance premium is paid by you, and becomes part of your regular mortgage payment.

 

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24. What is a down payment?

Very few home buyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage the first step in a potentially long-standing relationship. But even with a mortgage, you will need to raise the money for a down payment.

The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting.

The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings
 

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25. What is a home inspection and should I have one done?

A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.
A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.
 

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26. How much can I afford to pay for a home?

To determine 'affordability' your Centum HiLite Mortgage Consultant will first need to know your Taxable Income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, they will then calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.
Second, your Centum HiLite Mortgage Consultant will calculate 40% of your Taxable Income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on Lenders' usual guidelines.
In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries.

 

 

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