Financing and Costs
Another important aspect, probably the most important, is what you can afford. This is done by contacting a mortgage expert who can fairly quickly, usually within the week, identify what the bank would be willing to lend you. Getting prequalified and obtaining an interest rate committment will speed up the buying process when you find the right home. Most lenders witll lock in a rate for 90-120 days without any cost of obligation. We work with many of these people on a daily basis and have great contacts – so just ask! After you receive what we refer to as a prequalification it is important to take all things into account in terms of your operating costs. Banks will often offer you an amount of money that you qualify for however, you need to take into account your monthly expenses when figuring out and a comfortable price point. Remember a nice house is wonderful—but so is food and heat!
Remember the house must also qualify, usually an appraisal to confirm the value of the home will be asked for to access the merit of the amount of money borrowed.
Some experienced mortage brokers with a good track record:
Elaine Simpson – Mortgage Broker
Concierge Mortgage Group
Elaine has a great web site with lots of information for buyers of all ages and price brackets.
Ross has been in the business for over 30 years and knows his stuff. He also is easy to reach, will come to you ,and provides good personnal service. He works all over the city .
When purchasing a home one of the many factors involved is the cost. Not just the cost of the home itself but the actual hidden costs that are involved and can be significant.
It is important when calculating your budget to include the following in your equation.
What is CMHC Mortgage Loan Insurance?
Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment.
To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.
Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.
How Much Does CMHC Mortgage Loan Insurance Cost?
The information below is taken from the web site of CMHC http://www.schl.ca/
To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. Your lender will give you the exact price when you apply for a 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.
Remember: without mortgage insurance you may avoid the insurance premium but you’ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved.
A 10% premium refund, and a premium refund for a longer amortization period (if applicable) may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Homes.
|Loan-to-Value||Premium on Total Loan||Premium on Increase to Loan Amount for Portability and Refinance|
|Standard Premium||Self-Employed without 3rd Party Income Validation||Standard Premium||Self-Employed without 3rd Party Income Validation**|
|Up to and including 65%||0.50%||0.80%||0.50%||1.50%|
|Up to and including 75%||0.65%||1.00%||2.25%||2.60%|
|Up to and including 80%||1.00%||1.64%||2.75%||3.85%|
|Up to and including 85%||1.75%||2.90%||3.50%*||5.50%*|
|Up to and including 90%||2.00%||4.75%||4.25%*||7.00%*|
|Up to and including 95%||2.75%||N/A||4.25%*||*|
|90.01% to 95% —
Non-Traditional Down Payment***
|Extended Amortization Surcharges
Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period (for LTV ? 80%).
For portability and refinance, the premium is the lesser of Premium on Increase to Loan Amount or the Premium on Total Loan Amount. In the case of portability, a premium credit may be available under certain conditions.
* Premiums shown with an “*” do not apply for refinance. For portability the maximum LTV ratio is 90%, but CMHC may consider higher LTV ratios when the new ratio is equal to or less than the original LTV. For portability, the premium is higher for non-traditional down payments on Increase to Loan Amount.
** For conversion from Self-Employed with traditional 3rd party income validation to Self Employed without traditional 3rd party income validation, the premium is the lesser of: a) the Premium on Total Loan Amount or; b) the outstanding balance multiplied by a 1.5% premium plus the Premium on Increase to Loan Amount.
*** Down Payment Requirements — Traditional sources of down payment include: Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (<50% of min. required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equity grant (non-repayable grant from federal, provincial or municipal agency). Non-traditional sources of down payment include: Any source that is arm’s length to and not tied to the purchase or sale of the property, such as borrowed funds, gifts, 100% sweat equity, lender cash back incentives.
Premiums in Manitoba (effective July 15, 2012), Ontario and Quebec are subject to provincial sales tax. The provincial sales tax cannot be added to the loan amount.
The mortgage lender may require an appraisal of the home before closing. There is sometimes a fee for this service.
Located in Ottawa Ontario, Carty Gwilym is a real estate appraisal firm that provides market value estimates for private residential and small commercial properties for the following requirements:
- Purchase and sale valuation
- Interim and permanent financing
- Employee relocation valuations
- Foreclosure and power of sale
- General litigation
- Insurance valuations
This has become standard practice among banks and usually costs around $300.00 dollars. It provides protection in case there are issues arising from title. This is a good article that provides information about title insurance .
An important part of the home buying process this can cost anywhere from $375.00 to $800.00, depending on the age, size and cost of the home.
Some that our clients seem to like
A strong professional home inspection company operated by Stephen Clayton, a Registered Home Inspector with a Masters Degree in Business Administration (MBA) and more than twenty years experience in the residential construction field as a contractor/renovator and multi-award winning custom home builder. Steve has been conducting home inspections for over ten years during which he has inspected over 3000 homes!
Affiliated Property Group
David Glennie – Certified Engineering Technologist (CET)
- CET RHI designation
- Building Inspections
- Reserve Fund Studies
- Energy Audits
- Radon from the Ottawa Association of Home Inspectors
For a list of certified inspectors, go to: http://www.oahi.com/
In Ontario it is required that the both the Buyer and the Seller retain a lawyer for closing. The fee for buying a home is slightly more than it is when selling a home. For the purchase you can expect to pay around the $1200 dollar mark + disbursements – usually around the $300 dollar mark. For the sale of the home you can expect to pay around the $1000 mark.
Listed below are lawyers that come recommended
34 Hawthorne Avenue
Ottawa, Ontario K1S 0B1
BellBakerLLP Barristers and Solicitors
Ottawa, Ontario K1A 0K1
With over 25 years’ experience, Martin Owens has a large solicitors practice, with a focus on real estate, wills, estate administration, and business law. Martin regularly acts for various large and small, public and private sector organizations, and has also assisted a local school board in the acquisition, development and sales of dozens of school sites. Martin obtained his Bachelor of Laws degree from Ottawa University in 1979 and was called to the Ontario Bar in 1981.
Geoffrey A. Howard
Geoff Howard joined Bell Baker as a partner in 2006 and brings with him over 20 years of experience advising clients on a broad range of matters involving business law, general corporate and commercial law, commercial leasing and real estate development, as well as residential purchases, sales and refinancing. He also advises clients on business acquisition and estate planning issues. Geoff graduated with an honours degree in Economics from the University of British Columbia. He received a masters degree in Economics and his law degree from Queen’s University in Kingston. He was called to the bar of Ontario in 1980. Geoff has been a long time seminar leader at the Ottawa Bar Admission Course and was Senior Instructor and Lecturer for the Corporate Commercial section from 1988 to 1997. He has also participated as a speaker, panel member and chair for Continuing Education Programs with the Law Society of Upper Canada.
Land Transfer Tax
This tax is payable to the Province and is usually referred to as the “welcome to Ontario tax”. The amount charged goes up as the price of the home increases. It can range from 1% to 1.75% depending on the price of the home. For you convenience we have included a land transfer tax calculator on our site. If you are a first time home buyer you may be eligible for a rebate . http://www.fin.gov.on.ca/en/refund/newhome/
Land Transfer Tax Calculator – http://www.landtransfertax.com/#follow
This is home owners insurance and will need to be in place before closing. The lender requires you have this insurance because the home is essentially security against the mortgage so it needs to be insured. Prices can vary greatly and at least 3 quotes should be obtained well before closing.
Most residential re-sales are exempt from HST. The services provided however are not. These include such things as commissions, lawyer services, home inspections and insurance. New home construction is subject to HST, however there are there are certain rebates available in certain cases.
Often the Seller already has an existing survey for the property. A survey should show easements, rights of ways, fences. garages and where the house sits within the property lines. Title insurance looks after some issues but it is best to speak with a lawyer should you feel that you may need a survey done on an existing home or a new purchase. Few people have new surveys unless they have put on additons or needed to clarify property lines for fences.
These costs vary and include but are not limited to: moving costs, hookup fees from various utility companies, phone and cable hook-up.