Category

Home Ownership

Category

There’s been a whole lot of chatter going on about the new mortgage rules instituted here in Canada, and I’ve finally had a chance to put pen to paper (fingers to keyboard more accurate I guess) and share my thoughts with you guys. The Stress Test Ok, let’s start with the most controversial change. The stress test comes into play for anyone who is getting an insured mortgage. What exactly is an insured mortgage you ask? It is when you are putting down less than 20% down and have to get the extra CMHC insurance. If you are in that boat, you now have to qualify for a much higher interest rate than you will actually be paying on your mortgage. As of right now, you should be able to get an interest rate on your mortgage under 2.5%, but the qualifying rate you have to meet is currently set…

Here we go, the last post in my Home Buying Series! If you have missed any of the previous posts, you can find links to all of them at the bottom of this page. Today we’re talking about closing costs…the worst! Those pesky administration fees that will cost you a pretty penny. So how much money are we actually talking? On average, closing costs will end up being between 2% and 4% of the purchase price of your new home. If you buy a $400,000 house, you could end up with closing costs as much as $16,000. Now don’t freak out, you can have your closing costs added into your mortgage so that you don’t actually have to cut your lawyer a cheque for $16,000 when you’re likely already feeling the pinch from your down payment. What are you actually paying for? Lawyer fees / disbursements This is the most…

We’ve spent the last few weeks talking about the process of buying your first home and today we finally get to the fun part. If you want to check out the previous four posts in the series all the links are at the bottom of this page. You’ve made the decision to buy a house and have your down payment saved up and have pre-approval for a mortgage so now it’s time to find the house of your dreams…or maybe the more realistic house for the current moment. Remember, very few people buy their dream home right off the bat so be prepared to have to make some compromises when buying your first home. Location, Location, Location In my opinion, the first thing you’ll want to narrow down on your house hunt is where you actually want to live. When the bf and I bought our first place just over…

If you’ve been keeping up with my Home Buying Series over the past few Mondays, you’ll already know if you’re ready to buy, how to save a healthy down payment and how to take advantage of the homebuyer’s plan (HBP). Once you have your down payment saved up and you know where exactly the money is coming from you are just about ready for the fun part (bring on the house hunting), but there’s one last step you want to take to ensure everything goes smoothing….getting pre-approved for a mortgage. Why exactly do you need to get pre-approval? Lock-in your interest rate, so you won’t get stuck if rates go up (Usually, the quoted rate is good for at least 120 days and if rates end up going down your lender will meet the new lower rate.) Set your spending cap (Keep in mind that banks will often lend you more…

Our home buying series continues and this week we are looking at the Home Buyer’s Plan; a convenient tool that helps you use your RRSP’s for buying your first home. The last couple of weeks we’ve been talking about Renting vs. Buying and Saving Your Down Payment With the Canadian housing market the way it is, it can feel impossible to save enough money up for a down-payment on your first home. You need to have a minimum of 5% for a down-payment to get a mortgage, and any down-payment under 20% requires insurance coverage through CMHC (Canada Mortgage and Housing Corporation) which will cost you a pretty penny. But let’s be honest, 20% can be impossible these days, so it’s not unlikely you’re just aiming for the 5%. Just a note, CMHC also changed their rules recently, and you now need 10% down for any portion of your mortgage that is over…

Continuing on with our Home Buying Series this week and today we’re turning the focus on the good old down payment. Last week we talked about the pros and cons of renting vs. buying so if you missed that you can check it out here. You’re ready to buy a house…how exciting!!! Happen to have a spare $50,000+ kicking around? Probably not but the chances are that’s what you’re going to need to save up to put down a solid down payment. In Canada, you have to put down at least 5%, and if you want to avoid paying for the extra insurance coverage through CMHC, you’ll want to get that amount up to 20%. It’s not a deal breaker, but if you are willing to spend the time to save the extra money, it can be worth it. If you are buying a $400,000 house with only 5% down…

Buying your first home is most likely the biggest financial decision you will ever make so over the next few weeks we’re going to delve into that process with a new Home Buying Series. We’ll start off today by figuring out if you’re ready to jump into home ownership and continue through all the steps including posts about the Home Buyer’s Plan, mortgages, closing costs, etc. First things first, are you even ready to buy? The common bias is that it is always better to buy than to rent but you need to know that there are pros and cons to both. Today we’re going to look at some of these pros, and cons so you can better gauge whether or not you are ready to make the jump into home ownership. The biggest argument against renting is that you aren’t building any equity, but this isn’t always true. Rental…

If you have (or have ever had) a mortgage, you’ll know that the bank will often push mortgage insurance on you when you’re signing on the dotted line. Now to be clear, this is the additional insurance your bank will offer you when you get a mortgage and not the CMHC insurance that is required when your down payment is less than 20%. Sometimes the bank will even go so far as to assume you’ll get the coverage and you’ll actually have to opt-out. They’ll throw out some small premium amount that will just get tacked into your mortgage payment, and you’ll think sure, sounds great…but does it. Ok, I already spoiled this with the post title…but no, it shouldn’t sound so great. Now don’t get me wrong, insurance is necessary, especially when it comes to covering your debt but there is a better way of doing it. Let’s first…