Mortgage Affordability Calculator
How much can I afford? Use our handy Affordability Calculator to find out how much you can afford based on your current lifestyle.
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|Fixed Mortgage Rates provide you with the security of never going up over your term. The most popular fixed mortgage rate term is five years.||Variable Mortgage Rates go up and down with the current prime rate. As they carry a higher risk, they generally offer a lower rate.|
Buying a Home HELP
Buying a Home: Top 5 Frequently Asked Questions
Can I afford a mortgage?
First things first, you must establish a budget for your home purchase. Before you hit any open houses, visit a mortgage broker or lender to see how much of a mortgage you qualify for, and at what interest rate. But don’t just settle for one opinion - comparing your options offered by a number of lenders at this stage can mean paying much less for your mortgage over time. Got your mortgage pre-approval? Great - it’s time to start the house hunt! Click here to compare the best mortgage rates
How big should my down payment be?
By law, your down payment must be a minimum of 5 per cent of your new home’s value, and paying anything less than 20 per cent will place you in the “high-risk buyer” category, meaning you’ll also need to pay mortgage default insurance premiums. This insurance coverage is mandatory, and is offered by either the national agency Canada Mortgage and Housing Corporation, or by private insurers Genworth and Canada Guaranty. These premiums are rolled up into your monthly mortgage payments, and paid throughout your amortization. As a good rule of thumb, the more you can pay on your home up front, the less you’ll pay over time on your mortgage through insurance premiums and interest.
Who should I work with when buying a home?
Buying a home is likely the biggest financial decision you’ll ever make - so don’t be afraid to ask for expert advice! Teaming up with a pro like a mortgage broker can make finding the perfect mortgage a much easier process. Their services are free, and they have access to a variety of mortgage rates, offered by many lenders - think of them as your own personal mortgage shopper! When searching for a home, be sure to team up with a good real estate agent. Not only can they help you find a home in your desired neighbourhood, they can also help you assess your home’s value, raise any red flags about a property, and walk you through the offer process and paperwork.
How do I make an offer?
Found your dream home? It’s time to make your move and put down a deposit. This assures the seller that you are a serious buyer, and committed to closing the sale. Remember, if you back out of the sale, the seller keeps your deposit amount. There’s no set rule for how much you’ll need to pay, but remember - the higher the deposit, the more competitive your offer will be.
What are some other costs I should know about?
Buying a home costs more than your deposit, down payment and mortgage payments; there are a number of taxes, fees and other service charges you must keep in mind when creating your buying budget. Some of these costs include: Land transfer tax, lawyer fees, land survey, home inspection, appraisal, and HST if applicable. br> Click here to learn more about closing costs
Key Terms To Know - Buying A Home
The total length of time required to pay off your mortgage. The maximum time limit in Canada is 25 years.
The length of a mortgage rate contract. The most popular length of time is five years.
Mortgage Rate Type
There are two main types of mortgage rates in Canada: Fixed mortgage rates, which guarantees a certain interest rate for the mortgage term, and Variable mortgage rates, which are dependent on Canada’s Prime rate and may fluctuate throught the term.
A home buyer who has paid less than 20 per cent of their new home’s total value in their down payment. This type of buyer must take out mortgage default insurance.
The amount the buyer pays up front for their new home. The mortgage covers the remainder of the home’s cost.
An assessment of your viability as a mortgage borrower, taking into account your assets, credit score and other existing debt to determine what mortgage rate you may qualify for, and how big of a mortgage loan. A pre-approval is not an official mortgage contract, just a preliminary assessment of what you’ll qualify for.
TThe amount of time a pre-approved mortgage rate is valid. For example, a buyer may be pre-approved for a mortgage rate and amount, and can have up to 120 days to find a home and apply that mortgage rate.
This is the official approval for a mortgage rate and amount, based on the applicant’s desired home purchase.
A professional who has access to many different mortgage rates offered by a variety of lenders. Their free service can help connect you with the best rate for your specific buying needs and financial situation.
An important step when buying a home. The inspection confirms whether the home is in good condition, and identifies any potential structural problems down the road. A home inspection is often included as an offer condition by the buyer.
Requirements from the buyer that must be made in order for the home sale to close. These often include upon financing, meaning the sale is only valid if the buyer is approved for a mortgage, and home inspection.
Additional taxes, service charges, moving costs and legal fees required to close the sale and move into the home.
Land Transfer Tax
A tax that must be paid by the buyer for the transfer of property into their possession.
Mortgage Default Insurance
Insurance that protects the mortgage lender from losses should the homeowner default on their mortgage loan. This coverage is mandatory for all buyers paying less than 20 per cent, and premiums are bundled into overall mortgage costs.
Canada Mortgage and Housing Corporation
A national housing agency that is the largest provider of mortgage default insurance.
Home Buyers Plan
A government program that allows first-time home buyers to reallocate savings up to ,000 tax-free from an RRSP to go toward their home purchase costs.
A mortgage feature that allows for lump sums or accelerated payments to be made on the mortgage, decreasing the overall amortization.
A ranking based on a buyer’s history with debt and repayment. A high credit score shows a lender that a buyer is more likely to pay back the mortgage, while a low credit score shows a buyer is at higher risk of defaulting on the mortgage loan.