FREQUENTLY ASKED QUESTIONS
*applies to owner occupied properties*
What down payment do I need?
5% is the minimum down payment on a home up to $500,000. If you exceed $500,000 then 10% down is required ONLY on the amount over $500,000.
Will I need any other money available?
Yes, you will also need to show approx .5 - 1.5% of the purchase price (dependent on the lender) available to cover closing costs. In some cases we can add this amount as a debt into the application.
Can the down payment be gifted to me?
Yes but it typically must come from an immediate family member. The lender would need to see a completed gift letter (we provide you with) and then verification that the money was deposited to your bank account.
Can I borrow my down payment?
Yes, it requires a loan (or if you have an open line of credit) to be used as the down payment. Credit must be very good and the lender and insurer may charge a premium for this program. The clients ratios must work with the new loan included.
Can the down payment come from my RSP?
Yes, if you are considered a first time buyer under Revenue Canada's First Time Homebuyers Program then you can draw up to $35,000 from your RSP tax free with 15years to repay the money.
Are there any other programs for First Time Buyers?
Yes, click below for more information.
Click Here for eligibility and program details
What if I don't qualify right now?
Then we plan. Nikole will give you the info you need to attain your goal and remains a point of reference along the way. This is a huge purchase, our largest asset and debt, there is nothing wrong with some planning time.
How do brokers get paid?
The lender pays, it is based on the mortgage amount and term you take (the longer the term, the higher the pay). 1% of the mortgage amount is fair (but estimated - sometimes more, sometimes less) less brokerage fees I pay to TMG.
I keep hearing the term "Insurer"? What does this mean?
In Canada when we put less than a 20% down payment, we are required to purchase default insurance from one of the Insurers (CMHC, Sagen, Canada Guaranty). This premium is mandatory but is added into your mortgage.
What are "Servicing Ratios"
The Servicing Ratios determine the amount of mortgage you qualify for. There are 2 and both need to be under their maximum.
Gross Debt Service (GDS)
Shows home affordability (home costs/income)
Total Debt Service (TDS)
Shows home and debt affordability (home and debt costs/income)
What are my maximum ratios?
It depends on credit rating, down payment and sometimes on the program you need.
What is the "Stress Test Rate"?
In September 2016 the Government began implementing a "benchmark rate aka stress test rate". This rate is higher than the actual rate you will receive from the lender and is used only to qualify.