Pamela Vasiliu
Sales Representative
pvasiliu@remax.net

RE/MAX Professionals Inc.
Brokerage
Independently owned and operated.

Date: Friday June the 22nd, 2018 
416-236-1241

 

   

Buyer Tips - Junction Triangle, High Park, West Toronto News and info.

November 28, 2012 - Updated: November 28, 2012

 

Welcome buyers, I have put together some helpful information to assist you with your buying process.

Mortgages Made Easy:

Mortgages can be overwhelming,  the following information will help clarify the process....

The first step before you begin shopping for a home, I highly recommend that you receive a mortgage pre-approval, this not only makes you aware of your budget, but also locks in your interest rate for 60-120 days (depending on which lender you’re dealing with)

Now that you have your pre-approval, you now have a good idea of what you can afford. Things you need to know.

  • The minimum down payment needed is 5% of your purchase price……….so start saving!
  • ie. Purchase price $300,000 down payment $15,000 ($300,000 x 5%)
  • Our government requires for lenders to insure any mortgages with less than a 20% down payment, called a High Ratio Mortgage, either through CMHC (Canada Mortgage and Housing Corporation, run by the government) or Genworth
  • Unfortunately this is not done for free, because like we all know, nothing comes for free, the Buyer will have to pay a premium, which will all depend on how much down payment you have and whether you’re self employed or a salaried employee, but let’s save that discussion for another day as it complicates matters and we are trying to keep it simple!
  • You’re probably asking yourself right now, “Where am I going to come up with this extra money?” Well that’s been thought of too, it gets added onto your mortgage loan so that you don’t need to pay for it upfront, thank god!
  • Now that you have found your dream home/condo and put in an offer, conditional on financing, you require a firm approval, which will consist of your income, credit score, current debt (included in your pre-approval) and now the actual property that you will be mortgaging
  • Once the firm approval is complete, you will be required to sign a mortgage commitment which outlines your terms, rate, mortgage payments, etc……..Congratulations now you have joined/rejoined the rest of the world in home/condo ownership!!!

Mortgage ABC’s:

We are going to go over some mortgage terminology so that when talking to your friends/family, you can throw around some big words and sound like you know what you’re talking about:

  • Amortization: this just means how many years it will take you to pay off your mortgage completely, the longest time the bank will allow you to take is 25 years (new rule), unless you have a down payment of 20% or more
  • Term: is the amount of time your mortgage commitment/contract is in effect before it’s up for renewal, most people take a 5 year term……this is not to be confused with amortization
  • Rates: you have a few options when it comes to mortgage rates, there is no right or wrong answer here, it just depends on your personal preference
  • Variable Rate: main thing to understand here is that the rate can change during the term of the mortgage depending on various factors:
  • Prime: it’s an interest rate set by the Bank of Canada, if prime goes up or down, so will your rate…..Your bank: will take prime and either put a markup or markdown on it…..ie. Prime plus or minus
  • Fixed Rate: main thing to understand here is that this rate will NEVER change during the term of your mortgage, no matter what the prime rate is and what the banks mark up or mark down is
  • Closed Mortgage: according to the banks, a closed mortgage DOES NOT allow you to break your mortgage/pay it off during your mortgage term, without paying a penalty, which is either IRD (Interest Rate Differential) or 3 months interest, whichever is higher
  • Open Mortgage: again, according to the banks, an open mortgage DOES allow you to break your mortgage/pay it off during your mortgage term and not pay a penalty, although your interest rate is usually a bit higher than a closed mortgage

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