Mortgage FAQ Answers to questions that come up often.[learn-more caption=”1. Why use a Mortgage Professional?”]
- Power of professional negotiating expertise.
- One stop convenience for access to numerous mortgage products.
- Unbiased knowledgeable advice.
- Access to unadvertised rates.
- Work for you, not the Bank.
- The Home Buyers Plan is a federal government program that allows homebuyers to use $25,000.00 for each purchaser from his/her own RRSP.
- You must not have owned a principal residence within the last 5 years.
- You must intend to occupy your home as a principal residence.
- Minimum repayment is 15 equal annual installments. This schedule can be accelerated.
- The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.
- You must complete a Form T1036.
- The home must be located in Canada and is to be occupied as your principal residence.
- You have from your own resources a down payment of at least 5% of the purchase price of the home.
- Your mortgage payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees (if applicable).
- You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
- You meet the lender’s eligibility requirements regarding income, employment and credit worthiness.
Closing costs are approximately 1.5% of the Purchase Price. The following are approximate costs:
- Appraisal Fee: $200.00
- CMHC FEE (if applicable): $165.00
- Survey Certificate (if applicable): $250.00
- Home Inspection $250.00
- Legal Fees (approx): $750.00
- Tax Adjustment (if applicable)
- Interest Adjustment (if applicable)
- Property Transfer Tax
- This tax is charged by the Provincial Government and is collected by your lawyer at closing.
- Each Province varies as to the amount but it is usually a percentage of the purchase price. For example in British Columbia, the amount the purchaser must pay is 1% of the first $200,000 and 2% of the balance.
- You are exempt from paying PTT in British Columbia if you have never owned a home anywhere. You must finance at least 70% of the purchase price and the maximum home price must not exceed $300,000.00.
- Job Letter – Lenders use 100% of the income. Verification is made on company letterhead, signed by appropriate individual. If you are a recent hire, the letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
- Pay Stubs – Many Lenders will also require your most recent pay stubs.
- Pay Stubs – showing year-to-date income verification.
- T4’s and/or Personal Tax Returns (T1 Generals)- 3 years to take an average.
- Notice of Assessment – (NOA) – most recent to confirm no taxes owed.
- T4’s and/or Personal Tax Returns> – 3 years to take an average.
- Job Letter – confirming position.
- Notice of Assessment (NOA) – optional depending on Lender.
- Financial Statements of Company – 3 years average of net income used. Depending on Lenders policies, The add-back of various personal expenses run through the company may or may not be allowed (eg’s of allowable addbacks – Depreciation, Amortization, CCA (Capital Cost Allowance).
- NOA’s (Personal Notice of Assessments).
- Personal Tax Returns ( T1 Generals showing personal net income).
Overtime – Will be used as long as there is a proven track record – 3 years evidence (T-4’s). Bonuses – Once again a 3 yr track record required. Part-time Job – should be in place for a couple of years before using the additional income. Tips – generally not recognized unless declared for tax purposes. Car Allowances – This varies from lender to lender. Alimony and Support – Evidence that payments have been made regularly and a copy of divorce agreement is required. Investment Income – must be received continuously. This source of income is limited to interest, dividends or some type of ongoing revenue. Capital gains, which result from the liquidation of an asset is a 1 time occurrence and can’t be used.[/learn-more]