Six Steps to Success

Step 1 - Determine How Much House You Can Afford

Mortgage Prequalification
This is a fast and very simple but important step in the process. A banker or mortgage broker can talk to you over the phone or meet with you and discuss your financial situation and then calculate the maximum price home that you can purchase based on your income, other debts and available down payment. This is called Mortgage Pre-Qualification. There is no cost and no commitment. You can also do this using our online calculator which, based on your answers about your income, debts and down payment amount will tell you the maximum price house you could purchase. This method does not however take in to consideration your credit history which may increase or decrease the amount you can borrow. Getting prequalified will help you focus on the houses which you can afford.

Mortgage Pre-Approval
The Mortgage –Preapproval is different than pre-qualification in that you actually go through the application process and the bank or mortgage broker checks your credit history and verifies your income and debt information. When this process is completed you will receive a Pre-approval Letter which is a commitment from the lender that they will lend you the money to buy a house. You can now go house hunting with the confidence that you financing is in place. This can be a tremendous advantage when making an offer on a house.

Step 2- House Hunting

Internet
These days the majority of home buyers start their search for a home on the internet. This is a great way to narrow down your choice of cities and neighbourhoods and start to understand what houses are selling for in those areas. Our experience tells us that the average buyer may spend 3 or 4 months looking on the internet before venturing out to actiually look at houses.

Open Houses
Open houses are a great way to visit some houses on your own. You will be able to see several houses in a short period of time and start to get a feeling for the house style and the features which are most appealing and important to you. In addition you will get the opportunity to meet some Realtors® and get a feel for their different styles.

Use A Realtor 
When buying a home our services are generally free. We get paid by the seller’s Realtor® out of the commission the sellers pay him/her to sell their home. This is called the commission split. It’s a great deal for the buyer in that they get the benefits of professional representation at no charge.

Step 3 - Make an Offer

Once you have found that dream home, we can guide you through the process of making an offer. We will help you determine a fair price to offer by doing a Market Analysis of homes in the area that have recently sold or are currently up for sale. We will then write up the offer documents with all of the terms and conditions we feel are needed to protect your best interests and ensure you are getting the best deal possible.
Most offers have one or more conditions which must be met before it becomes firm and binding on all parties. Here are some of the most common conditions that are put in offers:

• Offer is conditional on the Buyer being able to get a mortgage on the property
• Offer is conditional on the Buyer have a home inspector inspect the property and the Buyers being satisfied with the results of the inspection
• Offer is conditional on the Buyer selling their house by a certain date
• Offer is conditional on the Buyer being able to get appropriate insurance on the property

 We will then present the offer to the sellers and their Realtor® and negotiate on your behalf. Of course you will be involved in all of the decision making, but we will represent you at the negotiating table. All going well we will be able to satisfy everyone’s needs and we will end up with an accepted offer.
If the offer was unconditional then it moves on to the lawyers. If it is a conditional offer the buyer and seller need to go to work on satisfying the conditions. For example, getting approval for a mortgage on the property or having the home inspection done.

Mortgage Approval
If you went through Mortgage Pre-Approval then usually you only need to provide you bank or mortgage broker with a copy of the offer and the MLS listing  and they will begin the process of creating the mortgage and advancing the money to your lawyer to close the deal. If you have not gone through Pre-Approval you will need to see your bank or mortgage broker to apply for a mortgage. The bank may require an appraisal to be done. This is typically paid for by the Buyer and costs $185 to $300 depending on the property.

Step 4 - Inspections

An inspection by a qualified home inspector is always recommended in order to ensure that there are no unforeseen problems with the home. Once your offer has been accepted by the sellers we will arrange to have a home inspection completed. The usual cost is between $300 and $400. Other inspections may be recommended if there is a pool, for example, or if the house has non-standard features or mechanical systems.

Step 5 - Waiving Conditions

Once all of the conditions have been satisfied we will have waivers signed by the buyer and the deal becomes firm and binding on all parties.

Lawyers
The deal then proceeds to the lawyers.  The lawyers  will do their work and arrange all the documents, title searches etc. They will coordinate with your lender to get the funds advanced and close the transaction. A week or so prior to closing you will meet with the lawyer to sign all the documents. At this time you will give your lawyer a cheque for the amount of your downpayment plus his fees and disbursements.

Legal fees for a purchase generally are about $1200 which includes Title Insurance.

Step 6 - Closing Day

On Closing Day the lawyers will excchange documents and ensure that everything is in order. Title to the property will be transferred in the Land Registry Office . Once this is complete you will be able to pick up the keys to your new home and move in!!!

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RRSP Home Buyer's Plan

The federal Home Buyers Plan was originally promoted as a way the federal government could support home ownership. The plan was launched in 1992, and since then more than 700,000 homes have been purchased by first time home buyers using their RRSP investments.

Under terms of the Home Buyers Plan (sometimes known as the RRSP program) participants in a home buying agreement can borrow up to $20,000 from their RRSP to use in the purchase of a principle residence in Canada. Funds on deposit in an RRSP for a minimum of 90 days qualify under the plan. Almost every type of property qualifies, including a duplex, triplex, condominium, co-op, co-ownership, and mobile homes.

Because there are usually two participants involved in the purchase of each home, there can be a maximum of $40,000 available from individual RRSPs that can be used. If one spouse or partner has owned a home, but not the other, then the previous owner would not qualify and only one could apply for the Home Buyers Plan.

Individuals have 15 years to repay the RRSP withdrawal without penalty. This means 1/15th of what's borrowed is due each year, over a 15-year span (for example on a $7,500 withdrawal, that's $500 annually). Repayments can start sooner, and penalty-free prepayments are also allowed.

Club 21 Rewards

We have put together a unique package of rewards to help our clients save thousands of dollars on the purchase of their new home.

Cash Back - A unique program offered exclusively by Jeff and Debi for clients who purchase a home through us. Receive up to 1/2% of the purchase price of your new home on closing to assist you with your home purchase. Use it to help with the closing costs or to furnish your new home or anything else your heart desires!

Commercial pricing on furniture and appliances. Savings vary depending on the products you buy, but there is no limit to how much you can buy. Buy one item or a whole house full. It's up to you.

That new home you just bought just might need a fresh coat of paint! Have we got a deal for you. 25% off ICI Paint Products. Available at 150 stores.

5% discount on garbage removal services. Get rid of all that junk before you move.

Discounts on storage containers. These can be stored at your home or off-site in a secure PODS Storage Center.

$100 off the purchase of a new Protection Package. 2 months free monitoring.

* cashback amount is based on a percentage of commsion we receive

Mortgages and Financing

Conventional or CMHC/Genworth Mortgages

If you are buying a home and are borrowing more than 80% of the home's value, the mortgage must be insured. This insurance protects the Lender against borrower default, and enables them to give you mortgage financing for the purchase of a home with as little as a 5% down payment. Mortgage default insurance can make a big difference in how quickly your mortgage loan is approved. The loan premium is directly related to risk, higher the risk, higher the premium – see chart below.

Loan-to-Value Premium

Table of CMHC Mortgage Loan Insurance Premiums
Loan Size (% of Lending Value)	Single Advance Premium (% of Loan)
Up to and including 80%	1.00%
Up to and including 85%	1.75%
Up to and including 90%	2.00%
Up to and including 95% Traditional Down Payment Flex Down	2.75% 2.90%

 

What do all these numbers mean? Example if you are buying a property at a value of $100,000 and you are putting down 5% ($5,000) then your premium would be $2,612.50 ($95,000 x 2.75%) and this insurance premium will be added to your mortgage. This would make your mortgage $97,612.50. Using the same example and putting down $15,000 your insurance premium would be $1,487.50.

New Purchases or Refinancing your Existing Mortgage

The process is basically the same. Sometimes it is best to blend your existing mortgage commitment with your new mortgage request. Other times it is better to break the mortgage. If that is not enough choices sometimes it is better to do a second mortgage behind the existing mortgage. As your mortgage consultant it would be my job to calculate the mathematical options and present them to you.

Pre-approval

Not every pre-approval is the same. For a pre-approval to be worth the paper it is written on you must make sure that a credit bureau has been done, that your employment has been fully reviewed and your down payment has been discussed in detail.

Once you have a good pre-approval you can negotiate your purchase with much more confidence and possibly eliminate the need for a financial condition on your offer. You want to make your offer as strong as possible to make it the winning offer.

Zero Down Mortgages

Yes they do exist and there is a market for them. However, as usual there is no such thing as a free lunch. Zero Down mortgages are typically 1 ½ % higher than “the best” 5 year rate. Now don’t run, the increase in rate is a cost worth paying if your other option is to wait till you have the minimum down payment (5%) to buy. Typically by the time you have saved the funds needed the housing market has increased equal to or greater than the cost of the higher interest rate. Keep in mind if you are renting you are basically paying 100% interest so anything less than 100% is a good rate.

Mortgages for the Self Employed and/or Contract Employees

In a nut shell self employed can be mortgaged but the options of what and how are too many to list here. As a self employed you know the hurdles of borrowing money. My job is to make it easier for you. Some self employed can be viewed by the lenders as the typical client others need specialized products. Lenders even have mortgages for the self employed that do not have their income taxes up-to-date. The rule of thumb on self employed is the more you can give them (clean credit / Notice of Assessments / larger down payments / down payments from own source vs. gift down payments) the lower your rate will be. In closing this subject I want you to remember that as a fellow self employed I understand that we like to make our “taxable” income as low as possible to avoid excess taxes paid. Sometime you have to pay a greater rate on your mortgage because of your lower taxable income. If you were to show a higher taxable income you would pay more income tax. Typically this income tax cost would be considerably larger that the increase cost in the mortgage interest rate. You can not have your cake and eat it too.

Credit Impaired

They say time heals all wounds. This is important in the world of credit. How much damage was done to your credit? How much time has passed? Have you obtained any credit since your trouble? How much of a down payment do you have? These are some of the questions that need to be answered. A mortgage consultant (like me) can help you over these hurdles. Remember we only get paid if you get a mortgage so our incentive to find you money is high.

Recreational – Cottage Mortgages

For those of us that have not been blessed with a family cottage, let’s mortgage our own. Lenders over the past few years have started to warm up to cottage mortgages. How much the lender will let you borrow will depend on a few things. The highest a lender will go is 85% of the purchase price or appraised value (which ever is lower). For this you need good credit and the property has to be in a marketable area. Lenders are looking at the area that the cottage is located, whether it is winterized and if it has road access. Cottage mortgage rates are typically 1% higher than the best 5 year rates. Rates are based on risk. The property is the banks security and a remote property away from city fire/police departments are considered a higher risk than your principal residence. Even the best client will pay more for a recreational property than his/her principal residence.

Investment / Rental Mortgages

Have you ever wanted to be a landlord? Are you kids going to university and you have found that the cost of a residence is out of this world? Why not buy a house and rent the extra space out to cover the mortgage cost? Lenders look at you as well as at the property you are looking to buy. Does the rental income cover the cost of the mortgage? Is the property up to fire code? How many units does it have? Are all the units “legal” units? Rates and condition vary on rental mortgages but something to keep in mind – if you exceed 6 units you will be viewed as a commercial unit and the rules and cost are greater.

New Canadians

Well you would be glad to know that lenders have a product for you. If you have relocated to Canada within the last 24 months. If you have a minimum of 3 months of full time employment in Canada – this can be waived if you are transferred under a corporate relocation program. If you have a valid work visa or landed immigrated status. You will require an international credit bureau but you too can be financed up to 95% of your purchase.

The following are the highlights of the proposed 2009 Federal Budget

Home Renovation Tax Credit

To stimulate economic growth and encourage Canadians to invest in improvements to their homes, Budget 2009 proposes to introduce a temporary Home Renovation Tax Credit (HRTC). The HRTC will provide meaningful tax relief to help Canadian homeowners make improvements to their property while promoting broad-based economic activity. The design elements of the HRTC are described below.

Design of the Credit
Individuals will be able to claim a 15-per-cent non-refundable tax credit for eligible expenditures made in respect of eligible dwellings.
The credit will apply to expenditures in excess of $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%).

Eligibility Period
The credit will apply only to the 2009 taxation year. Expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, will be eligible for the credit. The credit will, however, not be available in respect of expenditures for work performed or goods acquired in that period if the expenditure is made pursuant to an agreement entered into before January 28, 2009. Individuals may claim this credit (including in respect of expenditures made in January 2010) in their 2009 income tax returns.

Eligible Individuals
Eligibility for the HRTC will be family-based. For this purpose, a family will generally be considered to consist of an individual, and where applicable, the individual’s spouse or common-law partner, and their children who were, throughout 2009, under the age of 18 years.
Family members will be subject to a single limit based on their pooled expenditures.
While it is anticipated that in most cases one family member will claim the whole of the credit, any unused portion may be claimed by one or more of the other family members as a credit against that person’s tax otherwise payable.
Two or more families that share ownership of an eligible dwelling will each be eligible for their own credit. Each family’s credit will be determined by their respective eligible expenditures in excess of $1,000, but not more than $10,000.

Eligible Dwellings
Individuals will be able to claim the HRTC on eligible expenditures made at any time after January 27, 2009 and before February 1, 2010 in respect of dwellings that are eligible at any time during that period to be their principal residence or that of one or more of their other family members under the existing tax law.
In general, a housing unit is considered to be eligible to be an individual’s principal residence where it is owned by the individual and ordinarily inhabited by the individual, the individual’s spouse or common-law partner or their children.
In the case of condominiums and co-operative housing corporations, the credit will be available for eligible expenditures incurred to renovate the unit that is eligible to be the individual’s principal residence as well as the individual’s share of the cost of eligible expenditures incurred in respect of common areas.
Individuals who earn business or rental income from part of their principal residence will be allowed to claim the credit for the full amount of expenditures made in respect of the personal-use areas of the residence. For expenditures made in respect of common areas or that benefit the housing unit as a whole (such as re-shingling a roof), the administrative practices ordinarily followed by the Canada Revenue Agency (CRA) to determine how business or rental income and expenditures are allocated as between personal use and income-earning use will apply in establishing the amount qualifying for the credit.

Eligible Expenditures
Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling) provided that the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
The following expenditures will not be eligible for the credit:

• The cost of routine repairs and maintenance normally performed on an annual or more frequent basis.
• Expenditures for appliances and audio-visual electronics.
• Financing costs associated with a renovation (e.g. mortgage interest costs).

Alterations or other items, such as furniture or draperies, and other indirect expenditures for items that retain a value independent of the renovation, such as the purchase of construction equipment (e.g. tools) will not be considered integral to the dwelling and therefore will not qualify for the credit.
The HRTC will not be reduced by any other tax credits or grants to which a taxpayer is entitled under other government programs. For instance, in the case of an individual who makes an eligible expenditure that also qualifies for the Medical Expense Tax Credit (METC), the individual will be permitted to claim both the HRTC and the METC in respect of that expenditure.
Expenditures will not be eligible if the related goods or services are provided by a person not dealing at arm’s length with the individual, unless that person is registered for Goods and Services Tax/Harmonized Sales Tax purposes under the Excise Tax Act. Any eligible expenditure claimed for the HRTC must be supported by receipts.

RRSPHome Buyers’ Plan

The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw amounts from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. Budget 2009 proposes to increase the HBP withdrawal limit to $25,000 from $20,000.
For HBP purposes, an individual is generally considered to be a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year in which the HBP withdrawal is made or in any of the four preceding calendar years. Special rules apply to facilitate the acquisition of a home that is more accessible or better suited for the personal needs and care of an individual who is eligible for the disability tax credit, even if the first-time home-buyer requirement is not met. These rules will also be modified to provide the same $25,000 withdrawal limit.
Withdrawn funds must generally be used to acquire a home before October of the year following the year of withdrawal. Amounts withdrawn under the HBP are repayable in instalments over a period not exceeding 15 years. To the extent that a scheduled repayment for a year is not made, it is added to the participant’s income for the year. A special rule denies an RRSP deduction for contributions withdrawn under the HBP within 90 days of being contributed.
This increase in the HBP withdrawal limit will apply to the 2009 and subsequent calendar years in respect of withdrawals made after January 27, 2009.

First-Time Home Buyers’ Tax Credit

Budget 2009 proposes to introduce a new non-refundable tax credit based on an amount of $5,000 for first-time home buyers who acquire a qualifying home after January 27, 2009 (i.e. the closing is after that date). The credit for a taxation year will be calculated by reference to the lowest personal income tax rate for the year and is claimable for the taxation year in which the home is acquired.
An individual will be considered a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years. A qualifying home is one that is currently eligible for the Home Buyers’ Plan that the individual or individual’s spouse or common-law partner intends to occupy as the principal place of residence not later than one year after its acquisition.
Budget 2009 also proposes that the credit be available for certain acquisitions of a home by or for the benefit of an individual who is eligible for the disability tax credit (DTC). In particular, the credit will be available in respect of a home acquired after January 27, 2009 (i.e. the closing is after that date) by an individual who is eligible for the DTC, or by an individual for the benefit of a related individual who is DTC-eligible, if the home is acquired to enable the DTC-eligible individual to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.
For the purpose of this credit, a "DTC–eligible" individual is an individual in respect of whom an amount is deductible under the DTC for the taxation year in which the agreement to acquire the home is entered into, or would be deductible if costs for an attendant or care in a nursing home were not claimed for Medical Expense Tax Credit purposes by or on behalf of that person. Where the home is acquired by or for the benefit of a DTC-eligible individual, the home must be intended to be the principal place of residence of that individual no later than one year after its acquisition.
The credit may be claimed by the individual who acquires the home or by that individual’s spouse or common-law partner. For the purpose of this credit, a home is considered to be acquired by an individual only if the individual’s interest in the home is registered in accordance with the applicable land registration system.
Any unused portion of an individual’s First-Time Home Buyers’ Tax Credit may be claimed by the individual’s spouse or common-law partner. Where more than one individual is entitled to the First-Time Home Buyers’ Tax Credit (for example, where two individuals jointly buy a home), the total amount of the credits claimable for the year by those individuals shall not exceed the maximum amount of the credit that would be claimable for the year by any one of those individuals.