Getting a mortgage can be a confusing, so we’ve developed these guides as a simple step by step resource that will help you through the process of buying or refinancing your home.
The Simple Guide to Buying a Home
This is a brief summary of the steps in buying a home. You can start the process now by taking 5 minutes to complete our online application. For further detailed information you can contact Your Mortgage Source.
Obtaining a pre-approval with Your Mortgage Source gives you peace of mind and helps to ensure that you shop for a home in the right price range. This will give you the best chance of obtaining an approval for the home that you want to buy. Start now by taking 5 minutes to complete our online application.
Once you have a pre-approval you can begin the search for a home. Using a realtor will save you a lot of time as they will be able to narrow down your search within the criteria you are looking for. Some of your criteria may include: price, house size, lot size & type, location in relation to schools, work & shopping, etc.
Once you have found the home you want, you can begin the negotiating process by making an offer. Your realtor will give you guidance on any subjects you may want to include in the offer. Even though you have a mortgage pre-approval from our team, you will still want to make the offer subject to financing as all lenders will only give you a final approval once you have selected the property and submitted all of the required documentation to them. Once you and the seller have agreed on the price & terms you can then move on to Step #4.
After your offer has been accepted by the seller you will need to satisfy all of the conditions that the lender has placed on the approval. Some of these may include: appraisal on the property, income confirmation, etc. Your Mortgage Source will work closely with you during this time to make sure all conditions are met so your approval is in place in a timely fashion.
Once you have a firm approval from the Lender and have satisfied all of the other conditions that you placed on your offer you can remove the subjects. This means that the contract becomes firm and binding. At this time, your realtor will require a deposit.
After you have removed subjects you should contact your lawyer/notary and provide them with a copy of your firm contract. At some point after you remove subjects & satisfy all lender conditions, the lender will then send mortgage documents to the lawyer. In the meantime, you will need to book an appointment with your lawyer to sign the legal documents for the purchase and mortgage.
Your lender may require that you attend their office to sign documents. In addition to this, all clients will need to attend the office of their lawyer/notary to sign the legal documents for the mortgage. One important thing you will need at this time is to obtain an insurance policy for the home. All lenders will require that you have insurance in place for the replacement cost of the building.
Your lawyer/notary will require full payment for items outstanding in the form of a draft no later than the morning which your deal will complete. Items which require payment include: property purchase tax (if applicable), HST (if applicable), legal fees, down payment, etc.
You will take ownership of your home on the completion date of your contract. The possession date is when you have the right to move in and is usually two days after the completion date.
Guide to Closing Costs for a Real Estate Purchase
This is a brief summary of the costs involved in a real estate purchase. You can start the process now by taking 5 minutes to complete our online application. For further detailed information you can contact Your Mortgage Source.
If you are obtaining conventional mortgage financing (financing 80% of the value of the property or less) you will need an appraisal on your property to verify its value. In most cases, an appraisal will cost you between $250 to $400 for a residential property. There are some instances where a lender is able to use an automated system to determine the value of the property which will reduce the cost for you. The larger the property, the more an appraisal will cost. For commercial appraisals, the cost is usually a minimum of $2000.
This is simply the amount of equity you will be putting towards the purchase of the property.
When you write an offer on a property generally it will contain subjects that you wish to satisfy prior to entering into a fully binding contract. Once you remove all of the subjects, you will be required to submit a deposit to your realtor. This deposit will usually be offset against the total down payment required.
If you are purchasing bare land or a brand new home you will be required to pay the GST tax on the purchase price. In most cases, when you are constructing a home you will be able to apply for a GST rebate so that you only end up paying part of the GST once your home is constructed. You should speak to an accountant for further advice in this area.
If you finance more than 80% of the value of your property your mortgage is called a high ratio mortgage. In this case there is greater risk to the bank and they are required to get the mortgage insured against default. In Canada, the two main insurers are CMHC & Genworth. The insurance premium you are charged may be added on to your mortgage. This premium varies depending on how much is financed and the purpose of financing.
When purchasing a home it is an excellent idea to get an inspection done on the property. The inspection will highlight any major problems with the home before you actually purchase property. The cost of an inspection ranges from $300 – $500 for the standard home.
You will need a lawyer or notary to register a mortgage over the property. Generally, on a purchase you will pay $750 – $1000 for this work to be completed. The cost for legal work on commercial deals varies greatly. It is usually a minimum of $1500 and depends largely on the complexity of the transaction.
On most standard financing you will pay no fees for your mortgage. However, if you obtain financing from a “B” or “Sub-Prime” lender they will generally charge an application fee in the range of 1% – 5%.
Using Your Mortgage Source for mortgage brokerage services will cost you nothing in most cases. In 99.9% of the situations we are paid by the lender and therefore do not charge our clients a fee. There is the odd exception to this. In the purchase of a commercial property we do charge a fee as we do not get paid by the lender for commercial financing. You may also be responsible for broker fees on a construction mortgage in some cases.
In general, when you buy a property, you will pay a tax for purchasing the property. The tax is 1% on the first $200,000 and 2% on the remainder over that. Therefore on a $500,000 property you will pay $2000 plus $6000 for a total of $8000. You may get an exemption on paying this tax if you are a first time home buyer. The exemption usually occurs if your purchase price is less than $500,000 and you purchase a property in British Columbia. If the purchase price is between $500,000 and $525,000 there is a proportionate exemption and if the price is over $525,000 there is no exemption. Any questions regarding an exemption to this tax should be referred to your lawyer or notary.
A real estate agent will assist you in buying a property with the specifications that you want. Generally, he/she will charge you no fee when you are using their services to purchase a property. They will receive payment from the person selling the property.
Most lenders require a survey on the property they hold a mortgage on. The survey shows where the house sits in relation to the property boundaries. This helps the lender to ensure that the building is located within its proper boundaries so that there are no issues with its security having to be moved. A survey on a residential property will usually cost between $300 – $400. In lieu of a survey, your lawyer/notary can also obtain a title insurance policy. Title Insurance protects the lender in case there are any boundary issues with the property. Title insurance usually ranges between $200 – $300 in cost.
First Time Home Buyers Guide – Property Purchase Tax
This guide from Canada Revenue Agency gives you information on how first time home buyers can obtain an exemption from paying the property purchase tax.
E&OE. All mortgages are subject to credit approval. All costs associated with a real estate purchase or refinance are the sole responsibility of the client. We assume no responsibility for the contents contained herein and encourage all clients to obtain their own independent advice from outside professionals. All costs are estimates and will vary with each transaction and are subject to change.
