28 Sep

WHAT IS THE DIFFERENCE BETWEEN A MORTGAGE BROKER AND A MORTGAGE SPECIALIST

General

Posted by: Mike Hattim

With the importance of real estate in Canada, it is vital to understand how the various professionals in the sector operate when buying a home.

Sooooooo… what is the difference between a Mortgage Specialist & a Mortgage Broker? At the surface they sound the same
• They both arrange mortgages
• They both can offer advice and help you select a mortgage, right?

WRONG!!! There are many differences… Let’s check some of them out!

• A Mortgage Broker works for you! Their role is to act as a link between you and the lenders so that you do not have to spend your valuable time learning about mortgages and shopping around for the perfect mortgage. Mortgage brokers do the legwork and negotiate on your behalf for lenders. They are your point of contact for everything related to your financing your home.
o Bank specialists are employed and paid by the bank and work on the bank’s behalf.

• A Mortgage Broker can work with many different lenders across Canada, rather than working for one financial institution. Therefore, Mortgage Brokers can offer you more choices with competitive rates and terms including: Big banks, Credit Unions, Trust Companies, Monoline Lenders (broker only banks) and private lenders.
o Usually Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners could end up with a higher interest rate than other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you.

• A Broker must successfully complete a Provincially regulated Mortgage Broker course and exam. (In BC, Mortgage Brokers must be licensed by FICOM) They continue to maintain their good status to keep that license by taking professional development education courses.
o Bank specialists are not licensed and require no formal training. There are no standards for educational requirements (although most Lenders do provide some in-house training).

• Because Mortgage Brokers don’t work for a specific lender, you get impartial advice about a variety of lenders
o A bank specialist can only offer their own institutions products, good or bad.
o Specialists don’t have access to other lenders, so they won’t recommend another lender’s product offerings.

• Mortgage Brokers use their knowledge and experience to negotiate the best possible terms and rates for you from a variety of lenders, based on the best fit for your situation.
o When you see a bank specialist, the mortgage negotiating is typically left up to you.
o Will the bank specialist negotiate on your behalf or the banks?

• For conventional financing, the services of a mortgage broker are generally FREE to you. If there is a cost, you will be advised of those costs up front. Brokers get a finder’s fee from the lender once they place your mortgage. Therefore, brokers are motivated to get the best terms and rates for their clients.
o Bank specialists are paid by the bank
o Some banks offer bonuses if specialist gets their client to pay higher interest rates or sign up for other bank services.

• Mortgage Brokers work on a referral basis and are self employed. Most of their business is done through word of mouth referrals, therefore a Dominion Lending Centres Mortgage Broker is motivated to ensure their clients are extremely happy and satisfied to keep their business growing.
o A bank specialist is generally an employee of the bank, generating business through the bank’s existing customers.

• Most Mortgage Brokers are available for appointments outside banking hours (nights, weekends) at their client’s convenience.
o Bank specialists are generally only available during regular banking hours.

• Mortgage Brokers are focused on your mortgage
o Specialists are trained and rewarded on cross selling. Some will push you to consolidate all your banking services with them when getting a mortgage (credit cards, insurance, RRSP, lines of credit, etc.)

Would you ask Tim Hortons who makes the best coffee and expect them to say Starbucks? Not likely… So why would you ask a Mortgage Specialist who works for a bank, to tell you which Lender has the best mortgage product for your situation.

By Kelly Hudson

27 Sep

ALL ABOUT PRE-APPROVALS

General

Posted by: Mike Hattim

Are you in the market for a new home? That’s great – but if you’re not already pre-approved from your mortgage broker, be sure to read on.

Pre-approvals are very important for two reasons.

They give you confidence in knowing that a specific amount of financing is available for you.
A pre-approval can put you in a positive negotiating position against other home buyers who aren’t pre-approved.
Not all pre-approvals are the same, though. There are essentially three different kinds.

The first occurs when you meet with a mortgage professional and tell them how much you make. They’ll say something along the lines of “Great, you’re pre-approved.” The mortgage professional has only looked at your income. There is no real pre-approval.
The second kind is when a mortgage professional asks you how much you make and then pulls your credit bureau. This allows a mortgage professional to lock in your mortgage rate for up to four months. This pre-approval still isn’t a sure thing.
The third kind of pre-approval – and the one that we do – is a lot more encompassing. We get all of your papers prepared right off the bat, which allows us to eliminate any unforeseen issues with your approval. Sure, it’s more work up front – but we do this because it’s the right thing to do.
If you’d like to get a pre-approval, contact a Dominion Lending Centres mortgage professional! We’re here to help.

By Eitan Pinsky

26 Sep

MORTGAGE PROTECTION PLAN

General

Posted by: Mike Hattim

Insurance coverage is something that everyone is “pitched” at some point or another in their life. Unfortunately, a lot of us have a negative attitude towards insurance or warranty as it is perceived as being a cash grab. Yes, if you are purchasing a flat screen T.V., that extra 2-year warranty for $100 might be a little excessive. However, when it comes to covering monthly mortgage payments or the outstanding balance of your mortgage upon death or injury, yes, it is important to have.

Every single person is offered life and disability insurance when applying for a new mortgage. As a mortgage broker, it is our obligation to offer you Manulife’s Mortgage Protection Plan. Even if it is something you do not want or do not have a need for- we still require a signature confirming it was offered. Reason being, is when John Smith breaks his foot two years down the road and can’t work to cover his mortgage payments, Manulife needs to confirm that the client passed on the opportunity to have their payments covered.

Now, is Manulife’s mortgage Protection Plan, or, MPP as it is known, the most comprehensive coverage out there? No.

Is MPP better than any coverage you are ever going to receive from a bank directly? Yes.

Manulife’s MPP is a 60-day money back guarantee, with coverage that follows you lender to lender. It will cover disability injuries preventing you from work, and is underwritten before your coverage begins, not when a claim is made.

Most banks do not allow you to take their mortgage insurance to another lender. So, if after 10-years of paying your premiums you decide to leave your bank and go to a credit union, your coverage is no longer in affect and all that money you spent on your monthly premiums is now worth nothing. Scariest part about bank coverage, is the health evaluation is done when a claim is made, not when you sign up. Can you imagine not making a claim for 20-years and then being declined on coverage because you have developed health issues not relevant when you signed up in your 20’s?

If Manulife Mortgage Protection Plan is not for you, there are insurance brokers out there we have access to who can offer alternative solutions. The biggest thing though is to make sure you have SOME coverage, because you won’t know you need it until you do. If you have any questions, contact a Dominion Lending Centres mortgage professional for help.

By Ryan Oake

25 Sep

IS YOUR LINE OF CREDIT KILLING YOUR MORTGAGE APPLICATION?

General

Posted by: Mike Hattim

Some of the last round of changes from the government regarding qualifying for a mortgage were that if you have a balance on your unsecured line of credit, then to qualify for mortgage the lenders require that we use a 3% payment of the balance of the line of credit.

Simple math is, if you owe $10,000 we have to use $300 as your monthly payment regardless of what the bank requires as a minimum. Given that the banks hand out lines of credit on a regular basis it is not uncommon for us to see $50,000 lines of credit with balances in the $40,000 range. That amount then means we have to use $1,200 a month as a payment even though the bank may require considerably less.

So what if it is a secured line of credit? Again we have clients telling us that they don’t have a mortgage only to realize they do have a Home Equity Line of Credit (HELOC). A home equity line of credit by all definition is a loan secured by property, the actual definition of a mortgage.

Again, it’s something the bank will require little more than interest payment on because it is secured. The calculation here can also upset the calculation for your next mortgage, as what is required by many lenders is to take the balance of the HELOC. Let’s say the balance is $200,000 and you convert it to a mortgage at the bench mark rate, which today is 5.34% with a 25-year amortization. That without any fees today is equal to $1202.22 per month, so what in the client’s mind may be a $400 or $500 dollar interest payment for the purpose of qualifying will be almost three times higher.

This one change to supposedly safe guard the Canadian consumer has lately been the thing we have seen stop more mortgages than just about anything else. If you have any question, contact a Dominion Lending Centres mortgage professional for answers.

By Len Lane

24 Sep

5 TIPS ON HOW TO GET OUT OF DEBT AND INTO YOUR OWN HOME

General

Posted by: Mike Hattim

To get out of debt, you need a plan and you need to execute that plan. That’s why I’ve created this simple, five-step, get-out-of-debt checklist that can help you leave that financial burden behind you.

As you work on your plan, you’ll need to make all necessary adjustments to your budget along the way so you don’t overspend and slide back into debt. Plus, if you don’t have an emergency fund, consider setting some money aside in savings beforehand.

Keep this checklist someplace where you’ll see it often (like your refrigerator door ), and make it your goal to check a task off the list each day (or each week), depending on how quickly you want to become debt-free.

1- Make a list
Take all your bills and put them in a chart that includes: the name of creditor, interest rate, balance, minimum monthly payment. Figure out how long it will take you to pay the balance down to zero. Many credit card statements now feature this.

2. Lower your rates
This is easier than you think. Call up each of your credit card companies starting with the ones with the highest interest rates and ASK them to lower your interest rate. You can tell them that other credit cards are offering lower rates and you wanted to let them keep your business. They won’t give you an answer on the phone but you should receive a letter with a new lower rate within a couple of weeks. Another possible solution is a balance transfer. Often a credit card company will allow you to transfer your balance from another card to theirs and they charge you 0% for 6 months. They assume that you will see zero being added and will spend more. Show them that you are disciplined and keep paying the balance down as if it was still at 19%. Consider getting a debt consolidation loan. If you have a home with equity you can often get a very good rate and clear up all your debts. Often you can get these loans at considerably less than your credit cards. Once again, keep your monthly payments up as if you were still paying a credit card of 19% interest and your balance will go down quickly.
Next contact your car loan company. If you have been paying your loan on time they may lower your rates. Now you are ready to tackle the utility companies. In Alberta the gas/electric companies really want your business. You can often get a better rate just by threatening to switch. This also works with cellphone companies. They often have better plans than the one you are on but will only offer it when you say you are going to leave.

3. Get your Number
What is the amount you need to pay off all your debts? Now that you have a number in mind you can set a goal. Can you pay this off in six months? 12 months? two years?
Get your credit score number. How much does it have to improve before you can qualify to buy a house? Check with your Dominion Lending Centres mortgage broker for help getting this.

4. Make a plan
What will be your target debt? Is it the credit card balance with the highest interest rate? The lowest balance? Set a short term goal to pay one card off in a manageable amount of time. One down and three to go sounds better than tackling all the debt at once. Pay each debt off one by one. Does your community library offer debt counselling financing planning courses? Consider signing up for one.

5 – Monitor your progress
How quickly are the debts coming down? Is your credit score going up? It should if the debts are coming down.
Do you have to adjust your plan to make your deadlines? Don’t be discouraged. Large companies make plans and set budgets and then adjust them quarterly based on how the previous three months performance was.
Stick with your plan and if you show some self-discipline you can achieve your goals in time. Finally, tell your local Dominion Lending Centres mortgage broker what your goal is and what your timeline is. They will be happy to help you along the way. Nothing makes them happier than to tell people like you that they are approved for home financing.

By David Cooke

21 Sep

RENT, OWN, OR DO BOTH?

General

Posted by: Mike Hattim

There are generally three different situations you can find yourself in when it comes to living situations; living with parents, renting, or owning.

A lot of the times the first decision someone will need to make is whether they buy a home to live in, buy a home to rent to someone else, or buy a home to live in while also renting out a portion of it. There are lots of pro’s and con’s to both. Below are some of the numbers and things to consider when looking at each of them.

Buying with The Intention to Rent
Buying a property for the purposes of renting it out to someone else comes with different qualifying criteria and different mortgage product options. The following are some of the important points to consider:

The minimum down payment required is 20% of the property price and this down payment must be from your own savings. It cannot be gifted from someone else.
Only a portion of the rental income can be used for the qualifying of how much of a mortgage you can afford to borrow. Some lenders only use 50% of the income and add it to yours. Others may look at taking 80% of the rental income and subtracting your expenses which can have a much higher impact on how much you can afford.
Interest rates usually have a premium on them when the mortgage is for a rental property compared to a mortgage being requested for a property someone plans on living in. This premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.
The following is a typical scenario you can expect to qualify for in a rental situation:

$450,000 purchase price
$90,000 down payment (20%)
$360,000 mortgage
$1,665 monthly mortgage payment

$1,400 in monthly rental income
$66,500 a year in income
$0 month in consumer debt payments

Buying with The Intention to Own
Buying with the intention of living in the property as your primary residence is the most common and the guidelines are well known:

5% minimum down payment from own resources or from gifted funds coming from an immediate family member.
Insurance premium for having less than 20% as a down payment
Lowest interest rates available for high ration purchases of home becoming owner occupied (Loan-to-value of more than 80%)
If first time home buyers, you may be able to utilize grants and avoid property transfer taxes which you will not receive on the purchase of a rental.
The following is a typical scenario you can expect to qualify for in an owner-occupied situation:

$450,000 purchase price
$22,500 down payment (5%)
$444,600 mortgage
$2,039.63 monthly mortgage payment

$97,000 a year in income
$300 in monthly debt payments

Buying with The Intention of Both

Owner-occupied properties with a rental are really the best of both worlds. Only issue is, it needs to be a self-contained suite. Therefore, second bedrooms in town-homes or condos do not qualify. It is typically only detached homes with rental suites that are allowed but the rate premiums and minimum down payments fall under the owner-occupied side. Below is a typical scenario you could expect with this kind of purchase:

$1,000,000 purchase price
$100,000 down payment (10%)
$927,900 mortgage
$4,256 monthly mortgage payment

$1,200 in monthly rental income
$175,000 a year in income
$750 month in consumer debt payments

Please reach out to a Dominion Lending Centres mortgage professional today if you would like to discuss the different options that are available to you and whether or not any one of these scenarios could potentially work for you.

By Ryan Oake

20 Sep

A CHIP SUCCESS STORY

General

Posted by: Mike Hattim

A few years ago, I met with my Home Equity Bank representative. He was trying to encourage me to go visit my financial adviser referral partners to offer the Chip Reverse Mortgage product. I explained that I did not know anyone who had a reverse mortgage so it was hard to promote to financial advisers or anyone.

I asked him to tell me a success story and he came back with a great one that ticked most of the boxes. A couple in their mid-70s had met with a financial adviser to go over their portfolio and financial situation. They wanted to sell some of their investments to get a little cash.

What the adviser saw troubled him. The couple had about $200 a month left over after they paid for their bills and groceries. What’s more , they were driving a 20-year-old car, their home needed repairs and they hadn’t been on a vacation in years. It was a classic case of house rich, cash poor.

The adviser contacted Home Equity Bank and they appraised the house. The couple were eligible for $200,000 based on the value of their home. They took this money and the adviser invested a little more than half in funds that would provide them with $1100 a month in income. They took $25,000 and bought a new car, did some repairs to their home and took a vacation. They took the balance and used it to help out their grandchildren with university with tuition. With one move, they were able to increase their cash flow, make their home more comfortable, do repairs, enjoy their retirement and help out family.

Now that it’s fall and the spring home-buying rush is over, perhaps it’s time for you Dominion Lending Centres mortgage brokers out there to see if you can help out another segment of the population. Contact your financial adviser partners, your certified Seniors Real Estate Specialists and past clients with elderly parents. There are a lot more people out there that could use your help.

By David Cooke

19 Sep

FIRST TIME MORTGAGES: EXPECTATIONS VS. REALITY

General

Posted by: Mike Hattim

First-time homebuyers are one of our favourite clients! It’s great to work alongside them and teach them the in’s and out’s about real estate, owning a home, and helping them cross “homeownership” off their bucket list. One thing that we find though, their expectations are often not aligned with reality. We are always honest with our clients about the reality of the situation, but we thought it would be helpful to clear up a few of those “expectations”.

1. Expectation: They have enough saved for their down payment

Reality: This seems to be the first “shocking” point to many first-timers. It’s also one of the most heartbreaking ones to explain to them too. Many times, they have saved for several years and come in with what they think is a sizable down payment…but, in reality, it’s less than what is needed. They will often have their sights set on a home that is well out of their price range. They have also potentially failed to account for stress-testing measures. As a general rule of thumb, 5% is the minimum on a property with a purchase price of less than $500,000. However, 20% or more is the ideal in order to avoid your mortgage being classified as a high-ratio mortgage and require mortgage insurance.

2. Expectation: Once you have the down payment you are all set!

Reality: There are many different costs associated with moving, buying a home, and other fees that many first-time buyers may not be aware of. A few fees to consider include:

• Legal Fees
• Property Transfer Fees
• Moving Costs (moving van, moving crew)
• Appraisal fee
• Searches and Title Insurance
These will total approximately 1.5-2% of purchase price.

3. Expectation: Costs will stay the same when going from renting to owning a home.

Reality: This is not true in most cases. Many people forget to account for the day-to-day and general upkeep associated with home ownership. These can include repairs on the home, insurance, property taxes, extra utility costs, etc. This is why we always encourage first-time buyers to sit down and look at their budget and “practice” the strains and additional costs. This allows you to see if you are truly ready financially for home ownership and also alleviates stress down the road.

4.Expectation: We qualified for (blank) amount of dollars—let’s use all of it.

Reality: This is rarely a recommended or smart decision. Pick a price range that you are comfortable house shopping for that would allow you to accommodate things like home renovations, upgrades, and updates. Looking at homes that still fit your needs but may just need a little more work can significantly decrease the amount you are borrowing. If you are open to different options when house-hunting, you can save money in the long run.

These are just four examples of how a first-time mortgage holders’ expectation are rarely the reality. However, there are other areas that we find they may have questions in or not be aware of. The mortgage industry is one that is forever changing, and it can be difficult to stay on top of all of the changes! If you have a question, concern, or just want to know about what to really expect when you are going through the mortgage process, consider meeting with a Dominion Lending Centres mortgage broker.

Geoff Lee

17 Sep

7 QUESTIONS TO HELP YOU DECIDE IF YOU SHOULD PURSUE A HELOC, REFINANCE OR SECOND MORTGAGE

General

Posted by: Mike Hattim

HELOC, Refinance or Second/Third Mortgages? Which one should you choose to go with? If you have decided to tap into the equity in your home, the three can seem to be interchangeable at times and for many consumers can be a difficult decision on which one to select. We have laid out seven questions to guide you through the decision, for your unique situation. We’ve also broken this down into three categories, Equity, Payment and Availability.

PAYMENT

1. HOW WILL I RECEIVE THE MONEY?
• HELOC: Home Equity Line of Credit-withdraw as needed
• Refinance: Lump Sum
• Private Second/Third Mortgages: Lump Sum

2. WHAT IS THE INTEREST RATE?
• HELOC: Prime Rate + premium 0.5%-1.5%
• Refinance: Best fixed or variable rate (dependent on what you and your broker decide)
• Private Second/Third Mortgages: 6.95%-19.95% typically with lender/broker fees

HOW IS THE INTEREST CALCULATED?
• HELOC: interest accrues on what you withdraw from your home’s equity.
• Refinance: interest accrues on the full loan amount that was taken out.
• Private Second/Third Mortgages: interest accrues on the full loan amount that was taken out.

3. WHAT IS MY PAYMENT?
• HELOC: You pay back the interest only, however, most banks will have a minimum rule so even if your HELOC value is $0 you will still have to pay a nominal fee each month.
• Refinance: You will pay the interest, plus the principle principal loan amount.
• Private Second/Third Mortgages: You can pay interest only payment or pay the interest plus the principle principal loan amount.

EQUITY

4. HOW MUCH EQUITY DO I NEED TO HAVE IN MY HOME IN ORDER TO ACCESS IT?
• HELOC: 20% minimum
• Refinance: 20% minimum
• Private Second/Third Mortgages: 5-10% minimum

5. HOW MUCH EQUITY CAN ACCESS?
• HELOC: You can access up to 80%
• Refinance: 80% of your home’s equity is accessible
o HELOC portion can be up to 65% of your home’s equity
o Mortgage portion must be 15% – as per Bank of Canada guidelines
• Private Second/Third Mortgages: 1st mortgage + 2nd/3rd mortgages up to 95% of home value

AVAILABILITY

6. ARE THERE FEES ASSOCIATED WITH IT?
• HELOC: No fees associated with it
o At times
 Appraisal fees
 Legal fees
• Refinance: Prepayment penalty of Interest Rate Differential or 3 months interest* depends on your current mortgage terms.
o At times
 Appraisal fees
 Legal fees
• Second/Third Mortgage: There are several fees associated with a second mortgage including:
• Appraisal fees
• Legal fees
• Lenders fees
• Broker Fees

***One final note on refinancing: With the new stress-testing you will have to qualify at a higher rate and you will also have to consider that lenders can no longer insure the product… meaning there are many different rates with different lenders.

Once you answer each of these questions and review your options, you can decide which one is best suited for your needs. You can also always call a Dominion Lending Centres Mortgage Broker and discuss it. DLC brokers are well versed in each of these options and can direct you towards the best option for your situation. We’ve seen a variety of situations with our clients and have helped each of them reach their goals.

By Geoff Lee

14 Sep

DON’T FORGET THE CLOSING COSTS WHEN YOU PURCHASE A HOME

General

Posted by: Mike Hattim

The purchase price you negotiate when buying or selling a home is just one part of the total cost for buying a home. In addition to the purchase price there are several other fees – known as closing costs – all of which you need to factor in to your purchase price.

Closing costs tend to be hidden costs when buying a home. It’s not a set number, but a compilation of various administrative, legal fees and other one-time expenses associated with the purchase of a home that are due on the completion date.

These costs can add up, so you’ll need to factor these costs into your cash-on-hand budget.

Many first-time home buyers under estimate the amount of cash they will need for closing costs. Typically, you’ll want to budget between 1.5% and 4% of the purchase price of a resale home to cover closing costs.

Of course, these are estimates — the actual amount you will need could be higher or lower, depending on factors like where you live, the type of home you’re buying, or if it’s a new construction (+5% GST).

To help you plan the purchase of your property, here’s a snapshot of the extra fees you can expect to pay once you’ve settled on the price of your home.
o Legal Fees
o Title Insurance
o Fire Insurance
o Adjustments
o Property Transfer Tax (PTT)
o GST
o and more…

Here’s an overview of what you can expect.

Legal Fees: Legal/Notarial Fees and Disbursements. The lawyer/notary is the person who goes through all the paperwork and makes sure that everything is legitimate and binding. They confirm that all the items that were agreed to by the buyer, seller/builder, and lender are written and worded correctly. Your legal representative should also be able to walk you through each document that you sign so that you understand what you’re agreeing to. Legal fees range from $500 to $2,500. You will also need to reimburse them for their out-of-pocket costs that they incurred while handling the various searches and registrations, including title insurance (see below), property and execution searches, and the registration of the mortgage and deed. These disbursements are repaid to the lawyer on the closing date, as well as incidentals such as couriers, certified cheques, and photocopying, the land transfer tax, the down payment, and any interest adjustments.

Title Insurance: Title refers to the legal ownership of the property. The deed is the physical legal document that transfers the title from one person(s) to another. Both the title and deed of the home must be registered with a land registrar.

Most lenders require title insurance as a condition of granting you a mortgage. Your lawyer or notary helps you purchase this.

Title insurance protects you from title fraud, identity theft and forgery, municipal work orders, zoning violations and other property defects. It can also protect you against fees and costs that were not caught in the searches your lawyer conducted prior to the sale (Yes this can happen!).

Title insurance premiums range from $150-$500 depending on the value of the property.

Fire/Home Insurance: Mortgage lenders require that you have fire/home insurance in place by the time you complete the purchase of your home.

Property insurance protects you in case of fire, windstorms or other disasters. It covers your home’s replacement value. The amount required is at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. Home insurance can vary anywhere from $400 per year for condos to $2,000 for large homes.

Adjustments: An adjustment is a cost to you to pay the seller for the seller prepaying for something related to the house including property taxes, condo fees, heat etc. on your behalf.

Simply put, if you take possession in the middle of a month, the seller has already paid for the whole month and you must pay the seller back for what they’re not using. These adjustments are prorated based on the date you complete your purchase of the home. The most common adjustments are for property taxes, utility bills and condo fees that have been prepaid.

Property transfer tax (PTT) in British Columbia, is a tax charged to you by the province. First-time home buyers are exempt from this fee if they are purchasing a property under $500,000. All home buyers are exempt if they are purchasing a new property under $750,000.
• In British Columbia, the PTT is 1% on the first $200,000 of purchase, 2% over $200,000 & 3% on any value over $2,000,000.

GST is a federal value added tax 5% on the purchase price of a new home. If someone has lived in the home, the home isn’t subject to GST.
• There is a partial GST rebate on new properties under $450,000.

Interest Adjustment Costs: Most lenders expect the first mortgage payment one month after completing the purchase of a home. If you close mid-month, please note some lenders expect the first payment, or at least the interest accrued during that time, on the 1st day of the next month. When arranging your mortgage, ask how interest is collected to the interest adjustment date.

Other closing costs: Will your new home need furniture? Carpets? Lighting? Window coverings? Appliances? Do you have the equipment you need to maintain the lawn and gardens? Are you hiring movers or renting a truck? Will you need boxes, bubble wrap and tape for the move?

While these and other out-of-pocket costs aren’t part of the real estate transaction, you still need to budget for them. Plan your expenses as much as possible. If necessary, decide what you can put off buying until later, after you move in and get settled. If you have any questions, a Dominion Lending Centres mortgage professional can help you out.

By Kelly Hudson