1. Deciding your suitable type of home and ownershipDetermine what are your needs and wants and what is that you can afford. Empire Team can help you through the planning process and help you decide the home that best suits your lifestyle.
i. Consider the location
Close to work?
Close to public school, mall and other amenities?
Close to highway, bus stops, subway and etc.?
ii. Types of home
Detached, semi, duplex, high rise condo, link or townhouse?
New or resale home?
iii. Types of ownership
Freehold ownership- an individual owns the property and everything that is within. All expenses to operate and maintain the property are solely that individual’s responsibility.
Joint tenancy – one or more people own a property with equal entitlement to possession of property. If one were to die, the other will take full ownership.
Tenants in common – one or more people own different types of shares in the property and not necessarily does it have to be equal. If one were to die, the ownership will be passed on to their estate and beneficiaries.
Condo ownership- an individual will own an individual unit that is solely their responsibility, along with a share in common elements of the building with other unit owners. Common elements are maintained by its condo corporation. Condo owners will pay a monthly fee to this corporation as a share of those expenses to maintain the common elements (ex: gym, swimming pool, etc.)
Tenant shareholder in corporation- buying units in a corporation means owning a share in the corporation that owns all the co-op units. Ownership allows entitlement to a particular unit; however this does not permit them to sell without the permission of the condo corporation board of directors.
Co-ownership- a group of people join in the purchasing of a building with many units within it. The group will enter into a contract to share the building and will not be splitting property into individual units to own.
Life interest- lawfully permits a person to live in and occupy or use a section of property for as long as they live. They are not able to sell the property or mortgage it.
2. Understanding financingBuying a home is a big purchase and you will need to know how much a lending institution will be willing to lend you, unless you are paying upfront the full amount.
Lenders tend to use two lending principals to determine how much you can afford each month, which helps them to determine how much they can lend you. The two principles are as follow:
Gross Debt Service Ratio calculation – your monthly housing cost should not exceed 32% of your gross monthly family income.
Total Debt Service Ratio Calculation- your monthly housing cost and payments on all of your other debts should not exceed 40% of your gross monthly family income.
Another important factor that lenders will consider is your credit score, which helps them to determine the interest rate of your mortgage.
SOME IMPORTANT TERMS:i. Mortgage
The maximum amount standard mortgage can cover is 80% of the purchasing price with amortization (the length of time to repay the loan) of 25 years. The term of the mortgage vary from months to years. Usual terms are between six months to five years. Interest rates, which is the cost of borrowing varies between lenders.
ii. Down Payment
Can obtain mortgage loan insurance which allows you to put down as little as 5% down payments. This insurance protects the lender and many Canadian lending intuitions require it.
iii. Using RRSP plan to purchase a home
The program allows each holder up to $25,000 from the plan to use towards down payment. A couple can total up to $50,000. If this plan is used then the plan holder has up to fifteen years to return the money, while it is interest free.
In order to use your RRSP you will need to meet the following requirements
- This will be your first time buying a home and have not owned any other property in Canada during the past four years.
- RRSP plan was effective for at least 90 days.
- Annual payment of a minimum of 6.67% of the amount withdrawn. If repayment is more than 6.67% then the additional amount will be carried forward and applied towards future year’s payment.
3. Hiring usEmpire Team understands that the purchase of a home can be exciting but exhaustive as well. We are committed to making sure you are aware of all needed process to get the best possible outcomes from all avenues during the purchase of your home. From helping you understand what is that you need and can afford to finding a suitable home for your lifestyle is what we do. Your satisfaction is our only result.
4. Making an OfferNow that you have found the right home for you, it is time to make an offer. The offer should include:
- Name and address.
- Price of the amount you are offering for the purchase of the home.
- Things that should be included, which includes fixtures and chattels. Fixtures include items permanently attached to property such as bathtub, toilet, sink and etc. Chattels are not fixed on to the property and should be clearly listed. The list may include appliances, furniture, window blinds and etc. It is important to have it listed so it is not left for assumptions.
- Deposit amount of your down payment.
- Closing date, which will be the day you will receive full ownership of the property.
- Offer expiry date, which is the date when the offer will no longer be valid if the seller does not respond.
5. Hiring the right lawyer and other professionals
- Lawyer – will certify your property and make sure it is free of liens. They will overlook your offer and any other documentation, which includes draft mortgage document. This document will be signed by you and sent to your lender, who will then release the funds to your lawyer. On the day of closing, your lawyer will exchange the funds and other required documents to close the transaction.
- Mortgage broker –are familiar with various mortgage packages provided by different lending institutions. The can help you to find the most suitable rate and terms for you.
- Home inspector – will protect you from damages in the home that you may not notice and may not be able to afford. An inspector will check the foundation and let you know of any expensive repairs in the near future.
- Insurance broker- can help you to find the best rate and terms for your home insurance.
- Appraiser- evaluates the value of the home, which lending intuition may ask for.
- Property Surveyor – assess land boundaries, measurement and structure of the property. These details may also be required by your lending intuition.
6. Closing Cost* These are estimated values and may vary.
Appraisal fee : $200-$600
Home Inspection fee : $300-$500
Legal fee : $500-$2500
Title Insurance : $300-$600
Insurance to protect you against any title fraud.
New Home Warranty Program: $500-$1200
Warranty provided to new homes by its home builder, which protects you from structural defects
Mortgage default insurance: 0.5% to 2.5%
Down payment that is less than 20% of the sale of the home will require this insurance.
GST and HST
Charged to new home and not to resale properties.
Interest adjustments $10-$1000
The difference in the interest rate on your closing date and the date of your first mortgage payment.
7. Helpful moving tips
- Set appointments ahead of time for connection of gas, hydro, landline phone, internet, and alarm system.
- Book your moving truck ahead of time as well.
- Notify your relatives, work place, car insurance, credit card, doctor and other close contacts about your address change.
- Make arrangements for storage and if needed for renovation as well.
- Set arrangements for appliances and furniture delivery, if planning on purchasing new ones.
8. Home operating costs
- Property Tax
- Heating cost
- Electricity cost
- Insurance for the protection of home from any accidents
- Water and solid waste management
- For condo owner there is a monthly maintenance fee
9. FREQUENTLY ASKED QUESTIONS
HAVE A QUESTION?
ASK US NOW
ASK US NOW