According to Jonathan Haziza, a product manager for mortgage solutions at National Bank, the scale of the costs linked to buying a property tend to be underestimated by first-time buyers. So without further ado, here are some expenses to keep in mind for a realistic portrait of what lies ahead.
Your financial institution may ask for an evaluation of the property’s market worth. This happens when the cost is steep or the property contains various risk factors. Requesting an appraisal is a means of protection: either to ensure that payments won’t be above your means, or to verify that the property is truly worth what you’re about to pay. You’ll therefore need to hire an appraiser to produce the necessary documents.
Hiring a building inspector to check for hidden defects in pre-existing houses is crucial. This will help you avoid bad surprises that could cost you a lot; you’ll have peace of mind knowing that everything is as it should be.[……]
Here are the answers to your questions about mortgage loans.
What is the minimum down payment?
You need to put down at least 20% of the selling price to qualify for a mortgage. If you don’t have 20%, you can take out mortgage insurance and you’ll only need to put down 5%. In both cases you need to prove you have 1.5% of the selling price to cover start-up costs.
How can some builders have properties for sale without requiring a down payment?
Some builders do offer Canada Mortgage and Housing Corporation (CMHC)-approved programs that don’t require a down payment. However, the programs usually have very specific eligibility criteria and the down payment is often just delayed.
There are really only a few exceptions to the legal requirement to make a down payment when buying a property. The best way to lower your down payment is to insure your mortgage with CMHC or Genworth. Insurance can get your down payment to 5%.
As with traditional mortgage loan insurance, every down payment has to come from the buyer’s own resources or close relatives.
Debt-savvy buyers can put 5% down and access many resources, including a loan or lender incentives, as long as the down payment is from a source that is arm’s length to and not tied to the purchase or sale of the property. Contact your lender to see if they can offer you mortgage insurance and if you’re eligible.[……]
You’re thinking of buying your perfect home? You’re prepared for the down payment as well as the loan and tax instalments and insurance. You’re sure you’ve thought of everything. But have you really anticipated everything?
Buying a home is not only a matter of making loan payments! It’s important to anticipate other expenses. And since these expenses can impact the amount you put down, you need to keep them in mind during the buying process. These expenses* can include:
- Appraisal fee ($350)
- Welcome tax ($2,000)
- School taxes ($500)
- Home inspection fee ($150)
- Municipal taxes ($2,000)
- Moving cost ($1,000)
- Home insurance ($400)
- Lawyer (notary) fees ($1,000)
- Loan insurance ($1,600)