Toronto Condo and Real Estate Blog

Looking for a home can be an intimidating task filled with many questions. What home do I buy and where? Who do I go to for help? And how do I know if I am making a good purchase?

There’s no one “right way” to go about finding a home. But here are a few tips that may make the process a little easier and remove some of the anxiety associated with making what is, for most people, their largest single purchase in life.

The first thing to do is determine how much you can afford and what type of home you want or need. This would include the size, number of bedrooms, location and special features such as a garage, fireplace, fence, dishwasher, hot tub etc.

You’ll also want to consider such things as proximity to schools, community centres and play and sports facilities, public transportation, hospitals, libraries and shopping areas and your workplace. These factors are important to you and your family.

Since your home is probably your single largest investment, you’ll want it to be as attractive as possible to purchasers when you’re ready to sell. So keep in mind the features you think will make it attractive to potential buyers in the years ahead.

Finding a real estate agent to handle your purchase is important. Talk to a few real estate agents with different companies who know the area where you’re looking to buy. A real estate agent can show you homes in your price range in the areas you like that meet your particular needs and budget.

With so many homes to choose from, how do you know if what you’re going to buy is good value?

It’s very important to inspect the structure and grounds of the home you’re thinking of buying and look around the neighborhood to be sure it’s an area where you want to live.

Get a copy of the land survey from the seller to check the boundaries of the property to make sure they are clear of encumbrances and walk around the property yourself to make sure there are no surprises.

You’ll also want to tour the neighborhood and see the house at different times of the day or on weekends to check traffic patterns and noise levels that could affect your decision to buy.

When you find a home you like, inspect it yourself carefully for such things as structural defects, signs of water damage, lack of water pressure, faulty plumbing or inadequate wiring.

You may want to get an inspection done by a professional home inspector before you buy. A professional may uncover problems that you wouldn’t notice.

A good home inspector will check the house from the basement to the roof, including the heating and cooling systems, plumbing, walls, ceilings, insulation, electrical wiring, foundation, ventilation, doors and windows, and septic and sewer systems.

A home inspector will determine if any repairs are necessary. If possible, plan to go along with the inspector during his inspection. You could pick up some valuable information that will help you in the future with the maintenance of your house. Your real estate agent can likely refer an inspector if you don’t know of one yourself.

Some careful planning can help to ensure that you get a good-quality house that will meet the needs of you and your family in an area you like for a price you can afford without any nasty surprises after you take possession.

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Excerpt from an article by Dana Flavelle - Toronto Star

Homeowners will start seeing even more flexible mortgage products, like Scotiabank’s no money down “100% mortgage,” as competition in the market heats up, industry members say.

Scotiabank announced yesterday it is the first of Canada’s big banks to offer the new down payment-free mortgage.

The Scotiabank loan is aimed at first-time buyers. The mortgage costs more to carry because it must be insured, which means buyers must pay premiums on top of their mortgage payments.

On a $250,000 home, the cost of borrowing the full amount, plus insurance, is $1,659 a month, assuming a 6% interest rate on the loan, according to Genworth Financial Canada, the mortgage insurance specialist underwriting the Scotiabank product.

That’s $98 a month more than a conventional loan with a 5% down payment, Genworth said. To qualify for the lower amount, the borrower would have to come up with $12,500 down, he said.

Scotiabank has had a free down payment loan on the market since 2003, but it’s structured differently and is less flexible than the new product, the companies said.The new 100% mortgage is just the latest in a series of new products hitting the market, including loans that lower the monthly cost to carry by extending the amortization period or deferring payments on the capital.

Most are backed by large global mortgage insurance firms, like Genworth Financial, formerly part of GE Capital. And many are importing ideas they’ve seen elsewhere.

In a rising real estate market, big mortgages may make sense if they allow consumers to become homeowners sooner, he said.

Read the full article

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by Marc Salerno

For many Canadians, the hardest part of buying a home—especially a first home—can be saving for the down payment.

If you can only offer less than 25% of the purchase price as a down payment, you will normally be required to buy mortgage loan insurance.

Pioneered by Canada Mortgage and Housing Corporation (CMHC), mortgage loan insurance protects lenders against payment default, allowing Canadians to access high-ratio mortgages at the lowest possible rates.

CMHC mortgage loan insurance enables you to finance up to 95% of the purchase price of your home. This means you can buy a home with as little as 5% down. For example, if you wanted to purchase a $250,000 home and you qualified for mortgage insurance, you would need a down payment of just $12,500.

Mortgage loan insurance is available through your lender, who contacts CMHC on your behalf. You need to pay a premium for mortgage loan insurance, which is calculated as a percentage based on the down payment as compared to the purchase price of the home.

A traditional down payment of 15%, for instance, would incur a mortgage loan insurance premium of 1.75% of the total value of the loan, while a down payment of 5% would incur a mortgage loan insurance premium of 2.75%. Your lender’s or mortgage broker’s representative will calculate your premium, which you can pay either in a lump sum or as part of your mortgage payments.

Both new and resale homes are eligible for mortgage loan insurance, as long as the home is in Canada and it’s your principal residence. In addition, your total housing costs (including mortgage payments, property taxes, heating, annual site lease, and 50% of condominium fees if applicable) should not be more than 32% of your gross household income, and your total debt load (including your housing costs and other debts such as personal loans, car loans, and credit cards) should not exceed 40% of your gross household income. Other criteria may also apply and are subject to change, so contact your lender for more details.

CMHC also offers mortgage insurance that helps homebuyers obtain a secured homeowner line of credit of up to 90% of the value of their principal residence, either at the time of purchase or if you want to refinance. The line of credit lets you draw funds up to your insured credit limit as often as you wish without the need to reapply and allows you the flexibility to pay as little as the monthly interest charges for a limited period of time. Full repayment is required within 25 years from the date the loan is insured.

CMHC also offers a product called Flex Down, which makes finding a down payment even easier. Traditional mortgage loan insurance requires borrowers to fund a minimum of 5% down from their own resources when buying a home. With Flex Down, homebuyers with a proven track record in managing debt can provide the 5% down payment from a variety of new sources, including borrowed funds or lender incentives, provided the funds are at arm’s length from (and not tied to) the purchase or sale of the property. Currently, the mortgage loan insurance premium for Flex Down is 2.90%. Contact your lender to confirm availability of this product and for the qualifying criteria.

For more information about mortgage loan insurance or to order your free copy of CMHC’s Homebuying Step By Step consumer guide and workbook, please visit our website at www.cmhc.ca or call toll free at 1-800-668-2642.

Mark Salerno is district manager for the GTA at the Canada Mortgage and Housing Corporation. For over 60 years, CMHC has been Canada’s national housing agency and a source of objective, reliable housing expertise.

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Contact the Jeffrey Team for more information