The first step in buying a house, is to get a pre-approved mortgage. Why go house hunting only to find that you don’t qualify for a mortgage on the dream home you’ve found? Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking.
Pre-Approved Mortgage Features to Look For:
- Competitive interest rates.
- A 90-day rate guarantee.
- Flexible payment options. These enable you to tailor the mortgage to your lifestyle. Discuss payment frequency and lump-sum payment options. Find out if your lending institution will allow you to skip a payment in special circumstances or double-up on your payments.
- Ask about mortgage insurance and any extra charges that may be added to your mortgage. A mortgage with less than 20% down payment may be required to obtain mortgage insurance.
CHANGES IN FINANCING
First time buyers may withdraw up to $20,000 from their RRSP’s to use as a down payment. Each buyer can withdraw this amount. Repayment must be made within 15 years, with 1/15th being repaid each year. For example, if you borrow $15,000 from your RRSP, you must pay back at least $1000 each year for 15 years.
Currently, the minimum down payment required to obtain a mortgage is 5% of the purchase price.
The longest amortization period is 25 years if you have less than 20% down payment. You can still obtain 30 or 35 year amortizations if you have the 20% down payment. A longer amortization period usually means smaller monthly payments, but you may end up paying more interest overall.
As of April 19th, 2010, all buyers must qualify at the 5 year fixed interest rate, regardless of the term or type of mortgage you chose to go with.