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Buying Services
Purchase Expenses
Mortgages
Land Transfer
Tax
Quick Tips
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QUICK
TIPS FOR THE HOME BUYER
Buying and decorating your new home to
suit your style is part of the excitement. All the decisions
that need to be made can also make you feel nervous.
Here are a few tips that can help out the anxious first-time
homebuyer.
How much can I afford?
There are two things to consider when determining how
much home you can afford. How much do you have for your
down payment? What amount can you afford as a monthly
payment while still enjoying life? To help you answer
these questions, you can either call your financial
institutions, visit their website or go to your branch
and talk to your personal banker.
To shop for a home with confidence, you can obtain a
pre-approval certificate from your financial institution.
This document will tell you how much of a mortgage you
can afford.
How much do I need for my down payment?
You can buy a home for as little as five per cent of
the purchase price. However, any mortgage with a down
payment less that 20 per cent has to be insured by a
third party such as the Canada Mortgage and Housing
Corporation.
The amount of your down payment
will determine whether you need to insure your mortgage
or not.
- Conventional Mortgage: a mortgage where you have at least 20 per cent of the purchase price as a down payment.
- High-Ratio Mortgage: a mortgage
where you have less than 20 per cent of the purchase
price as a down payment.
Your insurance premium will depend on the amount
you are borrowing and on the percentage of your down
payment amount. Premiums usually vary between 1.25%
and 3.75%.
How can I save for a down payment?
You can buy a home for as little as five per
cent of the purchase price. However, any mortgage with
a down payment less that 20 per cent has to be insured
by a third party such as the Canada Mortgage and Housing
Corporation.
There are a few different methods
that can be used when saving for your down payment
- Setting money aside each month just as if you had to make a monthly payment
- Opening an RRSP investment account. If you are a first-time homebuyer you and your spouse can use up to $20,000
each towards your down payment without tax implications as long as you repay the amount within 15 years.
- A cash gift from a parent or relative ("gift" means it’s non-repayable)
Should I be aware of any additional costs?
Your mortgage will cover the purchase price of your
home, however there are other costs associated with
buying a home. These are called hidden or closing costs
and can usually amount to 1.5 per cent to 3.5 per cent
of the total cost of your home.
Here are a few examples of the
hidden costs of home ownership and the costs associated
with each:
Appraisal fee |
$200 - $300 |
Home inspection fee |
$400 |
Property survey |
$950 - $1,500 |
Land transfer tax Toronto |
$2,000 to $15,000 or more |
Legal fees |
$2,000 - $2,500 (professional services: i.e. lawyer) |
HST |
13% (applicable to all professional fees) |
Title insurance |
$250 |
Home insurance |
$600/year minimum |
Also, don’t forget to consider expenses such as moving
and home decorating costs.
Source: Real Estate News
Do you dream about owning your own home? CIBC has now
made it easier for those entering the new world of home
ownership.
They have formed a partnership with Canadian Mortgage and Housing Corporation to provide
valuable and informative services for the first-time homebuyer. For more information about
finding out how much you can afford, setting up an RRSP, or simply reviewing your mortgage
options, contact your CIBC personal banker or call 1-800-465-CIBC (2422).
Source: News Canada
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