Learn more about mortgages:
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For many first-time homebuyers, saving what’s required for a down payment can seem overwhelming. However, sometimes saving for a down payment is as simple as managing your budget differently.
You can start saving for your down payment:
Let CIBC help you with a strategy to reach your goal of buying your first home sooner. Using your RRSPs to buy a homeIf you qualify as a first-time homebuyer, you may be eligible for the government’s Home Buyers’ Plan (HBP). This allows you and your spouse or partner to withdraw up to $25,000 each from your Registered Retirement Saving Plans (RRSPs) to add to your down payment or to cover purchase-related costs. Best of all, you don’t have to pay income tax on the funds, as long as you repay the total amount to your RRSP over the next 15 years. The repayment period starts the second year following the year you made your withdrawals. If the full $25,000 is withdrawn, the minimum annual repayment would be $1,666. For more information on the Home Buyers’ Plan, please visit the Canada Revenue Agency website. The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual. |
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While it is possible to buy a home with as little as 5% down, the amount of your down payment will determine whether you’ll have a conventional mortgage or an insured, high-ratio mortgage.
What’s the difference?
High ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guaranty and require you to pay an insurance premium. The insurance premium:
The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual. |
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If you’re thinking about buying your first house, one of the first questions you may ask yourself is, “How much can I afford?” Read the following mortgage affordability tips before you set out to find the home of your dreams:
We will helps you answer the question “How much can I afford?”Buying a home is a big financial decision. When you start out by knowing what mortgage you can comfortably afford and what houses fit into your price range, you will be prepared to find the ideal house for your situation. We also makes it easy, by offering helpful mortgage calculators like the Mortgage Affordability Calculator that lets you enter your information to find out the price range that’s right for you. For additional information about how much mortgage you can afford or to complete an application by phone, contact a CIBC Mortgage Advisor at 1-866-525-8622. |
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Taking the time to narrow down your house-hunting priorities can help your real estate agent provide you with a range of properties that meet your criteria, which increases your chances of finding the house that’s right for you.
Important home buying questions to ask yourself:
Search Canadian real estate listings on The Canadian Real Estate Association’s Multiple Listing Service. |
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Mortgages are big investments that require financial stability and dedication. Start the process on the right foot by familiarizing yourself with different types of mortgages and rates, and learn helpful facts that will prepare you to be a responsible home buyer.
Types of mortgages
Types of mortgage interest rates
Mortgage payment options:Mortgage payments can be made weekly, bi-weekly, semi-monthly and monthly. Borrowing SolutionsWith a Home Power Plan you can include a line of credit or combine a line of credit and a mortgage, in order to consolidate all of your personal credit under one simple, low-interest and secured borrowing solution, which can be adjusted to meet your changing needs. Mortgage refinance optionsA mortgage refinance option, known at the banks as a Home Power Mortgage™, allows you to borrow additional money on your mortgage, so you can afford the things you’ve always wanted. For a low price, it can save you money and help you consolidate your debt into one convenient payment. |
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A credit rating is a measure of how dependable you are when it comes to repaying your debts. A good credit rating goes a long way towards helping you obtain credit and determining the rate you receive. Your rating is not established by the government or by financial institutions – it is established by you.
Credit bureaus create a detailed report containing information such as personal identification, your credit history, public records with an effect on your credit and a list of parties you have authorized to access this information. For example, if you pay your bills on time or if you repay a loan, you will be in good standing with the credit bureau. So, when it’s time to borrow, a lending institution will know that you are credit worthy. How do you get your credit rating?You have the right to see the information in your credit bureau file, which includes your credit rating. Contact one of Canada’s credit bureaus to receive a copy of your credit report by mail, free of charge. For a fee, you can also view your credit report online. Check your report carefully – if there are errors in the payment information on your credit report, you should send a letter to the credit-reporting agency requesting rectification of your records. For more information, contact one of the credit bureaus directly at: TransUnion Canada: 1-866-525-0262 Equifax Canada: 1-800-465-7166 How do I establish a good credit rating?The easiest way to establish a good credit rating is to pay your bills on time. Another way is to get various forms of credit, such as a credit card, loan, or a line of credit. If you use your credit responsibly and at least make your minimum payments, you can develop a history of good credit. |
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When you take out a mortgage on a home, you’ll generally have your regular payment automatically deducted from your account, to cover the entire amount. This can be deceiving, since your mortgage payment may consist of several components: the mortgage principal and interest, property taxes and mortgage life insurance. Let’s take them one at a time.
Mortgage principalThe mortgage principal is the amount of the original mortgage, less any payments made towards it. This does not include interest, which is calculated on the remaining principal balance and paid with your regular payments. Mortgage interestGenerally, mortgage interest costs are front-loaded, so that that interest comprises a much larger percentage of your regular mortgage payment at the beginning of the life of the mortgage than toward the end. Property TaxThis may be part of your regular mortgage payment. The property taxes that are based on the official assessment of the market value of your property. These taxes are ordinarily paid in installments. CIBC will hold these payments in escrow until they are due as the respective city/municipality will send the bills directly to CIBC. Mortgage life insuranceFor convenience mortgage life insurance premiums are added to your regular mortgage payment. Should you pass away and your claim is approved, the outstanding principal balance of your mortgage on the day you pass away would be reduced or paid off (up to a maximum of $750,000). |
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Home ownership is more affordable than you may realize and is also a great investment alternative. For what you are paying in rent, you could own your home.
Take a look at how practical and affordable owning a home can be.
Find out if you should rent or own with the Rent vs. Own Calculator. |
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Before you fall in love with a home, you’ll want to ensure that you qualify for a mortgage so you have the peace of mind of knowing that your financing has been arranged. Get a Pre-Approved Mortgage Certificate and shop for your house with confidence.
A Pre-Approved Mortgage Certificate gives you:A guaranteed interest rate for 90 days from the effective date of the Pre-Approval Certificate. You signal to sellers that you’re a serious about your home buying intentions which may provide leverage in the negotiation process, especially when there are multiple parties bidding for the property. CIBC strives to simplify mortgage pre-qualification with 3 basic steps:
Once you’ve selected the house you intend to buy, you will need to complete a full application to secure your mortgage.* *All mortgage applicants must meet lending criteria. |
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You thought this day would never come. You’ve found the perfect home. Now you’re ready to make your offer.
Once accepted, an Offer to Purchase is a legally binding agreement between you and the vendor. Along with your mortgage agreement, this is one of the most important documents you’ll sign. It locks you into the conditions of the purchase, so make sure your interests are protected by discussing your Offer to Purchase with your lawyer or notary prior to signing. Checklist: What to include in your home offer
Your home offer is acceptedCongratulations, once your Offer to Purchase is accepted, it’s time to contact a advisor. Reminder: You will need a cheque, bank draft, or money order to accompany your Offer to Purchase as a deposit. The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual. |
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Your offer has been accepted. You’ve reviewed your mortgage options and now need to finalize your mortgage agreement. Here is a list of the paperwork you’ll need to bring with you to complete your Mortgage.
About your employment
About your finances
About your new home
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While your down payment and mortgage will cover the purchase price of your home, it’s wise to consider the other expenses involved in buying a home.
You’ll pay some costs at the beginning of the home-buying process and others, known as closing costs or disbursements, when your home purchase is finalized. Hidden costs that could add up when you buy your first homeHome inspection fees (may not apply if you are purchasing a new home)Approximate Cost: $300
The home inspector evaluates the structures and systems that make up your home and provides you with a written report. While not mandatory, many people make a professional home inspection a condition of their Offer to Purchase. Property surveyApproximate Cost: $750 – $1,000
A survey indicates the boundaries and measurements of the land and positions of major structures, and any registered or visible easements (such as a driveway) or encroachments (such as a neighbour’s fence) on the property. Land transfer tax (if applicable)Approximate Cost: $2,000
Levied in certain provinces whenever a property changes hands. In some cases, first time homebuyers may be exempt from a portion of this cost. Legal fees and related expensesApproximate Cost: $1,300 – $2,500
These fees vary by province and are subject to GST or HST where applicable. Ensure your lawyer’s quote includes all related expenses and disbursements, not just legal fees. Make sure your interests are protected by discussing your Offer to Purchase with your lawyer or notary prior to signing. GST/HST where applicable (sometimes included in sale price)Varies based on Province
Some properties are GST and/or PST sales tax exempt and some are not. Generally, GST or HST where applicable is charged on new homes, but not on resale properties. Always ask before signing an Offer. Title insuranceApproximate Cost: $250
Title insurance is optional and covers problems that may arise due to encroachment issues (for example, a structure on your property is actually part of your neighbour’s property and needs to be removed), existing liens against the property’s title, title fraud, undischarged mortgages and other issues relating to the property’s previous owners. Insurance costs for high-ratio mortgagesVariable
Usually, mortgage default insurance premiums range between 0.5% and 2.75% of the principal plus applicable fees (may be subject to provincial sales tax which cannot be added to mortgage amount) If your down payment is less than 20% of the purchase price of your home, you must pay a one-time insurance premium on your mortgage amount. You can make arrangements to pay the premium to CIBC before closing, or it can be added to the principal amount of your mortgage. If it is added to the principal amount of your mortgage, you will pay interest on it at the same interest rate you pay on the principal amount of your mortgage. Interest adjustmentsApproximate Cost: $100 – $1,000
You will need to pay interest on any gap between the closing date of the purchase and the first payment date of the mortgage. You can avoid an interest adjustment by arranging to make your first mortgage payment exactly one payment period after your closing date. Prepaid property tax and utility adjustmentsApproximate Cost: $400 – $500
You will be required to reimburse the vendor for any prepaid property taxes or utility bills. Home insurance$450/year
Protection for your home and contents. Don’t forget to consider general expenses such as moving, upgrades, and home decorating costs as well. |
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