faq's

 

  • What is the maximum amortization available?
  • What are GDS and TDS and how are they used to determine what I can afford to pay for a home?
  • What is the minimum down payment required?
  • What is the maximum amount you can use from your RRSPs for your down payment?
  • What is mortgage loan insurance?
  • What is the minimum down payment required for the purchase of a rental property?
  • What is a home inspection? Should I have one done?
  • What is the difference between a fixed rate mortgage and a variable rate mortgage?
  • What is the difference between a closed and an open mortgage?
  • What is the maximum amount for which I can refinance my home?
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    What is the maximum amortization available?

    CMHC - 25 years

    Conventional - 35 years

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    What are GDS and TDS and how are they used to determine what I can afford to pay for a home?

    These are the ratios the banks use to determine how much of a mortgage you qualify for based on your current income. GDS is the 'gross debt service' ratio and takes as a total the mortgage's principle and interest payment, property tax payment, and an allowance for heating and strata fees if applicable, and determines what percentage of your income is required to cover this amount. TDS is the 'total debt service' ratio and looks at the same information as the GDS and adds any payments for lines of credit, loans, credit cards, etc and again expresses it as a percentage of your income.

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    What is the minimum down payment required?

    In most cases, a minimum of 5% of the value of the home is required as a down payment. In addition to the down payment, you must also be able to show that you are able to cover other closing costs, such as legal fess and disbursements, appraisal fees and a survey certificate. As a rule, at least 5% of the down payment must be from your own cash resources or a gift from a family member; not a borrowed amount. For any down payment that is less than 20% of the total value, a loan insurance from either the CMHC or GE is required.

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    What is the maximum amount you can use from your RRSPs for your down payment?

    $25,000 per person or $50,000 per couple.

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    What is mortgage loan insurance?

    Mortgage loan insurance is an insurance cover provided to a lender against default on mortgage installments when the down payment is less than 20% of the value of the home being purchased. Like any other insurance, mortgage loan insurance requires premium payments, which can vary between 0.5% and 3.75% depending on the insurance provider and how much of the purchase price is financed by the mortgage – the greater the down payment, the lesser is the premium.

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    What is the minimum down payment required for the purchase of a rental property?

    Effective April 19, 2010, the minimum down payment will be 20%.

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    What is a home inspection? Should I have one done?

    A home inspection is a visual examination of a house by a qualified professional to determine the overall condition and value of the home. The home inspector will check all the major components of the house, including the roof, ceilings, walls and floors, as well as the electrical connections, heating, plumbing and drainage and weather proofing. The inspector typically gives the results of the inspection to the home owner within 24 to 48 hours of the inspection.


    It is wise to get a home inspection done before making a purchase decision as it will clear any doubts you may have when you are purchasing a new home. The inspection will give you an idea of the quality of the home's construction and whether or not any major repair work needs to be completed.

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    What is the difference between a fixed rate mortgage and a variable rate mortgage?

    A fixed rate mortgage offers a rate and payment that is constant for the term of your mortgage. A variable rate mortgage is based on the prime lending rate and can increase or decrease at any time, depending on what is happening with the prime lending rate.

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    What is the difference between a closed and an open mortgage?

    A closed mortgage typically refers to a mortgage that has pre-payment privileges, such as lump sum payments and flexible payment options, but a penalty is usually charged when the mortgage is paid in full prior to maturity. An open mortgage allows for a full payout of the mortgage at any time during the term of the mortgage.

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    What is the maximum amount for which I can refinance my home?

    Effective July 9, 2012, the maximum amount that you can refinance your home to is 80% of its current market value.

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