Whether you’re buying your first home or looking to leverage the equity in your existing home, GP Wealth Management can help you obtain the financing you need at a rate you can afford.
Buying a home could be the largest investment you ever make. Consequently, the mortgage you choose will have a big impact on your finances, both now and in the future.
When deciding on a mortgage, it’s important to consider, not only how your mortgage payments will affect your cash flow from month to month, but also how you can best structure your overall debt load.
If your mortgage is coming up for renewal and you’re considering a switch to a new lender, start the process at least 60 days before the renewal date. Most lenders guarantee their rates for at least 60 days and offer the going rate at renewal if it’s lower than the rate initially offered.
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In this FAQ, we answer the most common questions asked about mortgages and line-of-credit loans. If you have any specific questions, send us an email and we would be pleased to help.
A purchaser can buy with a 0% down payment, however price restrictions may apply. CMHC or GEMICO may insure the mortgage against default for up to 100% of the lending value of the house. Mortgages with less than 25% down must have Mortgage Loan Insurance provided by either CMHC or GE.
A pre-approved mortgage puts your financing in place before you make an offer on a home. Usually, the sale of a home is contingent upon the buyer securing the required financing within an agreed-upon time frame. If you are unable to do so, the sale could fall through. With a pre-approved mortgage, you’ll be able to make a firm offer for the home of your choice. And as most Realtors will tell you, a firm offer adds an awful lot of leverage to price negotiations!
An open mortgage allows you the flexibility to pay down the principal amount at any time whereas a closed mortgage restricts the amount of paydown of the principal amount. In some cases, a closed mortgage may be discharged at a defined cost using a set formula to determine an Interest Rate Differential (IRD).
This allows you to convert your mortgage to a new one of longer-term while it is still in effect.
Did you know that as a first-time homebuyers, you can use your RRSP as part of the Home Buyers Plan.
If you qualify as a first time home buyer the Home Buyers’ Plan (HBP) allows you a withdrawl of up to $25,000 from RRSPs for a home purchase. The withdrawn amount will then have to be repaid within 15 years and would be subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If for instance, you withdraw the full $20,000, the minimum annual repayment is $1,333 per year. If less than the minimum is repaid in any particular year, then the balance is added to your taxable income for that year.
Calculate the amount of mortgage you can qualify for based on your available down payment including the option of using the Home Buyers Plan.
Today, more than ever, there are numerous options available to you when applying for a mortgage loan. Here are some of the key things you need to consider.
6 month, 1, 2 & 3 year (open, closed and closed – convertible) 4, 5, 7 & 10 year closed
3, 4 and 5 year (open, closed, closed-convertible and capped)
Combination of all possible terms (6 month through 10 years)
There are advantages in choosing short-term rates or long-term rates. It all depends on what you want.
If you anticipate that rates will remain low and stable, and you are prepared to chance increases, then you may want to arrange a short term mortgage. By rolling over your term say, every 6 months or float your rate against prime, with the option of locking in to a longer term at a later date, you can save with a lower rate using a short-term mortgage. But be prepared, a sudden upward movement in rates could have a significant impact on your payments.
Generally a term of 3 years or more would be considered long term when you’re choosing a mortgage. Often long-term rates are higher than short-term rates. When choosing a long-term rate, you avoid rate increases because your rate will be locked in. This option offers certainty of your payments allowing you to manage your expenses accordingly.
With a split-term mortgage, your interest rate risk is diversified by splitting your mortgage into parts. For instance, you could split a $100,000 mortgage into four $25,000 parts with interest rate terms of 6 months, 1, 2, and 3 year terms negotiated at the best rates.
Many lenders will structure a mortgage to suit your needs. You can make lump sum payment – usually 10% to 20% of the original principal balance or double-up a payment.
With payment changes, the amortization can be adjusted by increasing the payment on closed terms by 10% – 20% per year, generally once annually on the anniversary of the term.
Pay your mortgage with the frequency that matches your cash flow. Most mortgages allow weekly, bi-weekly or semi-monthly payments. Take advantage of the weekly and bi-weekly payments to accelerate the principal pay down and reduce the amortization. You will be surprised with the effect it will have in
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