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•Step 4 – How Much Can You Afford?

 

Gross and Total Debt Service Ratios

Lending institutions use two different formulas using your gross monthly income to determine an affordable mortgage payment:

1 GDSR (gross debt service ratio)

2. TDSR (total debt service ratio)

  

Online Mortgage Qualifier Calculator

(Dominion Lending Centres)

 

http://calculators.dominionlending.ca/calculator-mortgage-qualifier

 

The first steps in buying a house are ensuring you can afford to pay at least 5% of the purchase price of the home as a down payment and determining your budget. This calculator steps you through the process of finding out how much you can borrow. Fill in the entry fields and click on the payment schedule button to see a complete amortization schedule of your mortgage payments.

 

As a final note:  If you are buying a home with less than 20% down the bank needs to see 1.5% of the purchase price in closing costs available.  Either by a gift, cash on hand or credit cards (If it is credit cards, it has to be worked into your debt ratio when calculating for your mortgage.) 

   

 Feel free to call us and we will be glad to provide you with a Free Pre-Qualification Consultation.

 

OTHER COSTS

 

GST (new construction)

http://www.cra-arc.gc.ca/E/pub/gp/rc4028/README.html

 

New homebuyers can apply for a rebate of the 5% GST if the purchase price is $350,000 or less. The rebate is up to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000.

 

Mortgage Insurance Premium

http://www.cmhc.ca/en/co/moloin/moloin_005.cfm

  

How Much Does CMHC Mortgage Loan Insurance Cost?

To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. Your lender will give you the exact price when you apply for a mortgage.

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.

Remember: without mortgage insurance you may avoid the insurance premium but you’ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved.

A 10% premium refund may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Home.

 

Loan-to-Value

 

 

 

Premium on Total Loan

Premium on Increase to Loan Amount for Portability and Refinance

   

Up to and including 65%

0.60%

0.60%

 

Up to and including 75%

0.75%

2.60%

 

Up to and including 80%

1.25%

3.15%

 

Up to and including 85%

1.80%

4.00%*

 

Up to and including 90%

2.40%

4.90%*

 

Up to and including 95%

3.60%

5.65%*

 

90.01% to 95% —

Non-Traditional Down Payment**

3.85%

*

 

 

“Government of Canada Takes Action to Maintain a Healthy, Competitive and Stable Housing Market”

http://www.fin.gc.ca/n15/15-088-eng.asp

 

December 11, 2015 – Ottawa, Ontario – Department of Finance

Finance Minister Bill Morneau today announced changes to the rules for government-backed mortgage insurance to contain risks in the housing market, reduce taxpayer exposure and support long-term stability. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent for the portion of the house price above $500,000. The 5 per cent minimum down payment for properties up to $500,000 remains unchanged.

  

Appraisal Fee ($200-400)

You most likely need an appraisal if you are putting 20% or more down on the purchase price, if you are buying foreclosure, or refinancing your property.  If you are putting less than 20% down you should not have to get an appraisal

 

Legal or Notary Public fees ($1000 – $1400) 

You will require the services of a Lawyer or notary in order to complete the final documents, transfer title and other legal “Stuff”.  The cost for a Notary or a Lawyer is pretty close to the same. The one advantage to using a lawyer is should you run into any legal problems, the lawyer can help and advise you, where a notary cannot give legal advice.  If just buying the costs will run between $1000 - $1400.

Most will have a flat fee plus disbursements they have no control over such as discharging a mortgage. It is important to raise what the costs are at the time he/she hires the Lawyer to close their transaction.

 

Mortgage Discharge Fee (Seller)

If you have a mortgage, there is a strong chance that the buyer will not be interested in assuming it. Therefore, you may need your mortgage lender to accept an early discharge of the mortgage. the mortgage companies usually charge a discharge fee of 3 months interest on the outstanding principle; however, this penalty can take other forms such as an interest differential fees depending on the terms of you mortgage contract. Depending on the size of your mortgage, the penalties can potentially amount to several thousand dollars. If you are purchasing another home, your lender may be prepared to waive the discharge fee(s) as long as you arrange a mortgage on your new property with the same lending institution. This is an issue that you should discuss with your mortgage company before you sell.

  

BC Property Transfer Tax (PTT)

http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax

 

Homebuyers in BC pay a provincial Property Transfer Tax (PPT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder, up to a maximum of $475,000.

 

First-time homebuyers may be exempt from paying the PTT. There is a proportional exemption for between $475,000 and $500,000. At $500,000 and above the rebate is nil.

 

If more than one person is buying the home and some have owned a home and other haven’t, the percentage of the people who have not owned is used to calculate how much PTT is paid.  If you have owned a property anywhere in the world, you will have to pay PTT.

Home Insurance

You will be required to bring a copy of your home insurance policy to the lawyer’s office when you sign your documents for your purchase.  The bank will not fund the mortgage without proof of insurance.  Costs will vary depending on type of property, area, amount of coverage, etc.

 

Moving Costs

Moving fees vary depending on the distance moved and whether professional movers do all of the packing. It is wise to get an estimate from more than one mover. It is also wise to book your mover well in advance  of closing.

 

Condo Fees

Application Fee (private mortgages)

Status Certificates (well/septic)

Property Tax


Some lenders require property buyers to add property tax installments to monthly mortgage payments.

 

You will be required to pay the portion of the property taxes for the period of time that you have owned the home in a year.  This could be either a credit to you, or a debit for you.  Property Taxes are due July 2 of every calendar year.  They are calculated from January 1 of the current year to December 31 of the current year.  If you purchase a property before July 2, the seller will most likely credit you with the taxes that they owe for the time they have lived there. (Exception to this is if they are paying the municipality directly, they may have built up a credit in the account and you will have to reimburse them.)  If you purchase a property after July 2, the taxes should have been paid and you will have to pay the seller for the number of days that you will be living in the house for the rest of the year.

The lawyers do this calculation for you, it is the yearly amount divided by 365 or (366) days and multiplied by the number of days you own the property and the Sellers on the property.

  

Mortgage Life and Disability Insurance (optional)

This is paid monthly, but it covers you should you be out of work or one party passes away.  Speak with a Mortgage Broker about how this works and if it would be good for you.

 

Provincial Sales Tax


The PST is generally not payable on services except for legal and notary fees.  Both the GST and PST are paid on legal and notary fees.

 

Utility Fees

If not included in the taxes this is a charge by the municipality for water and sewer.  It is a different amount for every municipality.  It is calculated the same way as the property taxes. 

 

Garbage Pickup

($364.00/YR, 1 can per week, Maple Ridge)

Some municipalities have you pay your own garbage pickup.  Be sure you know what the cost is, so you can work it into your extra costs.

 

Title Insurance ($250 - $350)

Title insurance is much more common now than it was a few years ago.  Every bank used to require a survey Certificate of the property and it was getting expensive to do them, plus a lot of the time the surveys were the original ones from when the land had first been developed.  So they were finding that there were in accuracies in the surveys.  So title insurance is now used in place.  It insures the bank against anything that could happen on the property to possibly affect the value, and advises them of any changes on the title.  As an example, if you get a second mortgage and it is registered on title the bank will be informed, or any liens on the title or any disputes about boundaries etc. 

 

Rebates and Credits

BC Property Tax Deferment Programs


http://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/pay/defer-taxes

 

Seniors

Qualifying homeowners aged 55+ may be eligible to defer property taxes.

Financial hardship

Qualifying homeowners may be eligible to defer property taxes.

Families with children

Qualifying homeowners who financially support children under age 18 may be eligible to defer property taxes.

 

First-time Homebuyers’ Tax Credit

http://www.cra.gc.ca/hbtc

 

This federal non-refundable income tax credit is for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation.

The credit is calculated by multiplying the lowest personal income tax rate for the year by $5,000. For the 2015 tax year, the maximum credit is $750.

  

BC Home Owner Grant

http://www.rev.gov.bc.ca/hog/

 

Reduces property taxes for home owners with an assessed value of up to $1,200,000. The basic grant gives home owners:

•a maximum reduction of $570 in property taxes on principal residences in the Capital, Greater Vancouver, and Fraser Valley regional districts

•an additional grant of $200 to rural homeowners elsewhere in the province

an additional grant of $275 to seniors aged 65+, those who are permanently disabled, and verterans of certain wars.

 

Home Adaptations for Independence (HAFI)

http://www.bchousing.org/Options/Home_Renovations

 

A program jointly funded by federal and provincial governments provides up to $20,000 to help eligible low-income seniors and disabled homeowners and landlords finance modifications to their homes to make them accessible and safer.

 

BC Seniors' Home Renovation Tax Credit

http://www.cra-arc.gc.ca/E/pbg/tf/5010-s12/README.html

 

Assists eligible seniors 65+ with the cost of certain permanent home renovations to a principal residence to improve accessibility or help a senior be more functional or mobile at home. The maximum amount of the refundable credit is $1,000 per tax year and is calculated as 10% of the qualifying renovation expense (maximum $10,000).

 

Rain barrel subsidy programs 

Many Metro Vancouver municipalities offer rain barrels for sale, often at a discount for their residents:

Burnaby - $70

Coquitlam - $72

Richmond - $30

West Vancouver - $55

Other municipalities have similar offers.

 

Local Government Water Conservation Incentives

Your municipality may provide grants and incentives to residents to help save water.

Toilets: North Vancouver City, North Vancouver District, and District of West Vancouver offer a $50 rebate when residents install a low-flush toilet. Richmond offers a $100 utility rebate.

Clothes washers: replace your old clothes washer with a new, high efficiency Energy Star clothes washer and receive a $100 or $200 rebate from Richmond.

 

Local Government Water Meter Programs

Your municipality may provide a program for voluntary water metering so that you pay only for the amount of water you use. Burnaby (scroll down), Delta, Richmond and West Vancouver have programs and other municipalities may soon follow.

 

Water Saving Kits

Many Metro Vancouver municipalities offer water wise kits and other tools for reducing home water consumption including Burnaby, Coquitlam, and Delta.

 

BC Hydro Power Smart Savings and Rebates

http://www.bchydro.com/powersmart/residential/rebates_savings.html

Improving your home's efficiency and saving on your electricity bill can be easy if you know where to start.

 

FortisBC New Home Energy Rebate Offer

http://www.fortisbc.com/Rebates/RebatesOffers/NewHomeProgram/Pages/default.aspx

 

FortisBC and BC Hydro customers can receive rebates when building Energy Star new homes or when installing high-efficiency natural gas appliances. Homes must be built between April 1, 2015 and March 31, 2016. Applications are due September 30, 2016.

 

FortisBC Rebate Program for Homes

http://www.fortisbc.com/NaturalGas/Homes/Offers/Pages/default.aspx

 

Rebates for home owners include:

• $300 rebate for buying an EnerChoice fireplace

• up to $1,800 off an Energy Star water heater

• $1,000 rebate for switching to natural gas (from oil or propane) and installing an Energy Star heating system

Total amount of available rebates is $5,300 per household.

 

Energy Conservation and Assistance Program 

https://www.bchydro.com/powersmart/residential/ps_low_income/energy_saving_kits.html

 

BC Hydro and FortisBC offer free energy assessments and energy saving products to income-qualifying households. Qualified contractors will install upgrades ranging in value from $300 to $5,000 depending on the need of the home.

  

Energy Savings Kits

https://www.bchydro.com/powersmart/residential/ps_low_income/energy_saving_kits.html

 

http://www.fortisbc.com/NaturalGas/Homes/Offers/EnergySavingKit/Pages/default.aspx

 

BC Hydro and FortisBC offer low-income customers a free energy saving kit containing products to help save energy and money.

 

Home Energy Rebate Offer

http://www.fortisbc.com/Rebates/RebatesOffers/HomeEnergyRebateOffer/Pages/default.aspx

 

BC Hydro and FortisBC offer home owners rebates for upgrades and improvements, including insulation, draftproofing, space and water heating systems and ventilation to reduce the average customer’s energy bill by 30%. There is a bonus offer for completing three or more of certain upgrades.

Total value of available rebates is almost $5,300 per household.

 

Smart Thermostat Pilot Program

http://vancouver.ca/green-vancouver/smart-thermostat-pilot-program.aspx

  

City of Vancouver and Vancity are offering a $125 rebate for a homeowner purchasing 1 of 3 smart thermostats that automatically controls the climate in your home. This pilot program runs to December 2016.

 

Heritage Energy Retrofit Grant (pilot program)

http://www.vancouverheritagefoundation.org/get-a-grant/heritage-energy-retrofit-grant-pilot-program/

 

Grants of up to $3,000 per household to assist with energy retrofits for Vancouver homes built before 1940 and homes listed on the Vancouver Heritage Register. This pilot runs to August 31, 2016. It is sponsored by Vancouver Heritage Foundation and the City of Vancouver Sustainability Group with assistance from City Green Solutions. Qualifying retrofits include insulation, air sealing, window repairs and storm windows, and high efficiency forms of heating and hot water.

 

Financial Institutions - Energy-Related Savings

 

RBC's Energy Saver Mortgage

http://www.rbcroyalbank.com/mortgages/energy-saver-mortgage.html

 

Home owners who have a home energy audit within 90 days of receiving a RBC Energy Saver Mortgage may qualify for a rebate of $300 to their RBC account.

 

RBC's Energy Saver Loan

http://www.rbcroyalbank.com/personal-loans/energy-saver-loan.html

 

Offers a 1% interest rate discount or a $100 rebate on a home energy audit with a qualifying purchase through a fixed rate loan over $5,000.

 

BMO Eco Smart Mortgage

http://www.bmo.com/home/about/banking/corporate-responsibility/customers/product-responsibility#ecosmart

 

Offers home buyers a special rate on qualifying green properties.


Vancity Home Energy Loan

https://www.vancity.com/Loans/TypesOfLoans/HomeEnergyLoan/

 

Offers homeowners up to $50,000 at prime + 1% for up to 15 years for energy efficient renovations.

 

CMHC Mortgage Loan Insurance Premium Refund

http://www.cmhc.ca/en/co/moloin/moloin_008.cfm#reno

 

Provides homebuyers with CMHC mortgage insurance, a 10% premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient home or make energy savings renovations.

 

•5 – Arranging your Mortgage

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