Help For First Time Buyers

When you try to do something for the first time in your life, initially it often appears to be a daunting task. This is particularly true when you are trying to do something really big - buying your first home! However, there is no reason to be anxious as your Mortgage Centre Specialist will offer you with all relevant data, advice, help and guarantee that you may require. In fact, the Mortgage Centre Specialist is there to help you in every step and all the procedures involved in your endeavour to buy your new house.

It may be noted that there are a number of steps concerned with buying a house that will help you to feel organized as well as up-to-date regarding the entire process. In case there is any aspect related to buying a house that you are not convinced about, you should shed all hesitation and talk about it with your neighbourhood Mortgage Specialist who is sure to explain you the entire matter in detail, thereby erase all confusions from your mind.

Selecting a realtor

Selecting the appropriate realtor or one that is suitable for your requirements and desires will go a long way in helping you to acquire the precise house at the correct price. You may be assured that once you choose the correct realtor, half of your problems related to buying a new house will automatically be solved. Below, we present you a list of queries that you may put before all the potential realtors prior to coming to a decision to work with any one of them.


Before you choose a realtor, ask each of the potential realtors to provide you with their individual brochure or resume. While going though the brochures provided by them, try to find out their experience in real estate transactions in your area, in the price range or the budget you have in mind as well as the letters of reference or testimonials they may provide.

Full-time realtor

You need to ask each of these potential realtors whether this is their full-time business and also if they are dedicated to their respective careers on a long-term basis.

Track record

In addition, in order to be sure about their ability to help you fulfill your dreams of buying your first home, you need to ask each one of them questions pertaining to the work experience as well as their current business status. Ask them about the number of real estate assets that they have sold in the past three months and the number of listing they have currently. Also ask them about their ranking among their colleagues and what their rank has been during the last five years. You also need to find out the status or rank of their company with regards to their sales and the market share.


If you are satisfied with their response to your above queries, ask these potential realtors regarding the strategy or approach they will adopt in searching a home for you. Will they merely depend on the MLS listing or will they have any other source to show you the kind of home you wish to buy. Ask them if they will able agreeing to change their tactics to hunt the right house for you by adapting to the prevailing market situations, or they are inflexible in their approach.

Length of time for search

Having decided to buy a new home, it is very natural that you would want to acquire it at the earliest. Therefore, you may ask these potential realtors regarding the length of time they think they might be taking to get you the right home. Also ask them regarding the average time required to acquire a property in your area and also in the prevailing market conditions.

Price negotiation

Your next question to these potential realtors should be regarding the prevailing selling price of property compared to the asking price in your area as well as in the present market conditions. It is important to know whether the ratio of their individual selling price compared to the asking price is better or worse than the prevailing average. It need not be mentioned that if their ratio is worse than the current average, you should stop negotiating with such potential realtors.

Support staff

You should also enquire whether all of these potential realtors have adequate number of support staff to help in the process of hunting a suitable house for you. In fact, this also provides you with an extra contact whenever you may require it.

Viewing (home inspection) appointments

Ask these potential realtors whether they favour undertaking house inspection visits prior to booking or they are actually accommodating enough to let you see the listing as and when they are available.

Finding and purchasing the right home

Here is a piece of advice of all who are looking forward to buy their first home. Remember, when you are getting ready to make one of the biggest purchases of your life, it is always wise to shop for it near you present locality.

It is important to take a few crucial aspects into account while looking to buy a new house. It is pertinent to consider certain aspects like transportation facilities, distance of the home from your place of work and the propinquity to schools, daycare centres, recreational resources, shopping centers, healthcare centers and other things that are essential in your routine life. In case the listing realtor asserts that your prospective home is 'just 10 minutes to the city center', you need to verify if this is during the rush-hour while traveling in a mini van, or visiting the place around 3.30 am in a Porsche Boxster.

Having ascertained this aspect, you should next look for a real estate agent whose approach as well as easy accessibility helps to motivate you. In order to find a real estate agent who fulfills these criteria, begin the search in your locality and see who is most active among all. There is little doubt that a real estate agent who makes habitual sales calls and keeps you abreast with the listings as well as sales in your neighbourhood more likely than not pursues his or her business uncompromisingly.

Next, you need to arrange for appointments with a small number of real estate agents from different firms and evaluate the presentations given by them. Try to find out if these agents have done their groundwork from before and whether they are ready to take up your business of getting you the right house at the right price. In addition, you should also find out if any of these potential real estate agents have any kind of exclusive tie-ups or packaged cut rate or concession programs with other conglomerates that may help you to save money on your mortgage, moving expenses or on making new purchases for your new home. It is important to work with an individual or firm with whom you are able to have some sort of a relation, with whom you may share some chemistry and, most importantly, someone who is offering you the best service and value available in the market. You must openly ask the realtor if he or she is working for a seller or serving your interests.

Making house hunting fun

Remember, there is no dearth of information available in the market that may help you to make a knowledgeable decision while purchasing a new house. Everyone concerned, including the lenders as well as the Canada Mortgage and Housing Corporation (CMHC), a Crown Corporation which administers the National Housing Act, the Canadian Bankers' Association, the Ontario Real Estate Association and the Home Builders' Association have their individual brochures - some of them even have videos - that will not only make your house hunting exercise tension-free, but also entertaining.

In order to eliminate any scope of speculation from the home shopping process, you should take the benefits of all the professional resources accessible to steer you through the several alternatives or options available anywhere when you are buying your first home.

Affordability and financing

Before buying your first new house, you ought to methodically assess your present income and expenditures. You need to calculate the amount of money that will be added to your monthly expenditures owing to the new mortgage. Before you launch a hunt for your new house, obtain a pre-approved mortgage, particularly if you are buying your first house. In fact, when you obtain a pre-approved mortgage, you know the amount of money you are eligible for borrowing and this will enable you to shop for your new house in comfort.

It is the lenders who actually decide on the affordability of the borrower by going through his or her Gross Debt Service ratio (DS) as well as their Total Debt Service ratio (TDS). The GDS ration is derived from the amount that you will be in a position to pay every month and it comprises mortgage payments, taxes as well as heating. The maximum GDS ratio is 32 per cent of your monthly income. On the other hand, the TDS ration covers all things included in the GDS ration and also the other financing responsibilities you may be having. The maximum TDS ratio is 37 per cent, but in the case of Canada Mortgage and Housing Corporation (CMHC) it is 40 per cent.

It the calculations appear to be too confusing, you may seek the help of a Mortgage Specialist from the Mortgage Centre and they will undertake a complete analysis depending on your net income and estimated budgets to find out the amount of money you can afford to pay every month for the mortgage of your new home.

You may also use this pre-qualification phase to find out regarding the dissimilarity between the conventional mortgages and the high-ratio insured mortgages. You should ask about the support provided to people buying homes for the first time. In such cases, assistance of around five per cent down payment is permitted under the 'First Home Loan Insurance Program' sponsored by the Canada Mortgage and Housing Corporation (CMHC) and the 'RRSP Homebuyer's Plan' supported by the Canadian federal government. The 'RRSP Homebuyer's Plan' enables you to utilize funds from your Registered Retirement Savings Plan (RRSP) to buy a new home.

In addition, a Mortgage Centre Specialist will also be along with you and help you with the closing costs, such as taxes involved in land transfer, legal fees as well as other expenditures. When the closing cost is budgeted at around three per cent of the purchase price of the house, it is considered to be a pragmatic decision. You must always bear in mind that if you purchase a new house from any builder, you will be required to pay seven per cent GST on the entire price of the property.

Prior to your pre-qualification for a mortgage, your Mortgage Specialist will usually process a credit bureau report on you and seek for a confirmation in writing regarding your income and the amount of money you intend to make as a down payment for purchasing the new property.

Having pre-qualified for a mortgage, the interest rate is assured for 60 to 90 days from the day you had submitted your application for the loan. In case the interest rate fall during the period, you will have the advantage of paying a lower rate of interest. On the other hand, if the interest rate goes up during the intervening period, you will not be required to pay anything additional on this account, as you are covered. Another thing that needs to be remembered is that since you have pre-qualified by a specific lender or financial institution, it does not mean that you will have to remain committed to that lender or financial institution.

Selecting the appropriate/ suitable mortgage

Although you have several alternatives while selecting a mortgage for your new home, the basic choices are as follows:

  • Conventional mortgages vs. high-ratio mortgages
    When you opt for a conventional mortgage, you are not entitled to get a loan in excess of 75 per cent of the appraised worth or the purchase price of the property depending on whichever of these two are less. On the other hand, as the name suggests, a high-ratio mortgage normally offers in excess of 75 per cent of the appraised worth or purchase price of the home you are buying. A high-ratio mortgage is also frequently mentioned as an NHA mortgage or a mortgage loan insured by the Canadian Mortgage and Housing Corporation (CMHC), as this loan is granted under the provisions of the National Housing Act. The law makes it mandatory for all high-ratio mortgages to be covered by the CMCH and in this case the borrower is required to pay the insurance premium and also the application, legal and property appraisal fees.
  • Closed mortgages vs. open mortgages
    Both closed mortgages and open mortgages have their respective benefits. While the closed mortgages generally offer you lower rates of interests compared the open mortgages having same terms and conditions, open mortgages offer you the facility of making any amount of payment you desire to, at any given time without having to pay any monetary fine. This enables the borrower to pay off the mortgage before its fixed term and save considerably in terms of interest payment.
  • Short term vs. long term
    Apart from selecting the type of mortgage, it is also important selecting the right term or tenure of the mortgage. If you are of the opinion that the interest rates will be lower at the time of renewing the mortgage in comparison to the prevailing rates, then the short term mortgages are suitable for you. On the other hand, long term mortgages are appropriate if you believe that the prevailing rates of interest are realistic and you desire the protection of budgeting for the future. For anyone who is purchasing a home for the first time, this aspect is of utmost significance.
  • Fixed interest rate vs. variable interest rate
    While selecting a mortgage for your new house, you have the option to select either a fixed interest rate mortgage or a variable interest rate mortgage. When you choose a fixed rate mortgage, it enables you to budget exactly for any term you may choose - from one year to 25 years. However, a variable rate mortgage rises and falls depending on the market conditions.

Applying for your mortgage

When you make an application for a mortgage loan for your new home, you will be required to present a number of things along with the application. Here is a checklist for these different items.

  • A duplicate of the accepted 'Offer to Purchase' and the land survey is essential.
  • If you are employed, you will require a salary letter from your employer. Buyers who are self-employed will require last three years' financial statements along with personal income tax returns.
  • You need to produce an authentication that the down payment came from your individual resources, such as bank statements or a gift letter.
  • A list of your entire assets and debts along with account numbers are required.
  • If you are buying an existing home, you will require a duplicate of the Real Estate Lisiting.
  • You may require condominium financial statements, if necessary.

On the other hand, if you are purchasing a home that will be constructed, you need to carry a picture of the real estate property, a duplicate of the building plans and designs, the land survey papers as well as a copy of your agreement with the concerned builder.

As discussed earlier, your Mortgage Specialist is the person who will help you in deciding the amount of money you can pay for buying your home, the monthly mortgage reimbursements, acquire the approval for a pre-qualified mortgage as well as choose the mortgage plan that suits your requirements best. The help you will be receiving from your Mortgage Specialist will enable you to initiate quick actions when you have actually found the home you would like to buy. Contact your Mortgage Specialist when your real estate agent puts together an 'Offer to Purchase' - an agreement that fixes the final price and all other terms and conditions of the sale - between you and the seller. Now the deal to buy your new house in nearly finalized.

Before you sign the offer

Prior to signing the sale offer, you need to select a lawyer just as you had chosen a real estate agent to help you to find your new house. While selecting the lawyer you need to look for few pertinent things, such as competitive fees, outstanding service, knowledge and affability - all these put together would denote seeking value for the money you would be paying the potential lawyer.

It is important to engage your lawyer prior to signing the offer that will eventually become a legal Agreement of Purchase and Sale when you and the seller of the real estate property sign the document. It is essential that your lawyer should go through the document (offer) with awareness and reassess it along with you. When the offer is signed by you and accepted by the seller, your lawyer will direct a chain of searches from different municipal offices to make certain that the sellers have not be sued and they have duly paid all the property taxes and water, gas and electric bills. In addition, your lawyer will try to find out if there is any outstanding mortgage or lien on the property when you have become its owner. Moreover, your lawyer will also draw up a chain of closing documents and make another study of the closing documents prepared by the lawyer engaged by the seller.

Next, the lawyer engaged by you will coordinate with the property seller and prepare the proper documents pertaining to the sale of the real estate property or house. Once all this is complete, your lawyer will officially inform the property tax authorities and also the concerned utility offices regarding you becoming the new owner of the property from the closing day.

You will be required to visit your lawyer's office a few days before the closing with a view to sign the closing documents. When you go to visit your lawyer for this purpose, you should carry a certified cheque for the remainder of the closing funds, as the lawyer pays the pertinent parties on your behalf. Your lawyer needs to make payments for the land transfer to the government, the outstanding amount due to the seller and so on. In addition, a portion of the amount you would be required to spend also includes the lawyer's remuneration and expenses on other heads. On his part, your legal representative will acquire the mortgage funds straightaway from the financial institution or the lender that is funding your mortgage.

On the closing day

On the closing day, your lawyer will get together with an agent of the law firm engaged by the seller at the land registry office. On this occasion, your lawyer will hand over your cheque for purchasing the property to the seller's law firm agent and the latter will hand over the keys of your new home to your lawyer. Finally, both sides will sign the closing documents. Subsequently, your lawyer will register the new deed (title deed) and the mortgage. This will enable anyone making a search on the property to find out that you are its new owner. When all this is over, you will collect the keys of your newly acquired home and be prepared to move in!

Once the closing is over, your legal representative will send you a reporting letter along with duplicates of all the documents you have signed to acquire the property and mortgage. Copies of these documents will include the deed, the mortgage, the survey paper as well as a brief regarding the flow or expenditure of finances.

Mortgage life insurance

When acquiring a mortgage, it is advisable that you seriously contemplate taking a mortgage life insurance also. The expense for a mortgage life insurance is small and may be included into your mortgage payments. If any unforeseen and tragic event, such as death, incurable illness or enduring disability occurs in your life, the outstanding mortgage amount will be paid in full by the insurance firm. However, it may be noted here that the maximum amount payable by these financial institutions varies from one company to another. If you are keen on getting a mortgage life insurance, you may avail the quotes with any approved mortgage.

Prepayment privileges

Prepayment privilege is a facility offered by the financial institutions to enable you to pay off your mortgage loan faster as well as before its term and may differ from one organization to another. Hence, it is advisable that you undertake a thorough research regarding all the choices available to you. At the same time, you should try to realize that the longer the amortization period of a mortgage (the term or full tenure to pay off a mortgage loan along with the accrued interest on it), the more amount of interest you will be paying on it. Usually, the amortization periods vary from a minimum of five years to a maximum of 25 years.

It is important to note that if you choose to make weekly or biweekly mortgage payments, instead of the usual monthly payments, you may be able to save as many as eight years time in paying off the mortgage in full. If calculated in terms of money, the saving would be to the tune of $38,000 if you have a $100,000 mortgage. However, this estimation largely depends on the prevailing rates of interest in the market.

Alternately, you may also consider the facility of portability, which means availing the provision of transferring your mortgage. For instance, if you ever decide to sell your present home and buy a new one, you will be able to pass on your mortgage loan to the person who buys your home or carry it along with you to the new property you acquire. In either of these cases you are not required to pay any penalty or monetary fine to the lender. The portability aspect of a mortgage may turn out to be an important advantage for you if your current mortgage rate is lower than the prevailing market rates.

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