Home Buying FAQ
We've put together a list of common mortgage and home buying questions to help you better understand the process of buying a home. If you don't see your question below, contact Steenbeek Mortgage Team directly for additional guidance.
Q: Why use a mortgage broker?
A: While the banks can only offer you their own products, we have access to a number of lenders that provide a wide range of mortgage products and terms to choose from
Q: What is the benefit of getting pre-approved?
A: A mortgage pre-approval is just like applying for a mortgage, but it’s done before you shop for a home. You will determine how much you can afford and the price range you can shop in. If you choose a fixed interest rate mortgage, you are guaranteed a rate during the pre-approval period, so you are protected if interest rates rise while shopping for a home. If interest rates lower in that period, you will receive the lowest rate available.
Q: How much of a downpayment will I need?
A: The minimum down payment required to purchase a home in Canada depends on the property's purchase price. The down payment is calculated as a percentage of the purchase price. Here are the minimum down payment requirements:
For homes with a purchase price of less than $500,000: The minimum down payment is 5% of the purchase price.
For homes with a purchase price between $500,000 and $999,999: The minimum down payment is 5% of the first $500,000, plus 10% of the portion between $500,000 and $999,999.
For homes with a purchase price of $1 million or more: The minimum down payment is 20% of the purchase price.
It's important to note that these requirements may vary based on specific lending institution policies and other factors. It's always a good idea to consult with a mortgage broker or lender to get the most accurate and up-to-date information for your particular situation.
Q: What is the difference between High Ratio Mortgage Insurance and Mortgage Life Insurance?
A: When you purchase a home in Canada with less than a 20% down payment, it is considered a high ratio or insured mortgage. Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guarantee are default insurance companies that protect lenders in the event a borrower defaults on their mortgage. If a borrower stops making their mortgage payment, the insurer will handle the legal proceedings and compensate the lender if there is a loss after the property has been sold. Default insurers charge a one-time insurance premium, included on top of your mortgage amount.
Q: What is the best term to consider?
A: Usually the shorter the term, the lower the rate. However many people prefer the comfort of a longer mortgage term for its stability. We often recommend a longer term for first-time buyers. Variable rate mortgages are also a very attractive product that may be right for you. Talk to us to determine whether fixed or variable is best suited for you.