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May 24, 2018
1 Year Closed : 2.94 %
3 Year Closed : 3.19 %
5 Year Closed : 3.34 %
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Frequently asked questions.

Why use a mortgage professional?
What is the Home Buyers' Plan?
Do I qualify for the 5% down payment program?
What should I expect for closing costs?
What is Property Transfer Tax?
What type of income proof do I have to provide?

Why use a mortgage professional?

  • Power of professional negotiating expertise.
  • One stop convenience for access to numerous mortgage products.
  • Unbiased knowledgeable advice.
  • Access to unadvertised rates.
  • Work for you, not the Bank.
What is the Home Buyers' Plan?
  • The Home Buyers' Plan is a federal government program that allows home buyers to use $25,000.00 for each purchaser from his/her own RRSP.
  • You must not have owned a principal residence within the last 5 years.
  • You must intend to occupy your home as a principal residence.
  • Minimum repayment is 15 equal annual installments. This schedule can be accelerated.
  • The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.
  • You must complete a Form T1036.
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Do I qualify for the 5% down payment program?

  • The home must be located in Canada and be purchased to be occupied as your principal residence.
  • For purchases of $500,000 or less you must have from your own resources a down payment of at least 5% of the purchase price of the home. For purchases over $500,000 there is a graduated scale for down payments whereby you must have at least 5% of the first $500,000 and 10% over that to a maximum purchase of $999,999. The program is not available for purchases of $1,000,000 or more.
  • Your mortgage payment, both principle and interest, as well as your property taxes, heat and condo fees (if applicable) must not exceed 32% of your gross household income. (This can be increased up to 39% depending on your credit rating.)
  • You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
  • You meet the lender's eligibility requirements regarding income, employment and credit worthiness.
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What should I expect for closing costs?

  • Closing costs are approximately 1.5% of the Purchase Price. The following are approximate costs: 
  • Appraisal Fee: $350.00
  • CMHC FEE (if applicable): $165.00
  • Survey Certificate/ Title Insurance (if applicable): $350.00
  • Home Inspection: $500.00
  • Legal Fees: $1000.00
  • Tax Adjustment: (if applicable)
  • Interest Adjustment: (if applicable)
  • Property Transfer Tax: (if applicable)
 

What type of income proof do I have to provide?

In most situations lenders require a comfort level that the borrower has sufficient income and cash flow to service the mortgage as well as any other obligations that they may have. The higher the Loan to Value (i.e. mortgage amount vs. purchase price) the more important this becomes as the lender is placing less reliance on the value and equity in the property and more on the earning power of the borrower. The following is a summary of what Lenders require depending on what type of job you have:

Salaried Employees

  • Job Letter - lenders use 100% of the income. Verification is made on company letterhead which must be signed by an appropriate individual. If you are a recent hire, the letter should confirm that any probation period has passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
  • Pay Stubs - many lenders will also require your most recent pay stubs.

Hourly Employees

  • Pay Stubs - showing year-to-date income verification.
  • T4's and/or Personal Tax Returns (T1 Generals) - 2 years to take an average.
  • Notice of Assessment (NOA) – optional depending on the lender. If required then most recent to confirm no taxes owed.

Commission Income

  • T4A's and/or Personal Tax Returns - 2 years to take an average.
  • Job Letter - confirming position.
  • Notice of Assessment (NOA) – optional depending on the lender. If required then most recent 2 years.

Self-Employed

  • Financial Statements of Company - 2 years average of net income used. Depending on lender's policies, the add-back of various personal expenses run through the company may or may not be allowed. Examples of such add-backs include depreciation, amortization and capital cost allowance (CCA). Lenders may also require Articles Of Incorporation.
  • Personal Notice of Assessments (NOA) - most recent 2 years.
  • Personal Tax Returns (Full T1 Generals showing personal net income) - most recent 2 years.

Overtime - will be used as long as there is a proven track record - 2 years evidence (T-4's).

Bonuses - once again a 2 yr track record required.

Part-time Job - should be in place for 2 years before using the additional income.

Tips - generally not recognized unless declared for tax purposes.

Car Allowances - this varies from lender to lender.

Alimony and Support - evidence that payments have been made regularly and a copy of divorce agreement is required.

Investment Income - must be received continuously. This source of income is limited to interest, dividends or some type of ongoing revenue. Capital gains, which result from the liquidation of an asset is a one time occurrence and can't be used.


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