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 and extended amortization period without surcharge may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Homes.

You will need 35% down in order to avoid the CMHC insurance. Otherwise the insurance cost will run from 0.5% to as high as 7% of the total loan.

Ask your financial institution to calculate this for you.

Here are some basic calculations you can do that will help you determine exactly how much house you can afford.

1) The Down Payment
If you have a down payment  of 25% or more, you may qualify for a conventional mortgage loan which does not require mortgage loan insurance. A minimum down payment of 5% is required for a high ratio mortgage and you'll have to pay to insure the mortgage.

2)Maintenance Costs
You may want to start a separate maintenance fund, particularly if you're buying an older home, by setting aside $500-1000 and adding to it regularly.

3) Renovation Costs
Renovations always take longer than, and costs more than, you think.

4) Don't forget the Tax
The 5% GST applies to new housing. As of July 1, 2010 so does the HST (7%). However, there is a rebate, to a maximum of 2.5%, if your home costs less than $450,000.  There is no GST on resale housing unless the home has been substantially renovated, and then the tax is applied as if it were a new home.

In B.C. there is a PTT on all real estate, which is 1% to $100,000 and 2% on the remainder.  This is due when you pay your funds to the lawyer. New property is also HST (7%) applicable. First time buyers have an exemption if they meet certain criteria.

5) Appraisal Fee
If your loan is not insured, your lender may require a property appraisal at your expensee. Cost will be provided by Financial Institution.

6)Property Taxes
Your realtor will provide you with this amount.

7) Survey Fee
Your lender will require an up-to-date survey. If the Seller does not have one, you may have to pay to have one done. Houses only.

8)Property Insurance
This covers the replacement value of the structure of your home and its contents and for condos Third Party Liability.

9)Service Charges
You'll be charged a fee to hook up new services and utilities.

10)Lawyer's Fees
Lawyers review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details.  Fee will be at least $1000-$1500 plus Land Titles disbursements. Get a quote from NP or lawyer

11) Moving Costs
Moving companies charge between $50-$100 pr hour for a van and 2-3 movers. The rates are higher at month end and in the summer.

12)Condominium Fees
Charged monthly. The proerty manager will provide you with a Form B, stating the fee.

13)Home Inspection Fee
Around $400

For more information contact Maggie

Paying extra amounts on your mortgage can make a big interest saving over time. When we select a mortgage company, privilege payments options are something that we look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster.

Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you paid.

Variable rate mortgages have become popular with the consumer.  With the lowest rate available, it is simply the most effective mortgage product on the market!

Here's how it works...

The variable rate mortgage is based on a 5 year term, however, only the first 3 years are closed. years 4 and 5 are open with absolutely no pre-payment penalty. As an introduction, the first 3 months are set at 2.24%. After this great initial rate, your payments are based on PRIME less .40% for the remainder of the term.

What if Prime Rate goes up?
At any time, without penalty, you can convert into a closed mortgage 3 years or greater. When you decide to convert, you automatically get mortgage broker wholesale rates not bank posted!

Pre-Payment Options
Pre-pay up to 15% of your mortgage, without penalty, on an annual basis. You can also have the ability to DOUBLE your monthly mortgage payment on any payment date. (banks terms may vary).

Adjustable Rate Mortgages
There is a tremendous spread between the prime interest rate and a fixed long term mortgage. This spread can be as much as 3%. The adjustable rate mortgage is quite different than traditional mortgages in that long-term mortgages are priced according to Bond market, while the adjustable rate mortgage is priced in accordance with the prime interest rate. The longer the term, the higher the interest rate.

When you select a longer term mortgage you are agreeing to pay a higher interest rate for that term. It is similar to paying an insurance premium to guarantee the interest rate but the insurance premium is the higher rate.

An adjustable rate mortgage gives you total control. Your mortgage would renew every 3 months at a fixed interest rate. If you change your mind and decide to convert to a longer term, you would be guaranteed a minimum discount off the banks posted rates.

The variable rate mortgage allows you to have the best of both worlds. Short term pricing with the ability to lock in your rates at any time.

July 2010