FAQ - Mortgages Alberta & Saskatchewan

Mortgage application frequently asked questions FAQWhat is a down payment?

A down payment is the money you have to invest in a home – your equity or financial stake. 

Few people are able to buy a home with cash, and most need a mortgage to finance the home purchase. 

The higher your down payment, the easier it is to qualify and the less your home costs in the long run.

How much can I afford to pay for a home?

Affordability guidelines are based on calculations that measure your taxable income, outstanding debt and monthly obligations.  A general rule would be to assume a mortgage (including property taxes and heating costs) that takes up no more than 32% of your income.   If you have many other monthly payments to make, like car loans, lines of credit, credit or store cards, etc., then you will have less to spend on a mortgage.  If you are buying a condo, add in your condo fees to your monthly calculations.

How much do I need as a down payment?

Mortgage questions answered for family home buyerThis will depend on the price of the property you are planning on purchasing and if you are new to Canada.  Typically, newcomers to Canada must have a 35% down payment. 

Standard mortgages require 20% down, while less than 20% requires mortgage loan insurance through CMHC or GE.  Purchasers may be able to buy a property with as little as 5% down, depending on the price of the property and the persons credit record / employment.

What is mortgage loan insurance?

Mortgage insurance is required when the borrower is not putting down 20%+ for a conventional mortgage.  The mortgage insurance insures the lenders against the borrowers defaulting on their mortgage.  There are 2 providers available in Canada for mortgage loan insurance:  CMHC – the Canada Mortgage and Housing Corporation – is a federal crown corporation that insures lenders.  The other company, GE Capital Mortgage Insurance Company is a private lender that also provides insurance.  Premiums will range from .5% to 7% and are added to the monthly mortgage payment.

What additional costs can I expect with a home?

FAQ real estate and mortgage topics answeredThere are several things to consider when buying a home, including closing costs, carrying costs, repairs, maintenance and upgrades to determine how much you really will spend on your home.  Some costs need to be paid right away, while some can be paid off over time. 

You may want to consider adding a line of credit to your mortgage so you have funds available if you need them.  Once you own the home, you can expect to pay property taxes/ school taxes, utilities,insurance, maintenance and upkeep.

What is a mortgage pre-approval?

If you are buying your first home, a mortgage pre-approval is the best place to start.  At Kincaid Mortgages, we sit down with you to go through your mortgage options, the terms available, your financial situation and your expected closing and carrying costs.  We can find the right mortgage loan for your needs and get you pre-approved.  That way, you can shop with confidence for homes that are within your price range.

What closing costs are associated with a home purchase?

There are several costs you will need to pay for when you buy the home – realtor fees (if you are selling a home to buy the new one), lawyer fees, land transfer taxes, home inspection fees, property insurance and any adjustment costs (between the buyer and seller – for prepaid taxes, utilities, etc.)

 

Mortgage home buyer questions answered by Kincaid Mortgages AlbertaWhat are the terms of a mortgage?
There are several components that make a mortgage a good value for your needs. The most obvious one is the mortgage interest rate.  However, there are other factors – or terms – that can make the mortgage more appropriate for your needs. 

For example, you will need to choose fixed rate, variable rate or a hybrid mortgage.  There are also pre-payment conditions, flexible payment options, payment schedules and the amortization period.  We go through all of your options with you to ensure your mortgage meets your current and future needs.