First-time buyers
Congratulations on moving forward with the purchase of your first property. We are fully aware that you have individual, specific and unique needs. We do everything possible to help you achieve your dream of ownership. In order to succeed, we offer you our advice and a negotiating power that will assure you the best mortgage conditions on the market as well as a personalized service tailored to your needs.
Insured Loan (CMHC)
If you buy a property and need to borrow more than 80% of the value of the property, your mortgage loan must be insured. This insurance protects the mortgage lender if the buyer defaults on his mortgage payments. It also allows the lender to offer you a mortgage for the purchase of a single-family dwelling or a duplex with only 5% cash down. In the case of a triplex or 4 unit building, the minimum cash down is 10% of the purchase price. It is important to keep in mind that you will be required to have an extra 1.5% of the purchase price available to cover closing costs.
If your down payment is less than 20%, you will have to pay a mortgage insurance premium that can be included in the initial amount of your mortgage loan. This premium will be based on the percentage of the property’s value being borrowed. The three best known insurers in Canada are: The Canadian Mortgage and Housing Corporation (CMHC), Genworth Financial and AIG.
The mortgage insurance premium is paid once at the time of closing. It can be added to your mortgage amount or paid separately. The standard rate varies between 0.60% and 3.35% of the mortgage amount, depending on the amount of cash down disbursed.
0% Down
For buyers that have not accumulated the funds required for a 5% down payment, certain lenders offer products that include a cash back that can be used as a down payment. Keep in mind that you are still required to have excellent credit and a minimum of 1.5% of the purchase price of your own savings to cover closing costs.
Conventional Loan
For conventional loans, those without mortgage loan insurance, lenders require a down payment of at least 20% of the purchase price.
The Home Buyers Plan (HBP)
The Home Buyers Plan allows contributors to the Registered Retirement Savings Plan (RRSP) to withdraw, income tax free, at the Federal and Provincial levels, up to $25000.00 from their RRSP in order to finance the purchase or construction of their first home.
The main requirements of the plan are:
- The property in question must be located inCanada
- The property must be used as the primary dwelling in the year that follows its acquisition or construction.
- The acquisition contract is signed no later that the 30th of September of the year after its withdrawal.
The RRSP Withdrawal
- The withdrawal cannot exceed $25000.00
- The withdrawal must be made before or within 30 days of the acquisition of the property.
- The withdrawn amount must be reimbursed to the RRSP in payments amortized over a maximum of 15 years.
- The first repayment must be made at the latest at the end of the second year after which the withdrawal was made.
Admissibility Criteria
- The HBP is available when purchasing your first home or if you have used the HBP before, but have not been a home owner in the last 5 years. For 2nd time HBP users, the previous HBP withdrawal should have been reimbursed.
- For persons with a handicap that are purchasing a home that better suits their needs.
- For persons purchasing a home for a handicapped person that is blood related, bound by marriage, a common-law spouse or adopted.
Timeline
- The HBP users must start reimbursing the amount withdrawn 2 years after making the withdrawal.
- The withdrawn amount must be reimbursed within the following 15 years. The annual minimum repayment is therefore the withdrawn amount divided by 15.
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