Should You Rent or Buy?

Buying a home is a big decision that requires a huge financial commitment. But is it right for you? Should you rent or buy? Can you afford it? And is buying a property really the right choice for you?

When comparing owning to renting, you need to know what the bottom line is, add up all the numbers, including the cost of your home, the size of your downpayment, utilities, interest rates and insurance. Then compare it to how much you would spend on rent. But also consider the fact that buying allows you to...

Which Home is Right For You?

The next step is to start looking at properties, either on your own or with the help of a real estate agent. The advantage of using an agent is that he or she will negotiate with the vendor on your behalf. Your agent will also be able to provide you with current selling prices on comparable properties, arrange viewing appointments, and handle all the paperwork involved with making an offer.

Whether you use an agent or look for a home on your own, you should be clear about your needs. Is location critical?...

The Buying Process

So you found the house that you want, but what’s next?

Before you sign your name to anything, remember two fundamentals rules. First, work with a lawyer or notary to ensure that your legal interests are being projected. Secondly, give yourself time to think, to see if this is really the home for you.

Before you present an offer to purchase, visit the home at least twice; once during the day and once during the evening. Perhaps talk to some neighbours. Make sure you know what you’re...

Mortgage Broker Can Help

There are generally two ways to get a mortgage in Canada: from a bank or from a licensed mortgage professional.

As independent mortgage brokers and mortgage agents, we’re not tied to any one lender or range of products. Our goal is to help you successfully finance your home or property. We’ll start by getting to know you and your homeownership goals. We’ll make a recommendation, drawing from available mortgage products that match your needs, and we will decide together on what’s right for you...

Getting Preapproved

Now that you know how much you can afford and the costs involved, you’re ready to start looking for your new home. The first thing you should do is apply for a pre-approved mortgage, because it will give you a good idea of the price range you can shop in.

Contact a mortgage broker and let them know that you’d like a pre-approved mortgage. They’ll ask you for some personal and financial details, such as proof of funds, a job letter, and a driver’s license for identification purposes...

Open or closed? Fixed or Variable?

Many consumers may only be familiar with the Big 5 banking institutions, but the truth is, there are many lenders in Canada that can give you a mortgage. There’s also many different mortgage options you can choose from.

Use a mortgage broker to help you navigate the process of securing a mortgage, and find one that’s right for you. We’ve already talked about conventional and high ratio mortgages, now let’s take a closer look at the different factors that will affect your mortgage...

What Can You Afford?

Before you start looking for a home, you need to figure out what you can afford. This means closely examining your financial situation. Start by figuring out what you’re earning each month. Besides your salary, this figure could include bonuses, commissions, investment income, and rental income. Also make a list of your monthly expenses. These can include your rent, utilities, TV and internet service. If you take public transit, include your monthly fare. Or if you drive, include things like parking, gas, and insurance.

Expenses also include income tax and...

Understanding Key Terminology

In this video, we’ll go over some common mortgage terminology. Understanding all the factors that determine your mortgage will help you choose a mortgage product that meets your financial needs. Your downpayment only pays a portion of the home’s purchase price. The outstanding balance is financed in the form of a mortgage from a bank or a lender.

A mortgage is simply a personal loan used to purchase a property. You pledge the property as security for the loan. The amount of the loan is called the principal. Interest is added to the amount you...

Shopping For a Mortgage

When shopping for a mortgage, it's important to do your research and compare options. Check with several lenders what products they offer and do the calculations. Then, decide on one that best meets your need. Or you can get in touch with a mortgage broker, who can do all the homework and price compare for you.

Here are some features and options that you can negotiate with lenders, or simply ask your mortgage broker about them.

Partial prepayment is an important feature...

Six Questions to Ask

When comparison shopping, think about what features are most important to you, and make a note of what each lender is offering. Here are six questions that you must ask when you’re shopping for a mortgage.

- What types of mortgages are available for the amount that you need?

- How long does the rate hold apply?

- What does the regular payments cover? Is it principal and interest only? Does it cover other...

Other Types of Mortgages

In this video, we’re going to go over some different types of mortgages. The most common mortgage is a residential purchase mortgage, also known as a home mortgage. As discussed in the previous video, the options and variety of mortgage terms and conditions can vary widely, so check with a mortgage broker.

A second mortgage is granted when there is already one other mortgage registered against your property. If you default and the property is sold, the second mortgage is paid only after the first mortgage has...

Mortgage Life Insurance

Buying a home is one of the single largest purchases you will make in your lifetime. At ecMORTGAGE we also believe it is an investment in you and your family's financial future... an investment that needs to be protected.

45% of uninsured Canadians included life insurance among their top five financial priorities and 21% ranked it in their top three - yet they still have no coverage.

76% of parents said they worry about their family's financial situation in case of...

How Much Is My Monthly Payment?

In the last video, we discussed the two affordability rules that lenders will use to determine whether you can afford the mortgage loan that you want.

To recap, the GDS ratio must not be more than 32% of your gross monthly income, and your TDS ratio must not be more than 40% of your gross monthly income.

Now, let’s look further at how the size of your downpayment will affect your monthly mortgage payment...

Home Buying Costs You Need to Know

Once you have figured out how much you can qualify for, the next step is to truly understand the costs involved in purchasing a property. No secret here, buying a property is expensive and requires you to come up with a significant amount of money just to execute the transaction. Some of the main costs include:

- Coming up with a downpayment – 5% minimum in Canada at this time

- Insurance Fees – although you might...

Managing Your Cost of Homeownership

Whether you’re buying a home or simply managing your mortgage debt, the financial advice from a professional mortgage broker can save you tens of thousands of dollars in your total cost of home ownership.

When you’re buying a home, your realtor can potentially save you thousands of dollars by negotiating the price for your home. Your mortgage broker could save you as much, or even more, by reducing the total cost of home ownership, and here’s how...

Accessing Lower Rates

Canadian banks are some of the best in the world. They play a vital role in the Canadian economy by facilitating the commerce between savers and borrowers. However, it is important to remember that banks are not a public utility. They are a business, and like all businesses, their responsibility to their shareholders is to maximize profits. This includes fairly maximizing the interest rates and fees they charge their Canadian customers.

Like any business, banks must compete...

Money Saving Strategy: Rounding Up

For many homeowners, making extra prepayment privileges is difficult in the early years of home ownership, when budgets are tight. A less aggressive strategy of simply rounding up your required monthly payment is a great way to start. A $200K mortgage, over 30 years, at an average annual rate of 7%, would result in monthly mortgage payments of $1,317. By simply rounding up your payment to an even $1,400, you would pay your mortgage of almost 5 years sooner, and would save $53,500 in mortgage interest paid to the lender. Even small amounts can make a big impact in your interest costs...

Money Saving Strategy: Amortization

Let’s take a look at the next money-saving strategy: lowering your amortization period. Based on the previous example of a $200K mortgage loan with a 30-year amortization period, and an average interest rate of 7%, your monthly mortgage payments would be $1,317. If you were, for example, to reduce your amortization period from 30 years to 25 years, your payments would go up by $83 each month. However, your total lifetime mortgage interest costs would go down from $274K to $220K, and your savings will be over $53K.

If you were to reduce your amortization...

Money Saving Strategy: Pre-Payment

Many banks offer benefits known as “prepayment privileges”. Prepayments are extra payments you make to pay down your mortgage faster. These privileges are defined in the closed term mortgage contract you would sign with your bank. It sets out the amount of your mortgage debt that you are allowed to pay off without incurring a penalty.

Typically, the amount of additional prepayments in any year, ranges from zero to 20%. Not all lenders or mortgage products offer prepayment privileges, so it’s important to speak with your mortgage...