Mortgage Resources - Preparing to Buy a Home

Whether you’re a first-time homebuyer or purchasing a home for the second or third time, the journey to owning a valuable piece of real estate is exciting, and rewarding.

There are so many decisions to be made, and they are decisions that have long-term consequences. Yet there are many experts with specialized advice who are ready to help you make the best choices for you, your family, and your future.

What can you afford?

To borrow money to finance the purchase of your new home, you will need to determine how a mortgage payment will affect your current budget.

You can do some short and long-term planning to see how different sized mortgage payments or mortgage amounts will affect your finances.

Try our online mortgage calculator to find out how much you could borrow and what your mortgage payments would be.

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Step 2: Assessing your down payment

How large a down payment you put toward your new home is one of the most important decisions to make in the homebuying process. Putting down a sizable down payment is a cost-saving measure.

The greater the down payment, the more you will save in interest and insurance fees. The smaller the down payment, the longer it will take for you to become mortgage-free.

The source of your down payment may come from the sale of an existing home, your personal savings, or other sources, such as family members, or a combination of these.

Your first mortgage decision involves determining what percentage of the purchase price of your home will go toward your down payment. This decision, in turn, determines which type of mortgage you can apply for.

RRSP Home Buyer’s Plan

If you are a first-time homebuyer, you can take advantage of the RRSP Home Buyer’s Plan to withdraw up to $25,000 from your Registered Retirement Savings Plan to use as a down payment.

The amount you withdraw is treated like a loan and must be repaid over a maximum of 15 years. Amounts not repaid in accordance with the Plan are considered income and will be subject to tax.

If, as part of your homebuyer’s plan withdrawal, you withdraw RRSP contributions that were made in the prior 89 days, you may be denied an RRSP deduction for those contributions.

To qualify for the RRSP Home Buyer’s Plan, you must:

• Be a first-time homebuyer or have not owned a home in the past 5 years.
• Have entered in to a written agreement to purchase or build your home at the time of withdrawal.
• Intend to occupy the new home as your principal place of residence.
• Be a resident of Canada.

If you meet the conditions of the program and want to withdraw from your RRSP, you must complete a CCRA Form T1036 – Home Buyer’s Plan Request to Withdrawal Funds from an RRSP, and present it to the financial institution that holds your RRSP.

The Canada Customs and Revenue Agency has more information.

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Step 3: Getting Pre-Approval for Your Mortgage

Before you start house hunting, consider applying for a pre-approved mortgage. With a pre-approved mortgage, you have some advantages:

• You know your price range, so you can narrow your search.
• The seller will find your offer more attractive when they know that you already have financing.
• Your mortgage rate is guaranteed for 60 days.

Applying is free, and you are under no obligation to accept our offer.

We will review your application and contact you within two business days to let you know the status of your application.

Information you will be asked to provide

(If you have co-applicants for the mortgage, their information would also be included on the application.)

• Information about the mortgage you are applying for.
• Personal information.
• Employment history.
• Your assets and liabilities.
• Your contact information.

Documentation you may need

You may need to provide some documentation to support your application:

• Your most recent year’s income tax forms or your paystubs.
• Statements for both registered and non-registered investments.
• If you are receiving money from friends or relatives for the down payment, you will need a signed letter which clearly states that the monies are a gift and no repayment is expected.
• Existing mortgage balance and financial institution holding your mortgage(s), if applicable.
• Current value of your home, if applicable.
• The name and address of the financial institution(s) where you have your personal banking.

Now you’re ready to start searching for a home

With a pre-approved mortgage, you can begin looking at potential homes with confidence.

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