BUYING YOUR HOME
> What can you afford?
If you are a first-time home buyer or are even entering the marketplace as a repeat buyer, you need to ask why you want, or need, to buy. Are you making a move to a new community due to a lifestyle change such as a new job or a new relationship? Or is your buying an option and not a requirement? What would you like in terms of a house that you do not have now? Do you have a purchasing timeframe?
There are many questions you need to ask yourself as you prepare to make a major purchase such as a house. The main question being, do you have the money? Homes and financing are closely intertwined. (Financing is the difference between the purchase price and the down payment, commonly referred to as debt or the mortgage.) How much can you afford for a down payment and how long do you want to stretch out your mortgage payments? In addition to a down payment, you also need to consider money for closing costs (the final costs associated with closing the mortgage).
Saugeen Community Credit Union welcomes the opportunity to work closely with you while you consider and move towards the purchase of a new house. We are here to help answer all of your financial questions and help you determine what your level of comfort is and what you can safely afford without exerting a great financial strain on your lifestyle.
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> Acquiring a down payment.
There are many different things to consider when figuring out a down payment for your house purchase.
The main consideration is raising enough money for a down payment.
You must provide at least a 5% down payment when you buy a home. Any home purchase where the down payment is between 5% and 19% is considered a high-ratio mortgage, and the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada. The insurer will also charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. This amount can be paid in full up front or added to the principal portion of your mortgage.
For more information about mortgage loan insurance, visit the Canada Mortgage and Housing Corporation or Genworth Financial Canada.
You can acquire money for a down payment in a number of ways:
• You can deposit regular payments into a Savings account.
• You can use your RRSPs as a downpayment. If you are a first time home buyer you can conditionally withdraw up to $20,000 tax free for a period of 15 years.
• You can borrow the money from a parent or relative.
• You can use a personal loan or your line of credit.
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> Finding the right house for you.
Choosing your home is a big decision and it is one you don't want to rush into to ensure it is the right one for you and your needs.
No aspect of the home buying process is more personal or variable than bargaining between buyers and sellers. This is why it is very important to choose a real estate agent that has your best interests at heart. Does he or she know the community you wish to move to? Have they sold numerous homes in the community and have years negotiating realty transactions? Make sure you interview different real estate agents so that you find the one that will work the best towards your interest. You want the house buying experience to be an enjoyable one.
When you find houses in your price range that you are interested in, ask yourself on important question - Is this THE house?
A house is just a building, but a home is far more. It's where you will live, relax, entertain friends, raise families, and work. A home is where you spend the majority of your life, and so choosing a house is an enormous decision.
How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible. Have your real estate agent help you look at many different options. Once you have found one you are happy with, the next step is to allow us to help outfit you with the mortgage that will also suit your needs.
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> Choosing the mortgage right for you.
Saugeen Community Credit Union has various mortgage options to suit your financial and lifestyle needs. The best idea is to come in to one of our branches and speak with one of our loan officers about constructing a plan that will best serve you in the years to come.
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> Additional costs to consider.
There are many additional costs to consider when purchasing a home that you may fail to factor into your financial decisions. Some of the associated fees are:
• Lawyer fees for purchasing and finalizing the sale of the house.
• Lawyer fees for purchasing and finalizing the sale of the house.
• Municipal property and school taxes.
• Monthly condo maintenance fees (if applicable).
• Utilities, such as hydro, water, propane, natural gas, etc.
• Kitchen appliances, gardening equipment, tools, furniture, carpets or curtains. It's a good idea to factor these costs of items you think you'll need in the short term and factor these expenses into your initial financial planning.
• Land transfer tax. Most provinces charge a one-time tax based on a percentage of the purchase price.
• Property insurance – All homes must have adequate insurance coverage.
• Moving costs.
• HST on new home purchases (resale homes are exempt).
A good rule of thumb would be to factor additional costs at about 1.5% of your purchase price.
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TAKING CONTROL OF YOUR MORTGAGE
> Pay off your mortgage sooner.
Take advantage of various payment privileges with Saugeen Community Credit Union to help pay off your mortgage sooner. This will reduce the amount of interest you pay and help save you money:
• Make an extra, lump-sum payment to the original mortgage amount, once every year up to 15% yearly of original mortgage balance.
• Increase the amount of your regular monthly payments each year.
• Pay double the amount of your regular payment, on any or all payment dates.
• Shorten the amortization schedule – Most mortgages are amortized up to a 30-year period. You can choose a shorter amortization period to reduce the amount of interest you pay over the life of the mortgage.
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> Taking advantage of your home's equity.
Many home owners are enjoying appreciation on their properties and seeing their investments rise. You can take advantage of your financial gains by refinancing your mortgage to access the equity in your home. The re-financing can be used to pay off higher interest loans, lines of credit or credit cards. The equity gains could also be used to renovate your house.
During re-financing, you can choose the same amortization schedule that you had prior so that your mortgage is paid off when you originally planned. Or, you can repay it over a longer term, lowering your monthly payments to keep your financial strain at a minumum.
Whatever your choices or options, we are there to help you make informed and beneficial decisions for your future.
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> Home Renovations.
When it comes time to plan renovations for your home there are a number of different options available for you to consider to finance the project whether it is a minor of major one.
1. Saving for the complete renovation.
Before beginning your renovations, deposit a portion of your monthly income into a savings account until you can safely pay for the complete project. This is the most stress free way to handle your renovations financial burdern.
2. Borrowing for the renovation.
If your renovations/additions are going to be more than you can easily save for, then you may want to consider a personal loan, line of credit or a mortgage equity line of credit. By using the mortgage equity line of credit you can take advantage of the equity you have built into your home by receiving a maximum advance of 80% of the appraised value of the property.