Frequently asked mortgage questions

Our clients ask great questions! Here are some common concerns and our answers! Each week we answer new questions! Send your questions in today to julie@elevationmortgage.ca.

You aren’t alone – most first time home buyers are asking the same questions!

A minimum down payment of 5% is required to purchase a home for a purchase price up to $500,000. For a home over $500,000 buyers require 5% on the first $500,000 and then for every dollar over $500,000 they require 10% down payment.  You must also be able to show that you can cover the applicable closing costs like legal fees.

Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or in the form of a gift from an immediate family member (mom, dad, grandparents, siblings). Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor.

To determine ‘affordability’ you will first need to know your taxable income along with the amount of any debt outstanding, a potential purchase price and a down payment amount. Assuming it is your principal residence you are purchasing; calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.

Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. These calculations help determine how much income may be used towards housing related payments, including your mortgage payment. These calculations are based on insurer and lender guidelines.

In addition to considering what the ratios say you can afford, it’s important to determine the mortgage payment that works for your personal or family budget. Being house poor is not a good situation. Our focus is on ensuring our clients can afford their mortgage, can add to savings, travel, eat out and pay down debts as well!

There are definitely financial responsibilities as a home owner. We work with you to plan ahead and create a budget!

Mortgage Payments
For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term and amortization.

Property and School Taxes 
Property tax can be paid in two ways – remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment.

Utilities 
As a home owner, you’ll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable.

Maintenance and Upkeep 
You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home’s market value, enhances the neighbourhood and, depending on the kind of renovations you make, could add to the value of your property.