I Thought I Just had to Pay the Mortgage!?

Marci • May 16, 2013

You’re preparing to go house shopping and naturally one of your first thoughts is, “what can I afford?” You meet your mortgage professional to determine potential mortgage payments and get a feeling for the household budget, but have you remembered to set aside about 1.5% of the purchase price for closing costs?

 

Your mortgage professional should help you understand these costs early in the game so that you are shopping within your means. Even though the estimate is 1.5% (lenders require buyers to prove they have the money available) you may not spend the full amount – but you want a firm understanding of how much money you will need for the down payment and closing costs. Closing costs always fall outside the mortgage.

 

I advise my clients to calculate their closing costs first, then see what is available for the down payment. For example, if you have $50,000 and your closing costs are about $10,000, you will likely end up with $40,000 for your down payment. This reduced down payment will impact your mortgage size and may impact the house price range you can shop for.

 

Closing costs include things like lawyer or notary fees, municipal property tax adjustments, strata payment adjustments and in B.C., the Property Purchase Tax (PPT). PPT is 1% on the first $200,000 of the house purchase price and 2% on the balance. First time buyers may be eligible for an exemption – check out my previous blog about “tax savings”. 

 

These costs are settled at the time of closing the purchase with the lawyer or notary.

 

Outside of the standard property purchase closing costs, I suggest my clients also include things like moving expenses, disconnect and new hook up charges for utilities like Hydro or phone and those little improvements like changing the locks, a couple of new window screens or a new cabinet for the laundry room. No move is complete without a few trips to the hardware store!

 

Make sure you like and trust your legal counsel. Many of the fees you will incur are non-negotiable, but lawyer or notary fees are. If you don’t have a lawyer you regularly work with, ask your mortgage professional or your realtor for recommendations. Get a quote on the fees. You have a choice in who you use and the ability to shop around.

 

Closing costs are part of every real estate transaction. Make sure you include them in your budgeting process to avoid those unpleasant surprises at the time you close the sale.

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Big News for First-Time Home Buyers: GST Relief Is Here!

By Marci Deane • May 28, 2025
Buying your first home just got a little easier — and a lot less expensive — thanks to a major new government announcement made on May 27, 2025. If you're thinking about purchasing a newly built home or condo, here's what you need to know (in plain English). What’s the Big Change? The Government of Canada is introducing a new GST rebate just for First-Time Home Buyers (FTHB) : 100% GST rebate on new homes up to $1 million A partial GST rebate for homes between $1 million and $1.5 million No rebate for homes priced $1.5 million or more 💥 Translation: You could save up to $50,000 in taxes on a new build — serious money back in your pocket! What Types of Homes Qualify? The rebate applies to: New homes or condos purchased from a builder Owner-built homes (yep, if you're building yourself!) Co-op housing units (if you're buying shares in a housing co-op) Who Qualifies as a First-Time Buyer? You’re considered a First-Time Home Buyer if: You're 18 or older A Canadian citizen or permanent resident You (or your spouse/common-law partner) haven’t owned a home in the last 4 years — anywhere in the world When Does This Start? To qualify, your purchase contract signed or construction must start on or after May 27, 2025 , and: Construction must begin before 2031 Homes must be substantially completed before 2036 Buyers with contracts signed prior to May 27, 2025 will NOT qualify Some Fine Print You Should Know There are a few limits: You can only claim this once in your lifetime If your spouse or partner already used it , you can’t You won’t qualify if the original agreement to buy was signed before May 27, 2025 (Yes, I already said that but it bears repeating!!) It must be your primary residence Why This Is a Game Changer Let’s be real — saving up for a home is hard enough , especially in today’s market. This new GST rebate is a massive win for first-time buyers and a big push to get more homes built across Canada. ✔️ Less tax ✔️ More homes ✔️ A major step toward affordable ownership 📌 Want the Full Details? You can read the full government announcement right here . Need help understanding this or to get pre-approved, I am here to help. marci@askmarci.ca

How Employment Status Impacts Your Mortgage Application

By Marci Deane • May 28, 2025
Chances are if you’re applying for a mortgage, you feel confident about the state of your current employment or your ability to find a similar position if you need to. However, your actual employment status probably means more to the lender than you might think. You see, to a lender, your employment status is a strong indicator of your employer’s commitment to your continued employment. So, regardless of how you feel about your position, it’s what can be proven on paper that matters most. Let’s walk through some of the common ways lenders can look at employment status. Permanent Employment The gold star of employment. If your employer has made you a permanent employee, it means that your position is as secure as any position can be. When a lender sees permanent status (passed probation), it gives them the confidence that you’re valuable to the company and that they can rely on your income. Probationary Period Despite the quality of your job, if you’ve only been with the company for a short while, you’ll be required to prove that you’ve passed any probationary period. Although most probationary periods are typically 3-6 months, they can be longer. You might now even be aware that you’re under probation. The lender will want to make sure that you’re not under a probationary period because your employment can be terminated without any cause while under probation. Once you’ve made it through your initial evaluation, the lender will be more confident in your employment status. Now, it’s not the length of time with the employer that the lender is scrutinizing; instead, it’s the status of your probation. So if you’ve only been with a company for one month, but you’ve been working with them as a contractor for a few years, and they’re willing to waive the probationary period based on a previous relationship, that should give the lender all the confidence they need. We’ll have to get that documented. Parental Leave Suppose you’re currently on, planning to be on, or just about to be done a parental leave, regardless of the income you’re now collecting, as long as you have an employment letter that outlines your guaranteed return to work position (and date). In that case, you can use your return to work income to qualify on your mortgage application. It’s not the parental leave that the lender has issues with; it’s the ability you have to return to the position you left. Term Contracts Term contracts are hands down the most ambiguous and misunderstood employment status as it’s usually well-qualified and educated individuals who are working excellent jobs with no documented proof of future employment. A term contract indicates that you have a start date and an end date, and you are paid a specific amount for that specified amount of time. Unfortunately, the lack of stability here is not a lot for a lender to go on when evaluating your long-term ability to repay your mortgage. So to qualify income on a term contract, you want to establish the income you’ve received for at least two years. However, sometimes lenders like to see that your contract has been renewed at least once before considering it as income towards your mortgage application. In summary If you’ve recently changed jobs or are thinking about making a career change, and qualifying for a mortgage is on the horizon, or if you have any questions at all, please connect anytime. We can work through the details together and make sure you have a plan in place. It would be a pleasure to work with you!

Is There A Difference Between A Deposit And Downpayment

By Marci Deane • May 21, 2025
If you’re new to the home buying process, it’s easy to get confused by some of the terms used. The purpose of this article is to clear up any confusion between the deposit and downpayment. What is a deposit? The deposit is the money included with a purchase contract as a sign of good faith when you offer to purchase a property. It’s the “consideration” that helps make up the contract and binds you to the agreement. Typically, you include a certified cheque or a bank draft that your real estate brokerage holds while negotiations are finalized when you offer to purchase a property. If your offer is accepted, your deposit is held in your Realtor’s trust account. If your offer is accepted and you commit to buying the property, your deposit is transferred to the lawyer’s trust account and included in your downpayment. If you aren’t able to reach an agreement, the deposit is refunded to you. However, if you commit to buying the property and don’t complete the transaction, your deposit could be forfeit to the seller. Your deposit goes ahead of the downpayment but makes up part of the downpayment. The amount you put forward as a deposit when negotiating the terms of a purchase contract is arbitrary, meaning there is no predefined or standard amount. Instead, it’s best to discuss this with your real estate professional as your deposit can be a negotiating factor in and of itself. A larger deposit may give you a better chance of having your offer accepted in a competitive situation. It also puts you on the hook for more if something changes down the line and you cannot complete the purchase. What is a downpayment? Your downpayment refers to the initial payment you make when buying a property through mortgage financing. In Canada, the minimum downpayment amount is 5%, as lenders can only lend up to 95% of the property’s value. Securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. You can source your downpayment from your resources, the sale of a property, an RRSP, a gift from a family member, or borrowed funds. Example scenario Let’s say that you are looking to purchase a property worth $400k. You’re planning on making a downpayment of 10% or $40k. When you make the initial offer to buy the property, you put forward $10k as a deposit your real estate brokerage holds in their trust account. If everything checks out with the home inspection and you’re satisfied with financing, you can remove all conditions. Your $10k deposit is transferred to the lawyer’s trust account, where will add the remaining $30k for the downpayment. With your $40k downpayment made, once you sign the mortgage documents and cover the legal and closing costs, the lender will forward the remaining 90% in the form of a mortgage registered to your title, and you have officially purchased the property! If you have any questions about the difference between the deposit and the downpayment or any other mortgage terms, please connect anytime. It would be a pleasure to work with you.