Home
Buying
101
Presented by the Faris Team
Here at The Faris Team we endeavor to be leaders in the real estate profession, and provide our clients with the best real estate service experience in the
world. We have developed this quick Home Buying 101 guide to get you started
and more importantly, get you excited about the next steps of your real estate
journey.
We look forward to going “full out for you®!”
Sincerely,
The Faris Team
Includes
Understanding mortgage options plus what we always recommend
Information about closing costs – the real numbers
5 tips to help you save money
Moving checklist
Home Buying 101
The Mortgage Broker/Specialist:
A Vital Piece of the Real Estate Puzzle
Whether you choose to go with a mortgage broker or a mortgage specialist with a
bank/financial institution, we recommend booking a meeting early in the real estate
process. Meeting with a mortgage specialist/broker will provide insight into your
financial position. This can help ensure that your search qualifications are on track
with your financial needs.
What is the difference between a specialist and a broker?
A mortgage broker represents various financial institutions. They shop around at
multiple banks/financial institutions to seek the best deal.
Alternatively, a mortgage specialist with a bank/financial institution works directly
for that bank/financial institution. They have access to great deals that their bank/
financial institution has to offer. Don’t know who to go with?
The Faris Team has a list of preferred mortgage contacts that will give our clients
both exceptional service and the best deals possible. Even if you already have a
mortgage contact in mind, we highly recommend getting a second opinion. This
one-hour time investment could result in saving you thousands of dollars in interest.
Visit faristeam.ca for an up to date directory or give us a call at 1 888 444 9533.
Understanding Mortgage Options
During your meeting with a mortgage specialist, you will not only discuss your
finances but also the ins and outs of mortgage options available in today’s market.
Take the time to inquire about:
Mortgage insurance, if the down payment is less than 20% of purchase price
(Genworth or CMHC)
The required down payment
What your monthly carrying costs will be
Royal LePage The Faris Team
2
Home Buying 101
Your mortgage specialist may also detail money saving options and strategies like
portable mortgages, how to pay the mortgage down quicker and how to avoid
reapplying if the mortgage expires.
Consider Bridge Financing
Bridge loans are short-term loans that bridge the gap between two different
closing dates. These are more commonly used when an existing homeowner sells
their home, and then buys another home, with two different closing dates.
Closing both homes on the same day can be very stressful and costly, particularly if
your closing times don’t line up properly or if your lawyer can’t accommodate the
close on that day.
For example: If you ordered moving trucks, they would have to wait until your new
home closes before they could unpack. Moving trucks typically charge by the hour.
It could become quite the juggling act to pack and unpack your moving truck all in
one day.
Recently, bridge loans have also become a very popular way to take possession of
a new home a couple of days or weeks in advance to allow for renovations.
Bridge financing is tool that you can use to relieve stress so that the purchase of a
new home a pleasurable one. Typically inexpensive, we recommend you speak to
your mortgage broker/financial institution to get more information.
What Can You Afford?
Your mortgage professional is there to help you discover the maximum house price
you can afford. The most important factors considered are your income, down
payment and mortgage interest rate.
Royal LePage The Faris Team
3
Home Buying 101
There are two affordability rules to keep in mind:
Rule #1
Your monthly housing costs (principal mortgage, interest on mortgage, property
taxes, heating) shouldn’t be more than 32% of your gross monthly income. For a
condominium, this would also include half of the condo fees. For a leasehold, this
price would also include the entire annual site lease.
Rule #2
Your entire monthly debt load (housing costs plus other debt payments) should not
be more than 40% of your gross monthly income.
Get a Mortgage Pre-Approval
Being a pre-approved buyer has a real advantage:
You will know what you can afford and be able to confidently put in an offer.
A preapproval could potentially save you thousands of dollars. Rates are
typically guaranteed for 90-120 days. By locking in to an interest rate, you
are protected if the interest rates should rise. Conversely, if the interest rate
happens to drop, you will still have access to the lower rate.
Being pre-approved gives you an edge over the competition. Having a
preapproval demonstrates to sellers and their Realtors® that you are a
serious buyer with solid financial backing. This can help when negotiating
your home purchase.
Closing Costs
During the meeting with your lawyer, you will need to provide a cheque that will
include your down payment, adjustments and any other costs accrued. This amount
will be less the initial deposit that was submitted with your offer (upon acceptance).
Your lawyer will provide you with a complete breakdown of the amount owing.
Royal LePage The Faris Team
4
Home Buying 101
Closing costs incurred on the day of closing:
Down Payment
Mortgage insurance
Land transfer tax
Adjustments
Lawyer Fees
HST (if applicable)
Mortgage Insurance
If you have a Genworth or CMHC (Canada Mortgage and Housing Corporation)
insured mortgage, there will be a cost for the insurance coverage. Anything below a
20% down payment typically requires this insurance. This fee is usually blended into
the mortgage payment, however you will owe tax (HST 13%) on your insured
mortgage total amount. The tax portion will be a part of the cheque given to the
lawyer.
Please note: if you purchase an energy-efficient home or make energy-saving
renovations, CMHC offers a 10% mortgage loan insurance premium refund and an
extended amortization period. (CMHC Green Home)
Land Transfer Tax (Buyers only):
Land transfer tax varies depending on the cost of the property. Land transfer tax is
1-2% of your purchase price and will be part of the cheque given to your lawyer.
Royal LePage The Faris Team
5
Home Buying 101
Mortgage Insurance
If you have a Genworth or CMHC (Canada Mortgage and Housing Corporation)
insured mortgage, there will be a cost for the insurance coverage. Anything below a
20% down payment typically requires this insurance. This fee is usually blended into
the mortgage payment, however you will owe tax (HST 13%) on your insured
mortgage total amount. The tax portion will be a part of the cheque given to the
lawyer.
Please note: if you purchase an energy-efficient home or make energy-saving
renovations, CMHC offers a 10% mortgage loan insurance premium refund and an
extended amortization period. (CMHC Green Home)
Land Transfer Tax (Buyers only):
Land transfer tax varies depending on the cost of the property. Land transfer tax is
1-2% of your purchase price and will be part of the cheque given to your lawyer.
Adjustments
Adjustments are common. Any applicable adjustments will be made on closing. For
example: if the seller has paid for 6 months of the property taxes and you are
closing with 3 months remaining of that prepaid tax, the seller will need a
reimbursement from you, the buyer, on closing. This will be part of the cheque given
to the lawyer.
Legal Fees
You should anticipate legal fees starting at $1,000 to handle the purchase and
mortgage for your property. In addition, you will be responsible for the lawyer’s
disbursements (out-of pocket expenses) including the title search, title insurance,
off-title searches, registrations and administration fees. The disbursements are
impacted by the purchase price and can range $600-$900. In addition, you will
also have to pay HST on applicable items.
Royal LePage The Faris Team
6
Home Buying 101
HST (if applicable)
If you are buying a new home, commercial property, vacant land or a property
generating income (i.e. agricultural land), HST could be applicable. We
recommend that you consult your lawyer to both confirm if HST is applicable and
the exact amount required. This will be part of the cheque given to the lawyer.
Other Potential Costs
Additional costs to plan for include fees associated with moving, like utility hookups,
movers, storage rentals and cleaning services. Note, the price for these costs will
vary for each property.
Tips to Help You Save Money
Tip 1: Consider Life Insurance
Type A home/property purchase is a major investment. We recommend taking
a moment to consider providing valued life insurance protection for you and
your loved ones.
Life insurance can be purchased through a variety of providers, including your
financial institution (bank), mortgage broker or a life insurance broker. We
recommend using a life insurance broker, as we have found that these industry
experts can typically insure you for more coverage with less investment,
thus saving you money. If you select this route, be prepared to decline your
mortgage life insurance through your bank institution.
Don’t know who to go with?
The Faris Team has a list of preferred life insurance contacts that will give our
clients both exceptional service and the best deals possible. Visit faristeam.ca
for an up to date directory or give us a call at 1 888 444 9533.
Royal LePage The Faris Team
7
Home Buying 101
Tip 2: Pay Your Taxes Directly to the City/Township
Prior to closing date, arrange for your taxes to be paid directly to the city/
township. As there will be no interest charged and no extra bank fees, this
could potentially save you $200. Paying taxes through your mortgage could be
more costly.
Tip 3: Pay Interest Semi-Annually
We recommend that you arrange with your mortgage representative/bank
institution that you pay interest semi-annually, and not monthly. This will save
you a significant amount of money.
Tip 4: Plan Ahead
In the event that you move before your mortgage expires, there could
potentially be a penalty. The mortgage penalty is typically calculated on the
remaining amount of mortgage, after you make your pre-payment to the
financial institution for that year.
Most financial institutions allow an annual pre-payment privilege (lump sum
typically 10-15% of your original mortgage) to pay down your mortgage faster.
Simply paying your annual pre-payment privilege prior to moving your
mortgage could reduce your mortgage penalty by 10-15%.
Tip 5: Research Government Programs
Check to see if you qualify for the following government programs:
Tax Free Savings Account (TFSA)
Home Buyer’s Plan (HBP)
Land Transfer Tax Refund for First-time Homebuyers
Tax Free Savings Account (TFSA)
Royal LePage The Faris Team
8
Home Buying 101
The Government also offers programs, grants and incentives to help with the
renovation of your home:
Federal
GST/HST New Housing Rebate
Enbridge Gas Residential Rebates and Incentive Programs
Smart Thermostats Program
Home Energy Conservation (HEC) Program
Home Winterproofing Program
Provincial/Municipal:
Ontario energy and property tax credit
Ontario healthy homes renovation tax credit
Ontario senior homeowner’s property tax grant
For the most up to date information, please contact your mortgage professional or
refer to Service Canada’s website:
http://www.servicecanada.gc.ca/eng/lifeevents/buying_a_home.shtml
Royal LePage The Faris Team
9
Home Buying 101
Moving Checklist
For a list of our trusted business contacts, consult the Preferred Vendor sheet
included in your Faris Buyer Guide, visit faristeam.ca for an up to date directory or
give us a call at 1 888 444 9533.
1-2 Months Before Your Move
Create a "move file" to keep track of quotes, receipts and other important
information.
Purchase or update a home insurance policy for your new home (insurance
binder
letter).
Plan your moving method (truck rental, packers, movers, etc.) and get cost
estimates.
Plan how you will move vehicles, plants, pets, important files and valuables.
Plan how you will arrange furniture in the new place – use a floor plan or sketch.
This will help the movers know where to place the furniture.
Use items that can’t be easily moved such as frozen foods.
Order boxes and moving supplies- moving companies have regular and
specialized boxes such as wardrobe boxes for added convenience.
Begin organizing your home (separate items into those you will keep, donate
or discard).
Pre-pack items you will not be using until you move (i.e. seasonal items).
Royal LePage The Faris Team
10
Home Buying 101
Clearly label each box with its contents and the room it belongs. We provide
complimentary Faris Team room labels for your convenience.
1 Month Before You Move (Address Change Checklist)
Notify the following companies, organizations and professionals of your move and
the effective date of your change of address
Change your address either online or at your local post office with Canada
Post and set up mail forwarding to your new address. Please note:
Complimentary Move Announcement Cards are offered to customers at post
offices to notify correspondents of a new address. However, the customer
must apply the applicable postage.
Change the address on your health card, driver's license, and/or vehicle
permit online. Visit Service Ontario’s website: https://www.ontario.ca/page/
serviceontario and click on “change your address” under ID & Certificates.
You can also visit a ServiceOntario Centre in person.
Canada Customs and Revenue Agency: child tax benefit, Canada Pension
Plan, GST rebate, income tax.
Update your Canada Pension Plan program and/or the Old Age Security
information, if applicable, so that you will continue to receive your benefits on
time. You can easily update your personal information using My Service
Canada Account.
Change your address with the Employment Insurance program, if applicable,
so that you will continue to receive your benefits on time. You can easily
update your personal information using My Service Canada Account.
Royal LePage The Faris Team
11
Home Buying 101
Employer(s)
Friends, Relatives
Landlord (if renting)
Doctor, Dentist, Optician, Veterinarian
Financial Institutions/Banks/Credit Card Companies
Lawyer(s)
Insurance Companies (Life, Vehicle, Medical, Pet, Contents)
Phone/Cellular Phone/Internet/Cable/Satellite company
Schools, Daycares
Utilities (Gas, Hydro, Water): Advise them of both your new address and move
in date.
Subscriptions (newsletters, magazines)
Other: Workplace, Memberships (i.e. Clubs, Gym), Canadian Firearms
Centre, Other
License Organizations (i.e. hunting or fishing license)
Royal LePage The Faris Team
12
Home Buying 101
1 Week Before You Move
Book a final walk through with us to view your new property several days prior
to the closing date. This will allow you to see and handle any concerns before
you move in.
Review your moving plans with your moving company, truck rental company,
or other parties involved in your move.
Pack an “essentials” box to keep with you during the move.
Keep medications close at hand during the move.
Welcome to Closing Day
On closing day, your lawyer will provide the keys to your new home, usually at their
office. This typically occurs in the afternoon, once the seller’s lawyer has received
the funds.
As closing times may vary, we highly recommend moving in at least one day AFTER
closing. Due to fluctuating closing times, we also recommend you do not book any
moving services on closing day.
Once you arrive at your new property:
Check all appliances, garage door openers, central vac, hot tub etc. again
to ensure that everything is in good working order, and inform us immediately
if they are not.
Take photos and notify us of anything unexpected. If you are not using a
mover, place carpet, floor and door frame protectors throughout
the home.
Replace locks for safety and make at least 2 copies of your new keys.
Enjoy your new home!
Royal LePage The Faris Team
13
Home Buying 101
Services you may want to consider for your new home
Duct cleaning
Professional cleaners
Painters/decorators
Carpet cleaning
Window cleaning
Furnace maintenance and filter change
Visit faristeam.ca for an up to date directory or give us a call at 1 888 444 9533.
Safety Checklist
Change locks
Store valuables and important files in a safe place
Test and change batteries in carbon monoxidedetector and smoke alarms
Fire evacuation plan
Fire extinguisher (one on each level)
Keep medications handy
Royal LePage The Faris Team
14
Home Buying 101
Visit FarisTeam.ca for more great resources to assist you on your home buying
journey, such as:
Simcoe County Community Guide
Condo Catalogue
See Why Thousands Trust The Faris Team
(c) Copyright 2016 by Mark Faris. All rights reserved. No part of this publication may be reproduced, distributed, or
transmitted in any form or by any means without written consent by Mark Faris.
Royal LePage The Faris Team
15