Frequently Asked Questions
Here are some FAQs that our clients frequently ask about our company’s many services:What is a down payment?
Most home buyers do not have enough cash resources to purchase a home outright and will turn to a financial institution for a mortgage. The down payment is the portion of the home purchase that you pay yourself. The amount of down payment represents your equity of your new home and must be well-determined before you consider purchasing a new home. A larger down payment means that your interest rates will be lower, reducing your costs in the long run.What is the minimum down payment needed for a home?
The minimum down payment of 5% is required to purchase a home in Canada, subject to maximum price restrictions. For example, a down payment of 20% is required for homes that exceed 1 million dollars in value. In addition to the down payment, you must provide proof that you are capable of covering the closing costs that include legal fees, appraisal fees, and disbursements. At least 5% of your down payment must be from your own cash resources or a gift from a family member provided that a signed letter states that it is a true gift and not a loan. Mortgages with less than 20% down payment must have mortgage loan insurance provided by CMHC or GE. For the exact laws and regulations regarding property taxes in Nova Scotia, speak to one of our Halifax home equity loans agents for a detailed explanation.How can you pay off your mortgage sooner?
There are many ways to reduce the time taken to pay off your mortgage. You can enjoy significant savings by:
- Making principal prepayments
- Making double-up payments
- Selecting a shorter amortization at renewal
- Increasing your payment frequency schedule
- Selecting a non-monthly or accelerated payment schedule
The length of mortgage terms varies from six months up to 25 years. As a rule of thumb, the shorter the term, the lower the interest rate and the longer the term, the higher the rate. While most home buyers typically choose four or five year mortgage terms, you should evaluate your current financial situation to find out what works best for you. If you plan to sell your house in the short-term without buying another, a short mortgage term may be the best option. If you are a first time home buyer, it may be more manageable to opt for a longer mortgage term so that your monthly payments are smaller.What is a fixed rate mortgage?
A fixed-rate mortgage has a fixed interest rate for a predetermined term between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected with no unexpected fluctuations.What is a variable rate mortgage?
There are 2 kinds of variable rate mortgages. The more commonly offered is the one in which the payment is determined by the bank’s prime lending rate. Your interest rate fluctuates depending on the prime rate, changing your mortgage payments. The other kind is a mortgage in which payments are fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. This means although you are always making the same mortgage payments, the percentage of your payment that goes into principal payment and interest payment will change according to the monthly interest rate.Should I wait for my mortgage to mature?
Lenders will often guarantee an interest rate to you as much as 120 days before your mortgage matures. As long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage as well, meaning a rate is promised well in advance of your maturity date and eliminating any worries of higher rates. If rates drop before the actual maturity rate, the lender will usually adjust your interest rate to be lower as well. Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one, so always investigate the possibility of a lower interest rate with another lender. Speak to one of our representatives to get expert advice on your mortgage situation.What is a home inspection?
A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector checks all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weatherproofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.
A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A thorough home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.What are the costs associated with buying a home?
First, you have to make sure you have enough money for a down payment – the portion of the purchase price that you furnish yourself. Secondly, you will require money for closing costs (up to 2.5% of the basic purchase price). If you want to have the home inspected by a professional building inspector you will need to pay an inspection fee. The inspection will reveal areas where repairs or maintenance are required and will assure you that the house is structurally sound. You will be responsible for paying the fees and disbursements for the lawyer or notary acting for you in the purchase of your home. There are closing and adjustment costs, interest adjustment costs between buyer and seller and sometimes land transfer tax – a one-time tax based on a percentage of the purchase price of the property and/or mortgage amount.
For any questions that are not listed in our FAQs or inquiries regarding our financial services including home equity loans, bad credit loans, home financing, and debt consolidation, contact us at Canada East Mortgages today. Our Halifax home equity loans agents are available throughout Halifax, Dartmouth, Cape Breton, Truro, Amherst, New Glasgow, Bridgewater, Yarmouth, Kentville, Antigonish, and Stellarton. Give us a call to learn more about our company and speak to one of our friendly advisors to see how we can help you with your finances!