Buyers Tips

March 29, 2015

Ibuying a homef you are buying a home, chances are that you feel as though you are in ‘over your head’. With these tips, you will find that you are not going to make a number of the same mistakes that many first-time homebuyers make.

Bi-weekly or weekly payments

When you get a mortgage, you might have the option to pay biweekly or weekly. There might be benefits to choosing the best option for you. You can save a lot of money if you pay more often – which means that on average, you are paying  four years less on your mortgage. Secondly, if you are paid weekly or biweekly, having this line up with your mortgage payment is much easier, because it simplifies your budgeting efforts.

Make extra payments

It might sound silly now, but making extra payments (if you are able to) can help save you on interest – a lot. When deciding upon the right mortgage company, one thing that we are very careful to look at is the privilege payments options. If you have a 20 percent privilege payment for example, you are allowed to pay $20,000 per year on a $100,000 mortgage.

It is also important that the privilege payment is flexible, meaning that you are able to pay as often as you want, and allows for smaller amounts. You can become mortgage free much faster if you periodically pay an additional $1,000 on your mortgage.

Reducing the CMHC fees on your purchase

If you need a mortgage that covers more than 80 percent of your property’s purchase price, it has to be insured by GE Mortgage insurance or Canada Mortgage and Housing (CMHC). As the down payment increases, the premium charged by these companies decreases.

If you finance your property at around 95 percent, you will see an additional 3.75 percent added to your mortgage. If you increase your down payment by 10 percent of the purchase price, you can reduce the premium to only 2.5 percent. You can avoid any additional insurance fee if you can put down at least 20 percent. Depending on your financial situation, you can try to avoid the insurance premium charge levied by CMHC or GE insurance by structuring your financing any number of ways.

Consider the benefits of larger down payments

Even though we have just explained the benefits of a larger down payment, remember that you do not want to stretch your budget to the point where you have no safety net. Credit cards are also not a great option, because you will always be making your credit card payments at a much higher rate.

Short-term rate vs. long-term rates

Most first-time mortgage shoppers have a hard time deciphering the options for the different mortgages. The terms can vary between fixed rate and variable, 6-month terms and 10-year terms. Taking a floating-rate mortgage (also known as a variable mortgage) can save you money.

For more information you can call me right now: 416-825-7888 or email

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