The Numerology of Your Mortgage

This week I thought I would take a look at the numbers which show up in 99% of mortgages.

Down payment.  You must have at least 5% to put down on a home. A little known fact is that even if you have purchased with 5% down you may do so again. Including a second home for family or a vacation home.

Closing costs.  In addition you must have another 1.5% of the purchase price for the closing costs. These are things like legal fees and title insurance. 

Term Your mortgage will be broken into small pieces ranging from 6 months through 10 years. Though most Canadians choose the 5 year fixed rate mortgage, it is important to note that most mortgages are broken at the 38 month point.

Amortization This is the term used to for the total length of time of the mortgage. If you have less than 20% to put down you cannot go past 25 years. If you have more than 20% you can go up to 30 years.

Qualifying rate- The government made changes not too long ago and now all mortgages must qualify at either 5.14%, the current Bank of Canada posted rate or 2% higher than the rate you are being offered.

Interest rate. Though you have to qualify at the higher rate, you can search the market for the best possible rate for your situation.

Property taxes - With home ownership comes property taxes. You can pay them monthly through the city or have them included in the mortgage. Some banks will allow you to pay them annually but all have the right to insist on verification that they are up to date.

Insurance.   There are 4 types of insurance.
Mortgage default- when you have less than 20% down you must have this. It is a onetime amount and is based on a percentage of the mortgage. It is added to the mortgage.
Title - Title insurance is also a 1 time cost and runs about 309$.
Homeowners - You will be legally obligated to have insurance on your home while there is a mortgage in place
Life/disability.  It is a very good idea to have life and/or disability in place to protect your family in case of the worst case.

So there you have it!
The numerology of your mortgage involves many facets so again I say make sure you choose the best mortgage professional possible to help you through this process.

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