Mortgages for First-Time Home Buyers in Alberta
First Time Home Buyer
If you are a First Time Home Buyer you are officially our favourite client. Don’t tell the others!
We LOVE helping newbies kick off their home purchasing career.
We always like to start first timers off discussing this list:
✓ Start with a budget – we can help with that!
✓ Start your education – learn about the process – give us a call to chat!
✓ Set your goals
✓ Gather your documents (check out our document checklist below)
✓ Meet with a mortgage professional - that’s us!
✓ Ask ALLLL the questions
✓ Get an official mortgage pre approval – or a plan to get on the right track!
✓Start working on the plan
✓ Start shopping for your home
✓ Write an offer, conditional to financing
What is a Mortgage Pre Approval? Does it guarantee I’ll get the financing I need?
A Mortgage Pre Approval simply means that we’ve reviewed your credit score, income, assets and liabilities and determined the amount of money you should be able to borrow to purchase a home.
Having a pre-approved mortgage is a great advantage when you’re looking for a home.
Knowing the price range that you can comfortably afford will help you narrow your search and ensure you won’t be let down in finding out the home of your dreams is not within your reach. It will also allow you to negotiate more aggressively knowing that your financing is secure!
Download the MCC Home Centre App and get access to all premium tools to help plan your mortgage
There are a number of programs available to First Time Home Buyers.
1. RRSP Withdrawal Program
2. First Time Home Buyer Incentive Program
3. Metis Housing Down Payment Program
4. Built Green Program
If you’re interested in learning more about these programs, contact us or check out our PDF’s below.
Purchasing a home with less than 20% down is called a “high ratio” mortgage. First time and second time home buyers often purchase their home using a “high ratio” mortgage.
To put it another way, it means that your “down payment” is less than 20% of the value of the home. Because you have less than 20%, you are required to pay “default mortgage insurance.” Now this isn’t just a “write a cheque” scenario, they just tack the small insurance amount on to your overall mortgage amount. Although you have to consider default mortgage insurance if you have less than 20% down, the AMAZING news is that in today’s market the lowest rates being offered are for “high ratio” mortgages.
If you are purchasing a home with a down payment that is MORE than 20% of the purchase price of your home, you are applying for a “conventional” mortgage.
The advantages of a conventional mortgage are that, 1. you have the option to stretch the life of the mortgage over 30 years instead of 25 years and decrease your monthly payments. And 2. You are not obligated to pay default mortgage insurance. Typically, we see home buyers that have built equity over a few years utilize the “conventional” products.
Seasoned Home Buyer
When purchasing a new home, it can be difficult to navigate the best way to handle your current mortgage. Really difficult!
✓ Are you keeping that home and renting it out?
✓ Are you porting your current mortgage to the new home?
✓ Do you need bridge financing to get you from one transaction to the next?
✓ Are mortgage rates lower now? Do you need a more flexible mortgage product?
These are all questions that tend to come up as clients are shopping for a new home. Sometimes, clients are worried that if they go to a new lender or broker, they will incur payout penalties at their current lender. In some cases, this could be true!
At Spire, with all of our home buyers, we do a a comprehensive pre-purchase review to outline the options available before your move.
We evaluate your current mortgage, we make sure your current rate is still in line with market rates, and if it isn’t, we calculate the penalty to restructure. If we can save you money – we will! We are happy to work directly with you and your current lender to guide you through porting the mortgage if necessary.
Bridge financing can be difficult and confusing.
It sure can! And as such, we’ve partnered with lenders that are able to provide bridge financing for our clients within 24 hours! Even if we decide to leave your mortgage at your current lender, we can make your transaction seamless with our bridge financing solutions!
If you’re planning on keeping the home, and renting it out – lean on us! We are excited to guide you through your adventures in landlording!
Home Buyer Resources
The Mortgage Process with The SPIRE Team
- The first step in the process is for us to collect as much helpful information as possible. It's our job to really make sure that we understand your current financial situation. We start that process with a quick 15 minute discovery call. We'll want to know what you do for work, what you have saved for a down payment and what ideas you have about purchasing a home.
- After our call, we'll send you a link to our online application. The application is the safest way to collect your personal information like your Full Name, Birthday, Social Insurance Number, Address etc. That email will also contain a list of important documents that you should start preparing.
- After we receive your application we will send you like from our online portal and a reminder list about the documents required. This link is the fastest, easiest and most secure way to use us your documentation. Snap a photo from your phone or drag and drop documents from your email or desktop! If this doesn't work for you, we're also happy to receive documents via, email, fax or in person!
- Once the application and documents have been received, you will receive and official "pre approval" email from us outlining the details of your mortgage pre approval. The only conditions of the approval remaining could be related to the purchase of your home. A home appraisal for example. You are now ready to head out with your realtor and shop for a home!
- When you write an offer on a house, we should be your first call. It's now our job to make sure that we transition your "pre approval" to a "firm mortgage approval." At this stage, if your documents are more than 30 days old, we may need to update your job letter, paystubs and down payment documents. We will speak with the realtor or builder to obtain the offer documents and property details.
- We will submit your deal to a lender for a firm mortgage approval. Within about 72 hours, we will receive a "conditional mortgage commitment." We might need a few more documents at this time and there is potential that the property will need to be appraised. Ususally it takes about 5-7 business to meet all the lenders conditions.
- Once we've satisfied the conditions of your conditional mortgage commitment, you are able to waive your "condition of financing" and firm the purchase of your new home! Now it's time to prepare for the move! Reminder, you cannot make major purchases using credit prior to your closing date!
Should I Buy a Condo? Condo vs Single Family Home
**We are asked all the time if we think it is a good idea to purchase a condo or a single family home. ** Here is the truth, there is a time and a place for both, but generally, if you're able to stretch to that single family home number, you're able to put more money back in your pocket each month.
If you buy a house, you will be responsible for paying all expenses related to owning and maintaining your property, including the mortgage, property taxes, utilities, insurance, house and yard maintenance and any repairs or renovations. You'll want to have an emergency fund set aside for problems with things like the furnace or roof.
**If you buy a condo, **you will own the interior space of your unit and in some cases a parking space. Common areas and outdoor space will be owned in common with other owners in your building. You will pay a monthly condo/maintenance fee, which can cover items like heat, hydro, water, pest control, landscaping, building insurance and miscellaneous amenities. A portion of this fee will go into a reserve fund to cover major repairs and upgrades to the building, such as the roof or elevators. In most cases, you (and the other unit owners) will also have to pay a one-time special assessment for “emergency” repairs not covered by the condo fee.
In the example in the PDF, we'll explore a home purchase for a client with a total household income of $62,000 per year and no other debt. Here are the qualification numbers for both a single family home and a condo.
The key difference is that the mortgage paydown, or the "money back in your pocket" at the end of the year is much greater with the purchase of a single family home. That being said, it's important to make sure that you're taking good care of your asset, the home, and putting away a little bit of money each month in a contingency fund.
Connect with us to run the numbers and figure out what purchase options are best for your personal situation!
- Download the Should I buy a Condo to learn more.
Purchase Plus Improvements Mortgage
A Purchase Plus Improvements Mortgage, allows qualified purchasers to buy a home or condo and include a Renovation Allowance, even with as little as 5% down.
**STEP 1: **Obtain a mortgage pre-approval from Spire Mortgage Team, to determine your maximum approval amount.
STEP 2: You must find a home and have a general idea of what renovations will be completed at what cost to you. The purchase price plus the renovation cost cannot exceed your maximum approval amount. You will be required to provide the lender with a written quote, outlining the work to be completed and the cost to do it. Pro tip: Do not include chattels, waste costs or demolition in the quote.
STEP 3: Once your offer is accepted we will have the lender approve the mortgage with the cost of the renovations included in the mortgage.
**STEP 4: **Once you take possession of your home, you can begin the renovations. The Lender will instruct the Solicitor to "hold" the Renovation funds in trust, until the lender confirms the work has been completed.
STEP 5: The lender will receive the inspection report from the appraiser and validate that the work has been completed. They will instruct the lawyer to release the funds to you, so that you are able to pay the contractor.
Download the Purchase Plus Improvements PDF
New To Canada Mortgage and Lending Options
Qualified homebuyers who have immigrated or relocated to Canada within the last 5 years are eligible to purchase a property with as little as a 5% down payment.
Eligible Properties for purchase include single family homes with up to 2 suites. (Note: clients are required to live in one of the suites).
Minimum Downpayment Required: 5% of purchase price. (Note: 5% needs to come from borrowers own resources, additional can be a gift)
Clients are required to provide the following:
Proof of Employment: employment letter with an overview of your salary and employment status.
Proof of down payment: bank or investment statements showing 90 days history on the down payment funds.
Proof of Acceptable Credit can be provided by the following: Landlord reference letter and 12 months bank statements, Utility Bills, Telephone bills, Cable bills, Insurance payments
A Firm Purchase Contract
Download the New to Canada Mortgages to learn more.
