Products of note for Ontario Home-buyers

By  Dwight Trafford | 

vacation home mortgage orangeville

In Ontario and across Canada, home-buyers that meet the lending guidelines can purchase a home with only 5% down. This is not limited to first time home buyers. There are restrictions. If the purchase price is over $500,000.00 they will need 5% of the first $500,000.00 and 10% of the difference. The buyer is restricted to a maximum of 25 year amortization. The home has to be a home they will live in. It can be a secondary residence such as a cottage and it can be a home occupied by other family members. It cannot be a rental or investment property . The purchase price has to be under $1,000,000.00. The property can be a duplex. Properties with 3 or 4 units require 10% down. There are minimum credit score requirements.

Purchase plus improvements. Mortgage lenders can advance additional funds for improvements that meet their guidelines. Finishing a basement, installing a new kitchen or bathroom, etc., would qualify for this. The borrowers income has to support the larger amount, and the work needs to be completed before the funds are released. This is an opportunity for home-buyers to transform a home that may not be ideal into one that is. They will have one mortgage with the extra funds rolled in. One payment.

New to Canada. New Canadians that have not had the opportunity to establish a credit rating in Canada can still apply as a regular borrower. Income has to support the application, but lenders will look at alternative sources for credit such as utility bills, cell bills, rent etc.

Municipal Grants: Most municipalities in Ontario have grants available for home-buyers to supplement their down payment. Each municipality has their own guidelines. Information can be found by searching home-buyer assistance program and the name of the municipality, city or county.

Self employed individuals. Business owners can also buy with as little as 10% down, even though their taxable income does not support the application. The income being used has to be reasonable for the employment type, they have to be up to date with Revenue Canada with no taxes owning, they need to be self employed for over 2 years, and credit has to be above average. Property has to be their principal residence, 1 or 2 units, and under $1,000,000.00.

There are other programs for self employed with more flexibility. They require 20% down minimum and rates may be higher.

Energy efficiency rebates. Typically a home-buyer with 5% down will have a premium added to their mortgage of 4% . If the home has a high energy efficiency rating, there are refunds available for part of that premium. If the borrower has less than 20% down payment, the mortgage will be insured by either Sagen, CMHC, or Canada Garanty. Your lender will tell you who they used. Search energy efficiency rebates and the name of the Insurer to access the rebate application.