Before making a home-buying decision, you should calculate both the one-time and ongoing costs associated with buying and operating the home.

As a guide for preparing a budget, consider the following:

Costs associated with the purchase of a home include:

• Appraisal fees
• Cost to obtain a survey
• Land transfer taxes (property transfer tax, 1st time buyers may be exempt)
• CMHC / GE CAPITAL mortgage insurance (if applicable)
• Moving expenses
• Property taxes
• Legal fees
• Home insurance
• Strata costs (if applicable)
• GST (if applicable)
• Adjustments (tenants deposits, rents)

We recommend that you consult with an experienced lawyer who will provide estimates of some of these costs at the outset of your planning.

Ongoing housing costs include:

• Monthly mortgage payments
• Property taxes
• Mortgage life insurance
• Heating costs
• Costs of secondary financing, such as a second mortgage (if applicable)
• Condominium fees (if applicable)
• Operating and maintenance costs

General Rules

Your monthly mortgage payments, taxes, heating costs, and 50% of condominium fees should not exceed 32% of your gross annual income. This is called your Gross Debt Service Ratio.

Your Gross Debt Service Ratio plus monthly payments on any other outstanding debts (including loan payments, car payments, credit card payments, and department store accounts, etc.) should not exceed 40% of your gross annual income. This is called your Total Debt Service Ratio.

Under normal circumstances, you should budget about 2% of the value of your home to cover annual operating and maintenance costs which are not included in your Gross or Total Debt Service Ratios.

Conventional -- "Low Ratio" -- Loan amounts which do not exceed 75% of the lesser of the appraised value or the purchase price of the property.

National Housing Act (NHA) -- Loan amounts of up to 95% of the value are normally available. Mortgages are insured by Canada Mortgage and Housing Corporation CMHC a Federal Government Corporation.

Conventional -- "Insured" -- Loan amounts of up to 95% are available. Mortgages are insured by the General Electric Capital Mortgage Insurance Canada GE CAPITAL a private insurer.

First Mortgages are available with a fixed rate of interest for various terms, ranging from 6 months to 10 years, with payments amortized over periods of up to 25 years.

Global Mortgage Corp. can help you decide which mortgage best suits your needs.

Fixed rate Mortgages can be "closed" or "open". The "open" mortgage allows you to prepay some or all of your outstanding mortgage balance at any time without penalty. These "open" Mortgages are available for either a 6 month or 1 year term and generally have a slightly higher rate of interest than "closed" Mortgages for an equivalent term.

"Closed" Mortgages are available in a wide range of terms, from 6 months to 10 years. These "closed" Mortgages cannot be prepaid in full prior to maturity without being subject to an interest penalty. Certain prepayments, as provided for in the Lenders Mortgage Terms, can, however, be made. Allowable prepayments without penalty range from 10% to 30% of the original mortgage amount per year.