One of the main concerns of real estate buyers is mortgage financing. To determine the amount you will need to borrow, you have to know the purchase price of the property and the total expenses you will need to pay in cash. The summary of these calculations enables you to determine the amount of financing you need to purchase your home.
Cash expenses
You have to plan for several cash expenses when buying a home. These costs must be estimated to determine the amount you need to borrow to finance the purchase of your new home.
Deposit
When presenting an offer to purchase, you will need to make a deposit to prove your legitimacy as a buyer. For that, you have to plan on a cash outlay.
Down payment
The down payment is without a doubt your main expense when buying a home. A higher down payment means lower monthly mortgage payments. If your down payment is less than 25% of the purchase price, your mortgage loan must be insured by high-ratio mortgage insurance such as that provided by CMHC. There are administration fees involved for the application. Yo also have to plan on legal fees and an insurance premium, which is a percentage of the loan amount.
Related expenses
Several related expenses must be taken into consideration when buying a home, such as building inspection, property appraisal, loan application, legal fees and disbursements, property taxes, deed transfer tax, fuel adjustment, insurance, and so on.