Quebec Real Estate Laws

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					HOMEBUYER WORKSHOP


 Welcome
   HOMEBUYER WORKSHOP

Overview
1. Choosing the Right Home
2. Home Buying and Financing Options
3. Building a Team of Professionals
4. Mortgage Insurance
5. Mortgage Pre-approval
6. Mortgage Options
7. Sequence of Events
8. Finalizing Your Mortgage
9. Additional Costs to Consider
10. Closing Day
11. Questions??
CHOOSING THE RIGHT HOME

• House vs. condominium
• New vs. resale
• Neighbourhood
  –   Proximity to schools and public transportation
  –   Real estate taxes
  –   Recreational facilities
  –   Distance to and from work
  –   Traffic flow and parking
  –   Planning and zoning laws
HOME BUYING AND FINANCING OPTIONS

• Many mortgage options
• Each customer is different
• Sources of information
  –   TD Canada Trust Mortgage Representative
  –   Brochures
  –   www.tdcanadatrust.com
  –   www.cmhc.ca
• Today’s seminar will help you
BUILDING A TEAM OF PROFESSIONALS



 • Realtor
 • Lawyer (or Notary in Quebec)
 • Lender
BUILDING A TEAM OF PROFESSIONALS

REALTOR
What do they do?
•   Aware of current market conditions

•   What price offers are realistic

•   What conditions to include in any offers

•   Be as specific as possible about the kind of home you’re
    looking for and your price range
BUILDING A TEAM OF PROFESSIONALS

REALTOR
Choosing a Realtor
•   A good real estate representative should be able to save you
    time and trouble

•   Ask for referrals from satisfied friends, family or other housing
    professionals

•   Make sure you are clear on who is paying the Realtor’s
    commission and understand your obligations once you've
    signed an agreement
BUILDING A TEAM OF PROFESSIONALS

LAWYER (or notary in Quebec)
What do they do?
•   Your lawyer will review any contracts you need to sign, like
    the Offer to Purchase

•   If you make an Offer to Purchase that is accepted, your lawyer
    will be responsible for many of the closing arrangements

•   Reviews the title and identifies any issues

•   Prepares and reviews the terms with you and registers the
    mortgage on title
BUILDING A TEAM OF PROFESSIONALS

LAWYER (or notary in Quebec)
Choosing a Lawyer

•   Ask for referrals from satisfied friends, family or other housing
    professionals. Ask your financial institution

•   Check for a lawyer referral service in your community

•   Call the local law association for the names of lawyers who
    specialize in real estate law

•   Lawyers fees range widely and depend on the complexity of the
    deal
BUILDING A TEAM OF PROFESSIONALS

LENDER
•   Having the right information is a big part of making
    wise financial home buying decisions

•   Your lender - part of your team of professionals -
    helps you make the decisions that are best for you
Financing
Information
MORTGAGE INSURANCE

CMHC Insured Mortgage
•   When you need a mortgage that is more than 80% of the
    purchase price of your home, mortgage loan insurance is required

•   MLI protects the Financial Institution and, by law, most Canadian
    lending institutions require it

Conventional Mortgage
•   Your down payment is a minimum 20% of the purchase price
MORTGAGE INSURANCE

How do you qualify for Mortgage Insurance

•   The home is located in Canada
•   Home related expenses must not exceed 32% of gross
    household income
•   Total monthly debt load does not exceed 40% of gross
    household income
•   Able to pay closing costs
MORTGAGE INSURANCE

CMHC Insured Financing

•   A range of flexible down payment options. For example, TD
    Canada Trust's “Cash Back Mortgage”

•   First-time homebuyers and repeat buyers are eligible

•   Available on properties with up to four units

•   Discuss the qualifying criteria and financing options that are
    best for you with your TD Canada Trust Mortgage Specialist
MORTGAGE INSURANCE

Mortgage Loan Insurance Costs

• CMHC Mortgage Loan Insurance Premium



Premiums: calculated as a percentage of the loan based on
your             down payment


• Premiums range from 0.5% to 3.30%
• Payable in a lump sum, or it can be added to mortgage
     MORTGAGE INSURANCE
    Mortgage Insurance Costs
 % of Lending Value    Premium (by Amortization)

                      Up to 25 yrs   >25 yrs to 30 yrs   >30 yrs to 35 yrs


Up to and including   0.50%                0.70%               0.90%
65%
Up to and including   0.65%                0.85%               1.05%
75%
Up to and including   1.00%                1.20%               1.40%
80%
Up to and including   1.75%                1.95%               2.15%
85%
Up to and including   2.00%                2.20%               2.40%
90%
Up to and including   2.75%                2.95%               3.15%
95%
Cash Back Mortgage    2.90%                3.10%               3.30%
MORTGAGE INSURANCE

Conventional Financing:
A mortgage loan up to 80% of the value
Purchase Price               $175,000
80% financing                $140,000
____________________________________
Down payment                 $35,000


CMHC Insured Financing:
A mortgage loan of 95% of the value

Purchase Price               $175,000
95% financing                $166,250
____________________________________
Down payment                 $8,750      A $26,250 difference
MORTGAGE INSURANCE

CMHC Insured Financing:
A mortgage loan up to 95% of the value
Purchase Price:                             $175,000
5% down payment:                            $   8,750
_______________________________
Mortgage                                    $166,250
Premium (95% financing)                 2.75%
==========================
Total CMHC Insurance Premium             $4,571.88

Total Mortgage Amount (if premium added): $170,821.88
Note: Not including PST (if applicable) on the premium. This is a one time fee
payable to CMHC at time of closing. Based on an amortization of 25 years.
MORTGAGE PRE-APPROVAL


•   Provides insight into affordability
•   Shows you how much you qualify for
•   Interest rate guarantee for 120 days*
•   There’s no obligation!




*Subject to conditions
HOW MUCH CAN I AFFORD?

• Formula used to estimate* home purchase amount:
• Total family income……………....
                                     $_________
• Multiply by 3.3……………………            x 3.3
• Approximate mortgage…………..
                                     $_________
• Add down payment………………             $_________
• Approximate home purchase…….       $_________

* Any fixed expenses may reduce the amount you can afford.
MORTGAGE OPTIONS


Mortgage - A loan against real estate that reduces over
  time as payments are made
Home Equity Line of Credit (HELOC)– A credit facility
  against real estate with a set credit limit, with
  borrowings allowed up to the limit
Factors to consider
• Loan amount required
   – Mortgage available up to 95% loan to value
   – HELOC maximum is 80%
• Mortgage provides forced savings
• HELOC flexibility for future borrowings
   MORTGAGE OPTIONS

Term - The length of the current mortgage agreement. After
  the term expires, the mortgage can be repaid, or
  renewed for a new term and rate
    – Terms range from 6 months to 10 years
    – Most common term is 5 year fixed term
    – 3-year and 1-year terms are also popular terms

Amortization Period - The time over which equal payments would
   pay off the mortgage. This is normally 25 years for a new mortgage,
   however TD Canada Trust offers amortizations up to 35 years.

Factors to Consider
• How soon do you plan to sell the house
• Do you plan to pay off the mortgage in the next few years
• Risk tolerance – rate certainty (long term) vs. possible rate savings
  (short term)
MORTGAGE OPTIONS


Fixed Rate - A rate that does not change during the
  Term of the mortgage

Variable Interest Rate - A rate that changes from
  month to month based on short term market rates.
  Also referred to as a floating rate based on TD
  Prime

Factors to Consider
• Risk tolerance
MORTGAGE OPTIONS


Closed - A mortgage agreement that cannot be
  prepaid, renegotiated or refinanced before maturity,
  except according to its terms

Open - A mortgage which can be prepaid at any time,
  without compensation

Factors to Consider
• Open rarely used for first time mortgage
• Do you plan to pay off the mortgage soon in the
  next years
BECOME MORTGAGE-FREE FASTER

•    Take advantage of increased payment options (up to 100%)
•    Make lump sum payments (up to 15%)
•    Increased payment frequency
•    Choose a shorter amortization
For example:
      Payment        Repayment           Time to Pay          Total Interest
     Frequency       on $100,000             Off
                      Mortgage
    Monthly               $731            25.0 years            $119,711
    Bi-weekly             $366            20.1 years            $91,779

Potential Savings                 4.9 yrs      $27,932
Based on 7.5% rate calculated semi-annually, not in advance
PROTECT WHAT’S IMPORTANT TO YOU


• Peace of mind
• Make insurance planning part of your overall
  home ownership strategy
• Home Insurance (fire, etc.)
• Mortgage/HELOC Critical Illness and Life
  Insurance
SEQUENCE OF EVENTS
•   Pre-approval
•   Conditional Offer to Purchase
•   Counter offer from seller
•   Conditional agreement
•   Solicitor initial title review
•   Mortgage Approval
•   Satisfactory home inspection
•   Valid, up-to-date property survey (if required)
•   Binding Purchase Agreement
•   Closing Day

    NOTE: Consult your lawyer and realtor for conditions that will
    protect you
FINALIZING YOUR MORTGAGE

You’ll Need
•   Confirmation of income
•   Current banking information
•   Evidence of your down payment amount
•   A list of assets and liabilities
•   Contact information for your lawyer or notary
•   A copy of the Purchase Agreement
•   A copy of the MLS® listing (where applicable)
•   Contract and building plans (if purchasing from a
    builder)
ADDITIONAL COSTS TO CONSIDER

CMHC premium                               Premium: 0.5% to 3.30% of mortgage
                                           amount


Legal fees/disbursements & land transfer   Legal Fees: Approximately $500 to
tax (applicable in some provincial         $1000
provinces)                                 Land Transfer: 0% to 4% of the
                                           purchase price
Adjustments re prepaid property taxes,     Property Taxes: 1% - 2% of purchase
condo fees, etc                            price
Home inspection fee                        Approximately $150 - $300 for home
                                           priced less then $300,000
Service hook ups (i.e. Hydro, Telephone)   Ranging between $100 - $500

Down Payment                               May range between $5000 - $40,000
Moving Costs                               $50 to $100/hour – 10%-20% higher
                                           at the end of the month and in the
                                           summer
CLOSING DAY

• Lender will provide the mortgage money to your
  lawyer
• You must provide the balance of the purchase
  price and are responsible for paying legal fees,
  disbursements and land transfer taxes
• Lawyer uses funds to pay the vendor, transfers
  the title to your name, registers the mortgage
• You receive the keys to your new house
NEXT STEPS


• Book an appointment with a TD Canada
  Trust Mortgage Representative
• Obtain a Pre-approval
• Build team of professionals
• Start shopping!
HOMEBUYER WORKSHOP

Thank You
and Happy House
Hunting!

				
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