What are your next steps after your home buying offer is accepted? Here’s what you need to do before closing day!
Buying a house with your spouse
It’s time to start looking to buying that dream home with your spouse. Do you put them on the mortgage? Is there a benefit to leaving them off? We here at the Clinton Wilkins Mortgage Team know how hard it can be for consumers to know all the ins and outs of mortgages. That’s why we have compiled the pros and cons for you and your spouse before you buy. Whether you are thinking of buying the biggest house possible or want to save that first-time home buyers grant. We have you covered!
- Qualify for more house. By having not one, but two incomes, you are essentially increasing your ability to purchase a larger home. Typically, both individuals will be earning an income and both putting forward a portion of the down payment amount. When it comes to qualifying for a mortgage, regulations now dictate a qualifying rate of 5.14 per cent! This means every penny counts. In terms of income, offsetting any debts, and of course how large the down payment can be. Check out our page for first time home buyers!
- Prepayments. With having more financial stability by two incomes, you have the ability to pay more on your mortgage by means of prepayment privileges. Prepayment privileges can be 15-20 per cent per payment, based off what your mortgage lender allows. Not can you do monthly prepayments, but you will traditionally have the option to do a lump sum payment per year as well. Any prepayments you make go directly onto the principal of your mortgage, cutting years off your mortgage.
- Costly life changes. Life is unexpected and you at any time a situation can arise where the need to sell or separate the assets is necessary. When it comes to this, most couples are in a hurry to separate and divide the finances and do not want to wait for the mortgage maturity date. Couples would need to list the home for sale and not only pay realtor fees, but chances are you were in the middle of your mortgage term. Being in the middle of your mortgage term means you will also be incurring a penalty to break that mortgage. If you have a variable rate you will be paying three months interest, whereas fixed-rate penalties are based off Interest Rate Differential (IRD).
- RRSP as down payment. If you are a first-time home buyer you can be eligible to take advantage of the Home Buyers Plan. The Home Buyers Plan allows you to use up to $25,000 from your RRSP as down payment, but the catch is the RRSP amount needs to be paid back in full within 15 years. If you and your spouse have an unexpected split, you could be left with lingering RRSP debt to be repaid.
When it comes to buying a home, we know the process can be stressful and challenging. Here at the Clinton Wilkins Mortgage Team, we will assess your individual financial situation and provide all the options available to you and your spouse. After all, we are looking out for your best interest.
Have more questions? Feel free to contact us!