I don't want to have another loan on top of my new mortgage! How do I avoid that?
We'll help you use a cash-back mortgage in conjunction with your down payment loan, so that you can pay it off immediately.
Does the CMHC Forbid 100% Financing?
Yes. In 2008 CMHC banned 100% financing and in 2012 they banned cash-back down payments (where the buyer did not actually have to make any down payment).
Soooo ... if that's the case, how does your program work?
Down Payment Loan (DPL) clients are making an actual 5% down payment
prior to the mortgage start date,
which we can help you borrow. Many of our clients take advantage of our preferred lender's (a top-5 bank) cash-back mortgage program to repay the down payment loan.
What about the Cash-Back Mortgage programs from the big banks?
By law, they require you to come up with the down payment PRIOR to the mortgage. They CANNOT accept the future cash-back funds as the down payment. They're not actually advertising "Cash-Back Down Payment Mortgages".
Why does my dumb brother-in-law say that people who haven't saved up their own down payment shouldn't buy a house?
Your brother-in-law is not a deep thinker, just an opinionated guy who hasn't investigated the issue or put a lot of thought into it. The fact is that most home owners never saved money for their down payment. They inherited property, switched equity from one house to another, or got most or all of their down payment from family, or a windfall.
I need to make at least a 5% down payment but I don't have to have it saved up in cash?
That is correct. BUT you have to get the 5%
somehow, at least on paper, prior to the mortgage, which is where we can help.
Who am I borrowing my down payment from? What's the interest rate?
You'll borrow either from a top-5 bank as a 2 to 5 year loan with a rate of 5.5% to 14.5% APR,
or from a private investor who will charge you a
Lending Administration Fee and expect you to repay the loan quickly from your cash-back mortgage. If you borrow privately and don't repay within a few days, the interest rate will be high: 5% per month. So repay it immediately, like you agreed to!
How quickly can I pay back the down payment loan so that I only have my mortgage to worry about?
If your DPL is from a private investor, you should repay it as soon as you can. If your DPL is from a bank, you can accelerate your repayment if you want to. Most of our deals involve cash-back mortgages, which give you 2-5% of the home price after close.
What if my credit score and history aren't good enough to qualify for a mortgage?
In that case, you should look into Rent-To-Own at our sister site
RTO Partners for a 2-4 year plan that fixes your credit and forces you to build up your down payment so you can become an owner.
Can I connect to you guys on Facebook or Google+ so that I'll remember you and possibly contact you in future?
Certainly ...
What does CMHC say about where I'm allowed to borrow the down payment from.
To quote CMHC ... “For eligible borrowers, additional sources of down payment, such as lender incentives and
borrowed funds, are also permitted. Non-traditional sources of down payment include: Any source that is arm’s length to (and not tied to) the purchase or sale of the property, such as ...
-
borrowed funds,
-
gifts from immediate family,
- 100% sweat equity,”
What's that "arm's length" thing about?
That's a provision that prevents monkey business like the seller lending the down payment to the buyer, then overcharging the buyer for the house, in a "cahoots" kind of way. When we arrange a DPL for you, it'll be arm's-length.
Why didn't my realtor or mortgage broker tell me about down payment loans?
Many realtors don't know about Down Payment Loans (they are unfamiliar with specific aspects of CMHC's rules). They may still think that you have to get your down payment by saving it, or borrowing from family. As for your broker, they might work for a bank that is not using CMHC's specific DPL provisions, or the broker has no idea how a private down payment loan works.
I don't like surprises. What other costs am I going to have, and when?
Closing costs usually amount to about 1.5% of the house's price.
You'll need to save that yourself. It goes towards your lawyer, land transfer tax, and some smaller items. Save up 2% just to be safe. In some cases you may be able to get a refund on your land transfer tax (Yayyy!).
How do I qualify?
One of the primary factors of being eligible is an EquiFax beacon score of 680 or higher. Other than that, what matters is your income and how much room your budget has for a mortgage payment every month. The amount of mortgage you can afford (which is based on government-imposed limitations, not on what you "think" you can afford) will then determine the price of house you can own.
