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November 2003 Issue
Dear <First Name:78>,
As your first home purchase specialists, we work on your behalf to find the home and mortgage that suits your needs. Best of all - our service is "FREE"*.
Note: This newsletter is designed to be a general overview of various topics encountered in the home buying process. It is not to be construed as legal advice. Please consult a professional.
In this Issue
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Mortgage Life Insurance
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Survey Certificate
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GST on Home Purchase
Mortgage Life Insurance
Lenders/brokers have an obligation to discuss mortgage life insurance with their customers. Sometime during the mortgage process, you can expect that your broker/lender will bring this issue to your attention .
Mortgage life insurance pays off the mortgage in the event the borrower dies, leaving the beneficiary free from having to repay the mortgage. Mortgage life insurance can also include protection for critical illness and disability.
What if you already have term life insurance? Mortgage life insurance is different from term life since it is designed specifically to go with your mortgage. Since your mortgage principal decreases over time, mortgage life insurance takes this into account, thereby allowing the premiums to be more affordable when compared against term life (which is a "level term" product).
Be careful about purchasing mortgage life insurance directly from major financial institutions. They are not transferrable to another institution. If you were to transfer your mortgage to another lender, you will not be able to transfer that life insurance to the new lender. By that time, your health situation may have changed (and so would the premiums, since you would be older) and you may be forced to stick it out with that lender despite unfavorable interest rates and terms.
If your feel that mortgage life insurance is important to you, consult your mortgage broker. Most brokers have access to mortgage life insurance that is transferrable from one institution to another.
Survey Certificate
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Lenders generally require a survey certificate when purchasing a detached home. A survey establishes the boundaries of the property and makes sure that the structure is within the boundaries of the property. It may not be necessary to spend to have a survey done if the previous owner has a copy and is willing to provide you with one. As mentioned in a previous newsletter (http://www.bcmortgage.ca/ecards/en_oct2003.htm), lenders will accept title insurance as an alternative to a survey. |
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GST on Home Purchase
GST is applicable on newly constructed homes and substantially renovated homes. Resale homes are not subject to GST
As we all know, GST is 7% of the purchase price. However, there are rebates available if you are planning to live in the home. The rebate will also depend on the price of your purchase. Given the complexity of the calculations, it best to consult your developer or your lawyer to determine the exact amount of GST payable.
Resources:
- BCMortgage.ca - BC's most comprehensive website for mortgages for first time home buyers
- CMHC - Canadian Mortgage and Home Corporation
- Equifax - Obtain your credit reports online
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