First Time Buyer Mortgages Made Easy with Altrua

Rather than overwhelming you with a vast amount of mortgage information upfront, we provide ‘bite-sized’ pieces of information, one step at a time that you’ll understand and feel confident about.

By the end of the approval process, our goal is to have you look back and agree that this was a pleasant and educational experience, with all of your questions answered.

With this said, to start, the following are the 3 main reasons that our existing customers have enjoyed working with Altrua:

1. Lower Rate

We provide the lowest mortgage rates in Ontario. Period. We work with many leading Banks and mortgage lenders and use our high volumes to obtain the best lender rate. Then we discount these already low rates beyond our competition. If you do happen to find a lower insurable rate, just let us know and we will beat it!

2. Education First Approach: Process, Incentives, and Mortgage Fine Print

What’s the point in saving $5000 with a lower rate if there are tricks and costly surprises hiding in the fine print? We guide you and provide advice on what to watch out for. Get the best rate AND the best mortgage fine print features and flexibility. Also available are first-time buyer Government incentives that are described just below.

3. Long-Term Service and Mortgage Management

Our customers appreciate more than the best rate. A mortgage is a long-term endeavor, and we aim to partner with you until it is paid off.  Well over 60% of mortgage holders want to make a change within a 5-year term. This could be a move, a home equity line or a host of other reasons. Then there’s the renewal date after the term is up – when we will shop for the best rate again. So instead of a one time savings, you’ll confidently save again and again over the life of your mortgage with a property mortgage management plan set up.

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 Summary of a Complete First Time Buyer Mortgage Meeting

The following may be used in conjunction with or to supplement a first-time buyer mortgage pre-approval meeting.

It’s all the main notes we would recommend taking, done for you!

  1. How the home financing process works in 3 steps.
  2. Understanding Mortgage Basics and Important Terms.
  3. Lowest Market Rates (yes these rates are real and with excellent fine print!)
  4. First Time Home Buyer Incentives
  5. Mortgage dangers and what to avoid in the mortgage fine print.
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Purchasing in 3 Steps

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Understanding Mortgage Basics

A mortgage term is the length of time that the RATE is set for. The most common term is a 5 Year term, which is then re-negotiated after 5 years is up on the ‘renewal date’. The Amortization is the time that the PAYMENT is based on. The longer the amortization, the lower the payment. A typical amortization is 25 years, but can be as 30 years if you have 20% down payment and can be lower than 25 years if desired.

A fixed-rate mortgage will guarantee your rate for the length of the term -‘set it and forget it!’. Fixed will usually carry less risk than a Variable rate which can be lower for a period of time, but will float higher when the Bank of Canada eventually increases interest rates. ‘Life is variable, so why not your mortgage‘? 🙂

In Canada, the minimum down payment is 5% – however, this can be gifted by family or potentially loaned if needed. Any down payment under 20% must be ‘insured’ by the Canadian Mortgage and Housing Corporation (CMHC), or another mortgage insurer, and this requires a % based fee that is built into the mortgage – not paid upfront. Any purchase price above $500,000 will require a 10% down payment minimum on the amount above $500,000. So $25,000 on the first $500,000 of the purchase price and up to $50,000 on $500,000 to – $999,999 of purchase price. So for a $999,999 home purchase the minimum down payment would be approximately $75,000 ($25,000 + $50,000). For a $750,000 purchase the minimum down payment would be $50,000 ($25,000 + $25,000).

Down payment can also be gifted from an immediate family member.

To get the lowest rates in the market, the credit score should be above 680 points (out of 900). If any credit lines are maxed out or if several payments have been made late – this can negatively affect your score. There are free credit reports available online or through many online bank accounts.

Whereas a bank can offer you their line of mortgage rates and products, a mortgage broker works for you and offers you the entire mortgage market of lenders, rates and products. We believe this aligns better with your best interest. And we continue to look for ways to save you money over the life of your mortgage – at renewal time or before.

Altrua has access to over 100 lenders across Canada – but tends to work with about 15 core lenders including the big banks. If it makes sense, we can even go to your own bank and help you negotiate a lower rate.

Because all mortgage lenders in Canada follow the same government rules for protecting themselves and clients – there is little to no risk from one lender to the next. All ‘A’ low rate mortgage lenders are in very stable conditions. Ironically, the only risk you could face is by working with just one Bank, and paying more for your mortgage.

For the vast majority of our mortgages we are paid a ‘placement fee’ or commission from the lender, and do not charge our clients any fees. Unlike most mortgage brokers – we use much of this lender fee to help lower your rate even further – while ensuring superior advise and service standards.

First Time Buyer Incentives

Using RRSP savings towards the down payment of your first home is an excellent strategy that can help save you thousands of dollars. The Home Buyers Plan allows for up to $35,000 of RRSP money to be used towards your purchase, and if purchasing as a couple, up to $35,000 each for a total of $70,000. The only ‘catch’ is that the RRSPs must be repaid starting in the second year after the purchase, at 1/15th of the RRSP value per year.

When savings are accumulated in an Registered Retirement Savings Plan (RRSP), a tax refund is released by Canada Revenue Agency at tax time in the following year. This is because for every dollar saved in an RRSP, taxable income is reduced by this exact amount. And because taxes have already likely been paid on this income by your employer, it would be returned to you at tax time.

So when RRSPs are purchased, you can get a tax refund – but when RRSP money is ‘sold’ – this adds to your taxable income and there are more taxes to be paid as a result. What the Home Buyer’s plan allows for is RRSPs to be sold for the purpose of down payment, TAX FREE, within the year of the purchase. So you get the benefit of the tax refund and do not have to repay this on the sale of the RRSP when using the programme.

Gross Income: $55,000

RRSP Purchase: $15,000

Tax Refund: $4,305.

Required RRSP Savings : Minimum $1,000 per year for 15 years.

If the HBP eligibility rules are not met, you risk having to pay taxes on any sold RRSPs. So its worth getting to know the following rules if you are considering the Plan:

  • RRSP funds must be in the account for at least 90 days before the withdrawal.
  • RRSP funds must be withdrawn within 30 days after the closing of the purchase.
  • You have entered into an agreement to purchase a qualifying home.
  • You cannot have owned a house within the past 4 years.
  • If buying with a spouse who has owned a home in the last 4 years, you cannot have formally lived in this house within the past 4 years.
  • Must be a Canadian citizen.
  • If purchasing with a spouse, ensure the spouse with the highest earnings maximizes their RRSP first.
  • If down payment funds are not available to purchase maximum RRSPs ($25,000/ person), consider taking out a low-interest RRSP loan, receiving the tax refund, and then cashing the RRSP to repay the loan in the year of the purchase.
  • Do not invest RRSP funds into anything risky or that will lock funds in for long periods. Money market mutual funds or RRSP savings accounts work well.
  • Do not forget to begin saving in your RRSP in the second year after your purchase.

In the Province of Ontario – first time buyers receive an instant rebate of up to $4,000 on their land transfer tax closing cost. Given this, the maximum house price that would not require any land transfer tax is $368,000,500 – and the land transfer tax would begin accumulating from this price point and upwards.

The Government of Canada allows for a non-refundable tax credit of up to $750 to First Time Buyers. The credit is intended to help cover the closing costs including legal work, land transfer tax paid, home inspections and other related closing costs.

Ensure you keep records of your receipts and understand the rules surrounding this credit, so that you may apply with your accountant at tax time.

Our Current Discounted Rates

5 Year Fixed 2.02%
5 Year Variable 0.88%
3 Year Special 2.24%

Warning! – What to Look Out For in the Fine Print

High Penalties

Do you know what your penalty costs are? There are major variations in mortgage penalty calculations, with major Banks among the highest for calculating penalties. As most Canadians experience life and property changes during a mortgage term, a very high penalty calculation can easily prove financially damaging. If ‘porting’ a mortgage to a new property lowest rates are not offered on additional mortgage money, if your only alternative is a massive penalty.

Collateral Charge

Can you easily re-shop your mortgage on term renewal? The ‘collateral charge’ contract makes it very difficult to move lenders at renewal to a better rate or product, without paying for a lawyer and refinancing the mortgage. This feature is widespread in the market, and is often not well explained upfront. We think you should always get the lowest rate – both today and at your renewal date. Check out this CBC Market Watch article here for details.

Pre Payment Flexibility

How flexible and open is your mortgage? When planned properly, a flexible pre-payment privilege can go far in saving on interest and becoming Mortgage Free Sooner. Some pre-payment privileges are smaller and limited to one or two occasions per year, and on specified dates. This limitation can be costly if relied on over the long term.

Variable Rate Features

If locking your variable mortgage into a fixed rate, are you locking in to high bank posted rates, or discounted wholesale rates? This difference in lock in rate can be big, perhaps as much as 1%, and can potentially manipulate wise decisions to lock in variable mortgages to a fixed product at some future point. If you decide on a variable mortgage, get the details on the fixed rate lock in privilege.
Kitchener Mortgage Broker - Brent Richardson

Brent Richardson

Principal Mortgage Broker/ Owner (Lic. # M08006143), Certified Financial Planner (CFP), BA (Hons.)

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Book a Free Home Buyer Consultation with Brent

  • 14 years of experience, and owner of Altrua Financial Inc.
  • Over 1500 mortgage transactions including over 300 first-time buyer mortgages.
  • Specialized first-time buyer mortgage guidance and advice.
  • Certified Financial Planning  (CFP) designation enables him to establish unique, long-term relationships with clients that focus on wealth creation through consistent mortgage-based savings and planning, and other financial goals.
  • Best Rate Guarantee*

Book a Meeting with Brent Today Directly in the Calendar Just Below