Building Your Financial Model: What's In A Mortgage?

Mortgages can be complicated. Co-ownership can make the process even more complicated. While it is helpful to have a working knowledge of the basics on mortgages, we’ve compiled a quick crash course aimed at co-ownership.

What’s In A Mortgage?

In order to understand what mortgage options are available for your co-purchasing group, let’s first break down the different types of mortgages.

*Finance conditioning is a condition on the offer which provides the purchaser a set amount of time to solidify financing without risk of losing the deposit. If they are not able to get financing they can withdraw from the offer without penalty.

Insured vs. Uninsured Mortgage

*There are many guidelines set out by the default insurance companies. They differ between the three insurers (the Canada Mortgage and Housing Corporation, Sagen, and Canada Guaranty) and depend on the type of purchase. Some include purchase price, down payment amount, amortization length, debt to income ratios, credit score etc.

Summary of Closing Costs

There are many costs associated with purchasing a home that also need to be calculated as part of the costs of acquiring a mortgage; a mortgage is more than the cost plus interest left to pay after a down payment is made. Most of these additional costs are due at the closing of your purchase:

• Down Payment
• Home Inspection and Appraisal Fees
• Default Insurance Costs
• Land Transfer Fee
• Legal Fees

An Example: The Cost To Own and Close!

That’s a lot to cover. Mortgages aren’t easy. Particularly for co-ownership. If you have more questions, there are plenty of resources available to broaden and deepen your understanding in this area.

Check out the next step where we look at who will lend to you and how to start creating your financial profile!

How Do You Build Your Financial Model?

Click on the sections below to learn more.

1. Building Your Financial Model: Introduction
2. Building Your Financial Model: What's In A Mortgage?
3. Building Your Financial Model: Who Will Lend To You?
4. Building Your Financial Model: Get Your Financial Profile Ready!
5. Building Your Financial Model: Creating Your Budget
6. Building Your Financial Model: Combine-Leverage-Split
7. Building Your Financial Model: Summary & Next Steps