Buying my Next Home
This is an exciting next step in home ownership and The Biggar Team can help you with your goals. Whether you’re moving to a new city, keeping your existing home as a rental property, buying a bigger home, downsizing or even buying a home for your children, we have custom home financing options that suit your unique needs. Our flexible mortgage features are especially useful when you’re moving.
Understanding how to finance my new home
Just like when you bought your current home, you can choose from a wide range of mortgage options to find the solution that best meets your needs. However, because you’re probably also selling your current home, you have some additional decisions to make.
In most cases, you’ll be able to use the proceeds from the sale of your current home to provide the down payment for your new home. Your sale proceeds are the selling price, less repayment of any remaining or outstanding mortgage balances (including any fees payable), less legal costs and real estate commissions.
If you’re moving to a more expensive home, you may need to come up with additional funds to ensure a minimum 5% down payment for a purchase price of $500,000 or less. For a purchase price between $500,000 and $1 million, the minimum down payment is 5% on the first $500,000 and 10% on the balance. For purchase prices over $1 million a down payment of 20% or larger is required. You may want to come up with a down payment of 20%, so you won’t be required to pay for mortgage default insurance.
If you’re moving to a less expensive home, you can use the excess funds to make a larger down payment on the new home (reducing your mortgage costs) or perhaps use the funds to renovate, invest, or take a vacation.
Understanding my portable mortgage option
Your existing fixed rate BMO® mortgage has a special feature that allows you to take it to your next property. It’s called porting your mortgage. You can transfer your existing fixed mortgage rate, balance, and maturity date to your new property. This will avoid the penalty cost of breaking your existing term. If the new mortgage required is more, we blend the “existing mortgage” with the “new mortgage”.
We can extend the term on your BMO® mortgage to 5 years or higher to help you qualify for more mortgage money when you port. Mortgages with variable rates or fixed terms less than 5 years require that you qualify for a higher payment. This is a rule The Bank of Canada implemented to ensure that you can manage a higher mortgage payment if rates were to rise. The qualifying payment is based on the posted 5 year fixed rate, as published by the Bank of Canada. Note that your mortgage payment is still based on the interest rate you are offered in your mortgage contract.
You have 90 days from the day your existing mortgage is paid off to move it to your next home. If you need a smaller mortgage on your next home, you will only pay a penalty on the decreased amount. Note that you cannot make any changes to the remaining term if you are decreasing the mortgage amount.
Understanding bridge or interim financing
BMO® Bank of Montreal’s bridge or interim financing can help ensure you have the funds you need to cover the cost of two mortgages when your closing dates don’t coincide. It basically provided you with your down payment on your new home before your existing home is sold. In order to qualify for bridge financing you have to have an unconditional sales contract completed by a realtor on your existing residence, enough sale proceeds to pay off the loan in full and qualify for the bridge loan. Once the sale of your existing home is finalized, your lawyer will use the sale proceeds to pay back the temporary bridge loan. Note that bridge or interim financing is looked at on a case by case basis.
Keeping my existing home
When purchasing your next home, this gives you the opportunity to consider keeping your existing home as an investment property. BMO® Bank of Montreal can use a portion of the rent you will earn on your existing property to help you qualify for the new mortgage. See Keep my current home as a rental property for more information and requirements. Do your research and make sure being a landlord will be the right fit for you.
Do you have a down payment for your new home? If you have enough equity to re-finance your existing home you can consider using it towards the down payment on your new home. See Accessing My Home Equity for more information to see if this will be an option for you. You can also use any savings you currently have as a down payment on your next home. See Understanding down payment for more information on the minimal down payment requirements.
Buying a home for a family member
You can purchase a home for an immediate family member with a minimum down payment. See Understanding down payment for more information on the requirements. The qualifying rules and policies are made by the mortgage default insurers if you have less than a 20% down payment. They require that you qualify for the new mortgage on your own. All of the new additional payments will be added to your application and no rental income will be considered.