“ Good evening everyone. Welcome to our Home Buyers Seminar. At the end of this evening’s presentation you will have a better understanding of the home buying process. The seminar should be an interactive session so please feel free to ask any questions as we move through the topics. We have invited several experts that will provide you with insights into buying a home, arranging mortgage financing and providing legal services. Our first speaker will be … (introduce the real estate agent)” (Realtor makes presentation on purchasing a home.) Say: “ Thank you (agent’s name) for taking us through a typical real estate purchase. A successful realtor such as (realtor’s name) will take the time to discover your personal home buying needs while providing details that will allow you to make an informed decision when purchasing your home.”
“ Again, I am (insert your name) from Scotiabank. I will take you through the steps involved in arranging financing for your new home. We’ll clarify: several mortgage terms and definitions that you may encounter, walk you through the mortgage approval process, discuss mortgage life insurance options and introduce you to several homeownership solutions offered by Scotiabank.”
MORTGAGE – provides security for the lender when you borrow money to purchase your home. When you sign your mortgage with a lender you are allowing a lien to be registered against your property until the loan has been paid in full. AMORTIZATION PERIOD – The actual number of years it will take to repay a mortgage loan in full. This may go beyond the term of the loan. For example, mortgages often have 5 year terms, 25 year amortization periods. TERM – The duration of a mortgage agreement. As the amortization period is longer than the term, mortgage payments made may not fully cover the outstanding principal by the end of the term. OPEN MORTGAGE – Provides for pre-payment or repayment at any time without penalty. CLOSED MORTGAGE – Does not provide for payout before maturity. A lender may permit payout under certain circumstances but will levy a penalty charge for doing so. VARIABLE RATE – A mortgage where the rate of interest changes as Scotiabank Prime Rate changes. The payments may fluctuate depending on the product chosen. FIXED RATE – A mortgage where the rate of interest is fixed for a specific term. CONVENTIONAL MORTGAGE – A mortgage loan that does not exceed 80% of the lesser of the appraised value or the purchase price of the property. A mortgage that exceeds that limit must be insured. HIGH-RATIO MORTGAGE – A mortgage where the loan amount exceeds 80% of the lesser of the appraised value or the purchase price of the property. A high-ratio mortgage must be insured by the Canadian Mortgage and Housing Corporation (CMHC), the corporation of the federal government that administers the National Housing Act and provides mortgage insurance to lenders, or by a private insurer such as Genworth Financial.
“ A MORTGAGE PRE-APPROVAL is a pre-qualifying process with your lender that lets you know exactly how much financing you should be able to arrange for a home. This helps you focus your house hunting to properties in your price range. When you receive a pre-approval for your mortgage, your interest rate is usually guaranteed for a period of time from the application date. AGENTS . Choose an agent that you feel comfortable with and that takes the time to understand what is most important to you when purchasing a home. As (the agent’s name) discussed earlier most people view several homes prior to making an OFFER on a property. Once you have made an offer then the lender is able to provide FINAL APPROVAL which takes into account both your pre-approval information and the property information. A valuable service that has become more popular recently is a professional HOME INSPECTION . Many offers now contain a clause outlining that the offer is subject to a satisfactory home inspection. Professional inspectors will provide a detailed report outlining the condition of the home and items that may require attention. The final step in the home buying process will be a VISIT TO YOUR LAWYER . Look for a lawyer such as (insert lawyer’s name) who is familiar with real estate transactions. (Insert lawyer’s name) will provide you with more detailed information on services, and costs, associated with purchasing a home.” Shortly after making an offer, it’s important to have the document reviewed by your lawyer, find someone that is familiar with real estate transactions.
“As we discussed a moment ago, a pre-approval is an invaluable tool once you have decided to purchase a home. There are several key benefits associated with a pre-approved mortgage. Lenders provide pre-approvals which guarantee rates from sixty to ninety days. That means that if rates increase during this time you are protected. Scotiabank’s pre-approval extends this guarantee to up to 120 days . The maximum mortgage that you qualify for will be set by the lender at this time. The mortgage amount is based on your personal information such as down payment available, income and your credit history. Your real estate agent will also benefit from your mortgage pre-approval. The agent can show you properties in the appropriate price range and confidently help you make an offer with the security of a pre-approval. Scotiabank provides a written pre-approval certificate outlining the mortgage amount and rate for your peace of mind.”
“At the time of application you will be asked to provide some personal information that assists your lender in providing you with a mortgage. Your down payment is an integral part of a home purchase. You may be asked to confirm the source of your down payment where applicable for the lender. Methods used to confirm your income and employment vary depending on whether you are a salaried employee or in business for yourself. As a salaried employee the banks will normally accept a letter from your employer or a pay stub. The lender will typically take job stability into account when approving your mortgage. As a self-employed individual you may be asked to provide two to three year’s financial statements or personal income tax information. Scotiabank currently requires the past two year’s Notice of Assessments from Revenue Canada from self employed clients. Affordability : Standard debt servicing capacity guidelines apply i.e. Maximum TDSR 40%, Maximum GDSR 32%. The final, and most important step will be a review of your credit history . Maintaining a satisfactory credit rating is important.”
“When you apply for a mortgage the lender will determine the maximum mortgage amount for which you qualify, based on: the monthly mortgage payments, property taxes and heating costs for your home. This is called your gross debt service and normally cannot exceed 32% of your gross income. If you are purchasing a condominium or arranging a second mortgage these monthly costs will also be included in the gross debt service calculation. the monthly costs to carry the property PLUS your other obligations such as loans, credit card and line of credit payments. This is referred to as your total debt service and is normally set at a maximum of 40% of your gross income.”
Read notes from the slide. Plus: “ This program is open to Canadian residents only for the purchase of homes located in Canada. Purchasers participating in the Home Buyer’s Plan may access funds in their Registered Retirement Savings Plan to a limit of $20,000 per person and must occupy the home no later than one year after the closing date. Over a period of no more than 15 years, you have to repay to your RRSPs the amounts you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew, until the full amount is repaid to your RRSPs. Your repayment period starts the second year following the year you made your withdrawals.”
“ Purchasers are able to enter the real estate market with as little as 5% down. As you can see, a more substantial down payment results in a reduced mortgage amount and carrying costs. A larger down payment will also reduce the mortgage insurance premium until it is no longer required once you qualify for a conventional mortgage.”
“ In recent years borrowers have been given the option to pay their mortgage in monthly, bi-weekly or weekly instalments. The benefit of choosing a weekly or bi-weekly payment frequency will greatly reduce your amortization and save you thousands of dollars over the life of your mortgage.”
“In addition to paying your mortgage in weekly or bi-weekly installments you can also save money by putting lump sum payments against your mortgage. If you are in a closed term mortgage Scotiabank allows you to: Prepay up to 15% of the original amount of the mortgage each year Increase your payment annually by up to 15% and Match any payment you make. Prepayments, when combined with weekly or bi-weekly payments, are powerful tools to saving you money.” With our Match-a-Payment option you can double up your current mortgage payment of principal and interest, as well as taxes if applicable, on any regular payment date so you can pay down your mortgage principal even faster, with no fee or penalty. Miss-a-Payment option allows you to skip one or more payments without penalty up to the amount of any lump sum prepayments or additional payments you’ve made. Open mortgages can be paid at any time without a penalty.
“Along with saving for a down payment you will also need to save money for other costs associated with buying a home. (Review costs from slide) Please remember that if you are putting less than 20% down you need to provide proof for the mortgage insurer that you have funds available to pay for these closing costs. (typically 1.25% of the purchase price of the property).”
“History shows that most homeowners in Canada move every three years. What happens if you are in the middle of a closed term mortgage? You have several options available to reduce the pre-payment penalties: Scotiabank allows you to take or “port” your mortgage with you to the new property. An updated application is taken and approval is provided based on the details of your new home and current personal information. Another option if you move is to take a mortgage solution with Cashback – this will cover the costs of breaking your current mortgage term.
“ Scotiabank offers three insurance plans: Loss of Life Protection will pay the outstanding balance of your insured mortgage in the event the insured borrower passes away. Health Crisis Protection will pay the outstanding balance of your insured mortgage in the event the insured borrower is diagnosed with Cancer, Stroke or Heart Attack. Disability Protection covers your mortgage payments in the event of a disability. Creditor Protection safeguards your family should the unexpected occur. It also protects you from having to change the way you live, at a time when you need the greatest support. Ask your Scotiabank mortgage professional about the benefits of our Creditor Protection plans.”
“Scotiabank has some exciting solutions for 2008. The Scotia Free Down Payment ® Mortgage, allows you to enter the housing market sooner by giving you the initial 5% down payment. Customers can now qualify for amortizations up to 35 years for uninsured or CMHC/Genworth Insured Mortgages. The Scotia Flex Value ® Mortgage provides the benefit of low rates and payments for a 5 year term, plus a convertible option. The Long and Short ® Mortgage only from Scotiabank, is available as part of the Scotia Total Equity ® Plan, an innovative way to use the equity you’ve built up in your home to help lower your overall borrowing costs.”
“ We are committed to offering homeownership solutions that meet the unique needs of our clients. The Scotia Free Down Payment Mortgage is an affordable fixed rate mortgage offered by Scotiabank. We pay the down payment, for free, equal to 5% of the property lending value. You can use your existing savings to offset other closing cost expenses. CMHC/Genworth Financial Canada’s premium is only 2.90% compared to 2.75% if 5% down payment provided by customer.”
“ On the closing date, Scotiabank will provide your solicitor with a down payment equal to 5% of the property lending value to complete the home purchase transaction. The whole process is very simple and is done between the solicitor and the Bank.”
Speak from slide
Available for purchases, switches and refinances Available for fixed and variable rate terms
“ In the current low interest rate environment, many customers want to be able to take advantage of lower rates as well as have the flexibility to lock into a fixed rate product if they feel rates are on the rise. This product offers you all those benefits and flexibility. The Scotia Flex Value ® Mortgage allows you to take advantage of the low interest rate environment and to maintain a low rate and low payment amount for as long as possible before locking-in. (5 years)”
The Scotia Flex Value ® Mortgage: is a 5-year variable rate mortgage. The rate and payment resets each time Scotiabank Prime Rate changes. Remember this product offers flexibility by allowing you to early renew at any time to a fixed rate mortgage of equal or greater term. The Scotia Flex Value ® Mortgage offers a: 5-year closed term at a rate based on Scotiabank Prime*
Can’t decide between low short-term mortgage rates and more secure long-term rates? Then don’t. With the Long and Short ® Mortgage, you can split your mortgage and get the benefits of both. Only Scotiabank offers this kind of flexibility with a one-time approval. It’s available as part of the Scotia Total Equity ® Plan, an innovative way to use the equity you’ve built up in your home to help lower your overall borrowing costs.
This solution is comprised of: The variable rate portion of the Long and Short features: Interest rate is based on Scotiabank’s Prime rate, and is reset following each change in the Scotiabank Prime rate. Flexibility to lock-in to an equivalent or longer term fixed rate mortgage without penalty at any time. The fixed rate portion of the Long and Short features: Any fixed rate term available The Long & Short Mortgage benefits: Provides diversification capability for you to help mitigate interest rate risk, similar to an investment strategy. Offers the opportunity to go both long and short. Allows you to take advantage of lower short term rates. Protects against rate increases over the long term. Allows you to potentially pay less interest on the mortgage.
“The Scotia Total Equity ® Plan is a unique mortgage program that is designed to meet the individual needs of Scotiabank’s clients. You can benefit from preferred rates offered through this program up to 80% of the value of your home.
The Scotia Total Equity ® Plan can help you to be better off financially: Save on borrowing costs Payoff high rate credit cards and loans Improve cash flow Consolidate debts to reduce your monthly obligations Have more money in your pocket Assist with the purchase of big ticket items Purchase vehicles, property or pay for your children’s education Ask a Scotiabank mortgage specialist how the Scotia Total Equity ® Plan can be customized to suit your borrowing solutions. Our final speaker for the evening will be (insert lawyer’s name) who will provide us with insight on the role of the lawyer in the home buying process.”
“Scotiabank’s on-line tools allow you to be prepared before you begin to search for a new home. A Resource Centre which includes the following calculators/tools: Mortgage Resource Centre Rent or Own? Mortgage Payment Calculator What can I afford? Mortgage Comparison Calculator Mortgage Laddering Calculator Mortgage Selector What is Mortgage Laddering? Scotia Total Equity® Plan Calculator Mortgage Rates Use the Scotia Total Equity ® Plan calculator to help create a flexible borrowing solution that reduces borrowing costs and increases your cash flow.” Keep up to date on the latest rates
“Thank you for attending this evening’s seminar. We hope that we have provided you with information that will make you more comfortable during your search for a new home. I would be pleased to talk to you after the seminar on how a Scotiabank pre-approval can put you one step closer to buying your new home.”
Bring Your Dream Home To Life.
Bring Your Dream To Life.
Agenda <ul><li>Definitions </li></ul><ul><li>Steps to Buying Your Home </li></ul><ul><li>Pre-Approvals </li></ul><ul><li>Qualifying for a Mortgage </li></ul><ul><li>Protection Plans </li></ul><ul><li>Scotia Programs </li></ul>
Definitions <ul><li>What is a Mortgage? </li></ul><ul><li>Amortization </li></ul><ul><li>Term </li></ul><ul><li>Open vs. Closed </li></ul><ul><li>Fixed vs. Variable Rates </li></ul><ul><li>Conventional Mortgages </li></ul><ul><li>High Ratio Mortgages </li></ul>
Step by Step <ul><li>Mortgage Pre-Approval </li></ul><ul><li>Finding an Agent </li></ul><ul><li>Finding a Home </li></ul><ul><li>Making an Offer </li></ul><ul><li>Final Approval </li></ul><ul><li>Home Inspection </li></ul><ul><li>Visiting your Lawyer </li></ul>
Pre-Approvals <ul><li>What can a pre-approval do for you? </li></ul><ul><li>Guarantee the rate for up to 120 days </li></ul><ul><li>Determine your maximum eligible mortgage amount </li></ul><ul><li>Allow your agent to show you the right selection of homes </li></ul><ul><li>Provides peace of mind </li></ul>
How Do I Qualify? <ul><li>The lender will need to confirm: </li></ul><ul><li>Your Down Payment </li></ul><ul><li>Your Employment/Income </li></ul><ul><li>Mortgage Payment Affordability </li></ul><ul><li>Credit History </li></ul>Note that the property itself will have to meet our residential property standards.
How Much Do I Qualify For? (Up to 40% of Gross Monthly Income) (Up to 32% of Gross Monthly Income) = Total Monthly Debt Gross Monthly Income = Total Monthly Costs Gross Monthly Income + Other Personal Credit Obligations + 50% Condo Maintenance Fees + 50% Condo Maintenance Fees + Secondary Financing + Secondary Financing + Heating Costs + Heating Costs + Property Taxes + Property Taxes Mortgage Payment Mortgage Payment Total Debt Service Ratio Gross Debt Service Ratio
RRSP Home Buyer's Plan <ul><li>Program Guidelines: </li></ul><ul><li>Proceeds to be used as part or all of a down payment towards the purchase of a principal residence </li></ul><ul><li>You or your spouse have not owned a principal residence within the past 5 calendar years </li></ul><ul><li>House is located in Canada </li></ul><ul><li>Maximum withdrawal from your RRSP is $25,000 per person </li></ul><ul><li>Repay RRSP over 15 years with annual payments equal to 1/15 of the amount withdrawn </li></ul>
Down Payment Scenarios Figures provided for discussion purposes only. Subject to change. $ 1,500 $ 1,500 Provisions for Closing Costs $ 2,612.50 $ - Insurance Cost $ 95,000 $ 80,000 Mortgage Required $ 5,000 $ 20,000 Down payment $100,000 $100,000 Purchase Price High-Ratio (5% Down) Conventional (20% Down)
Which Payment Frequency? * Rates shown are for illustration purposes only, calculated semi-annually, not in advance, and assumes the interest rate and payments remain constant for the full 25-year period of the mortgage. $ 9,699.73 INTEREST SAVED $ 54,512.54 $ 64,212.27 INTEREST PAID (over the amortization period) 21 Yrs 9 Mths 25 Years Actual Amortization Period $ 136.84 $ 547.37 Payment 4.39% 4.39% Interest Rate (5 year term) $100,000 $100,000 Principal Amount Weekly Monthly Mortgage Terms
Prepayment Privileges <ul><li>Annually, in a closed term mortgage, you can: </li></ul><ul><li>Prepay up to 15% of the original mortgage </li></ul><ul><li>Increase your monthly payment by up to 15% </li></ul><ul><li>Use our Match-a-payment ® option </li></ul>
Other Costs <ul><li>Appraisal </li></ul><ul><li>Legal Fees </li></ul><ul><li>Land Transfer Tax (where applicable) </li></ul><ul><li>Mortgage Insurance </li></ul><ul><li>Survey or Title Insurance </li></ul><ul><li>Miscellaneous Expenses </li></ul><ul><ul><li>adjustments (taxes, water, hydro) </li></ul></ul><ul><ul><li>moving </li></ul></ul><ul><ul><li>new appliances </li></ul></ul><ul><ul><li>utilities connections </li></ul></ul>
What Happens If You Move? <ul><li>Portable Option </li></ul><ul><li>Cashback </li></ul>
Safeguard Your Family <ul><li>Loss of Life Protection </li></ul><ul><li>Health Crisis Protection </li></ul><ul><li>Disability Protection </li></ul>
Scotiabank Mortgage Programs and Solutions to Consider <ul><li>Some exciting solutions for 2008 </li></ul><ul><li>Scotia Free Down Payment ® Mortgage </li></ul><ul><li>Extended Amortizations </li></ul><ul><li>Scotia Flex Value ® Mortgage </li></ul><ul><li>Long and Short ® Mortgage </li></ul><ul><li>Scotia Total Equity ® Plan ( Scotia STEP ® ) </li></ul>
Scotia Free Down Payment ® Mortgage* <ul><li>No down payment? No problem. </li></ul><ul><li>An innovative homeownership solution </li></ul><ul><li>Scotiabank provides the down payment equal to 5% of the property lending value* </li></ul>. *Some conditions apply. This offer can be changed or withdrawn at any time without notice and may not be combined with other discounts, offers or promotions. Applies to new mortgages funded by Scotiabank, not to renewals or refinancing of existing mortgages. This offer is available to customers who take out a new Scotiabank mortgage insured through CMHC/Genworth Financial Canada. Applicable to residential mortgages only and subject to Scotiabank lending criteria for residential properties. Scotiabank will provide an amount equal to 5% down payment to the Solicitor on date of advance. You will be required to repay the pro-rated amount of the 5% downpayment received if your mortgage is paid out, assumed or early renewed before maturity. Ask for additional details.
Scotia Free Down Payment ® Mortgage <ul><li>Choose From… </li></ul><ul><li>A rate discount of 0.50% ¹ off Scotiabank's 7-year fixed rate </li></ul><ul><li>OR </li></ul><ul><li>Scotiabank’s 5-year fixed term rate ² </li></ul><ul><li>¹ The Scotia Free Down Payment ® Mortgage offers a discount of 0.50% off the 7 year closed term mortgage. The 7 year closed term mortgage as of April 12, 2008 was 7.35%. If there are no ‘cost of borrowing’ charges (for example, appraisal fees), the APR for the discounted rate of 6.85% equals 6.75% (compounded semi-annually, and not in advance), for a term of 7 years - assuming a mortgage of $100,000 with a 25 year amortization. </li></ul><ul><li>² The 5 year closed term mortgage rate as of April 12, 2008 was 6.99%. If there are no ‘cost of borrowing’ charges (for example, appraisal fees), the APR for the posted rate of 6.99% equals 6.89% (compounded semi-annually, and not in advance), for a term of 5 years - assuming a mortgage of $100,000 with a 25 year amortization. </li></ul>
Extended Amortizations <ul><li>Customers can now qualify for amortizations up to 35 years for uninsured or CMHC/Genworth Insured Mortgages* </li></ul><ul><li>Great for homebuyers who want the flexibility of lower payments. </li></ul><ul><li>A solution to help you own the home you want sooner. </li></ul>* The premium surcharge is added to the standard insurance premium applicable to the application.
Scotia Flex Value ® Mortgage <ul><li>Low rates and low payments </li></ul><ul><li>Combines a low rate and low payment with a 5-year term </li></ul><ul><li>5-year closed term with a rate based on Scotiabank Prime* </li></ul>*Subject to credit approval and the home meeting our residential property standards. The Scotia Flex Value ® Mortgage - Closed Term -Scotiabank Prime as of October22, 2008 was 4.00%. If there are no ‘cost of borrowing’ charges (for example, appraisal fees), the APR for the rate of 5.00% equals 4.95% (compounded semi-annually, not in advance). Where a typical appraisal fee of $200 is assumed (actual appraisal fees may vary), the APR equals 4.99% (compounded semi-annually, not in advance), for a term of 5 years - assuming a mortgage of $100,000 with a 25-year amortization.
Scotia Flex Value ® Mortgage <ul><li>All payment frequencies are available </li></ul><ul><li>Early renewal permitted. You can early renew at any time to another fixed rate mortgage with an equivalent or longer term – without penalty </li></ul><ul><li>Renew/Early renew to a fixed rate closed term of 5 years and receive a guaranteed 1% discount off the 5-year posted rate* at the time of renewal/early renewal. </li></ul>* As of October 23, 2008, the 5-year posted rate was 7.20% and the APR for the discounted rate of 6.20% equals 6.12% (compounded semi-annually, not in advance). This assumes no additional "cost of borrowing" charges at the time of conversion, a mortgage of $100,000 and a 25-year amortization. The applicable 5-year posted rate at the time of conversion is subject to change. This offer cannot be combined with any other offers or promotions. Other conditions may apply.
Long and Short ® Mortgage* <ul><li>Combine the best of both worlds </li></ul><ul><li>Split your mortgage and get the benefits of going both long and short. </li></ul><ul><li>This solution is comprised of splitting your mortgage into: </li></ul><ul><ul><li>A variable rate mortgage </li></ul></ul><ul><ul><li>A fixed rate term mortgage </li></ul></ul>*Subject to applicable credit approval, Scotiabank residential mortgage standards and maximum permitted loan amounts. This offer can be changed or withdrawn at anytime without notice and may not be combined with other discounts, offers or promotions.
Scotia Total Equity ® Plan <ul><li>Looking for a way to lower your borrowing costs? You're living in it. </li></ul><ul><li>Access to a global credit limit (Up to 80% of appraised property value)* </li></ul><ul><li>Reduce borrowing costs </li></ul><ul><li>Increase cash flow </li></ul><ul><li>Can be customized to meet your individual needs </li></ul>* Applicable to residential mortgages only and subject to Scotiabank lending criteria for residential properties.
Scotiabank’s On-line Tools <ul><li>At your fingertips… </li></ul><ul><li>Mortgage Resource Centre </li></ul><ul><ul><li>Rent or Own? </li></ul></ul><ul><ul><li>Mortgage Payment Calculator </li></ul></ul><ul><ul><li>What can I afford? </li></ul></ul><ul><ul><li>Mortgage Comparison Calculator </li></ul></ul><ul><ul><li>Mortgage Laddering Calculator </li></ul></ul><ul><ul><li>Mortgage Selector </li></ul></ul><ul><ul><li>What is Mortgage Laddering? </li></ul></ul><ul><li>Scotia Total Equity ® Plan Calculator </li></ul><ul><li>Mortgage Protection Reference Chart </li></ul><ul><li>Mortgage rates </li></ul>Access these tools at www.scotiabank.com
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