Transcript: Smart Home Borrowing Solutions

Introduction

We all have financial needs throughout our lives, especially when it comes to the biggest purchase most of us will ever make: our home.

Whether you're buying for the first time, moving to your next home or renovating your existing one, you've got a number of important financial decisions to make. And those decisions are definitely worth a talk.

So let's walk through a few key steps to achieving your homeownership goals. When we're finished, you'll be able to print out a personalized summary to take with you when you visit a CIBC branch, so you can feel that much more prepared. To get started, please choose one of the following goals.

First Home

Congratulations, buying your first home can be a wise investment. And while it's a place to live and perhaps to raise a family, it's also an asset that will appreciate in value over time. Let's explore the process together to give you a better understanding of what's ahead.

Buying a house comes down to two major financial considerations: the amount you can afford as a downpayment and the monthly mortgage payments you can comfortably carry.

To get started, enter your gross annual income in the space provided. That's your total income before taxes. And if you're buying with someone else, make sure to add in their gross income as well.

Then, enter how much you have as a total downpayment amount.

Remember, the more you can put towards a downpayment, the less you'll need to borrow…and the more you'll save in interest over the years.

The next step is to understand the other costs associated with purchasing your first home. These include property taxes, utilities and sometimes condo fees.

It's also important to consider the amount you pay each month toward credit card balances, loans, or any other debts. This will give us a clearer understanding of what you can comfortably afford.

Go ahead and enter your expenses in the fields provided.

Based on the information you've provided, here's the approximate value of the home and mortgage that you can afford.

Oh and one more thing, there are also additional one-time costs associated with buying a home, such as legal fees and land transfer taxes, which typically range from 1.5 to 3% of your purchase price.

If these numbers are a bit different than you were expecting, don't worry. When we're finished here, you'll have a chance to explore ways to save more for your downpayment. Increasing your downpayment can help your lower your total mortgage amount or help you afford a house in a higher price range.

In the meantime, let's talk about some pay-down strategies to help you manage your mortgage over the long term.

Selecting ‹Discover useful pay-down strategies›

Here are few mortgage strategies to help you pay off your mortgage faster and save you thousands in interest.

You can look at increasing your monthly mortgage amount
Making payments more frequently
Making a lump sum payment, or
Paying as much as you want at renewal.

All of these strategies will shave years and interest off the life of your mortgage. Don't' forget to visit the Helpful Hints section for more tips and examples on how to own your home sooner.

Selecting ‹Continue›

Now that you have an idea as to what you can afford, you can increase your shopping confidence with a mortgage pre-approval certificate.

Pre-approval can offer you up to a 90-day rate guarantee with no obligation. Applying is free and it shows that you're a serious buyer. In fact, many real estate agents encourage you to get a pre-approval before they even begin working with you.

If you like, you can apply for one right now online. Don't worry — it will only take a few minutes.

To learn more about the topics we discussed or for other useful information for first time home buyers, simply click on Helpful Hints or the Canada Mortgage and Housing Corporation icon.

Be sure to print your summary. Having it with you when you call or visit a CIBC branch will save time and help you achieve your goals sooner.

You know, buying your first home is an exciting event and the financial decisions you make are very important. And that's worth a talk.

Next Home

Whether you're planning on moving into a bigger home or downsizing, your next move is about finding a house that fits with your current stage of life. And with the equity that you may have built in your current home, this move can be more about what you want and need, rather than simply what you can afford.

Your first step is to list the features you're looking for in your next home — the neighbourhood, the bedrooms, the kitchen, the backyard — what works, and what doesn't. Having a list of 'must haves' can help keep your search focused.

Now that you've thought about the features you want in your next home, let's do the same for your mortgage. Let's start by looking at your current situation and the equity you may have built up in your home.

Equity is defined as the current value of your home, often referred to as the 'appraised value', less your outstanding mortgage balance and any secured lines of credit and secured loans.

Please enter your current information in the fields provided.

Here is the equity you've built up in your current home. It is advisable to put this towards the downpayment on your next home. Remember, the more you can put towards a downpayment, the less you'll need to borrow…and the more you'll save on interest over the years.

If you have additional funds to put towards your next downpayment please enter them now.

Now, let's look at how much you want to spend on your next home. Whether you're planning on moving into a bigger home or downsizing, you probably have a good idea of your desired house price.

Please enter this now in the field provided.

Based on the information you've provided, here's your approximate mortgage amount and your monthly mortgage payments.

Oh and don't forget, there are also additional one-time costs associated with buying a home, such as legal fees and land transfer taxes, which typically range from 1.5 to 3% of your purchase price.

Now, what are your priorities over the next few years? Are you looking to pay down your mortgage faster? Or do you want to maximize your cash flow for other lifestyle priorities like education costs, renovations or other needs.

Selecting ‹Pay down mortgage faster›

It's amazing how small changes like making additional lump sum payments, increasing your payment amount or making more frequent payments can help you pay down your mortgage faster and help you save thousands on interest.

If you like, you can adjust these values to see how these strategies can take years off the life of your mortgage.

Selecting ‹Maximize cash flow›

Like many people, it may be more important to maximize cash flow for your current needs, than to pay off your mortgage sooner.

In that case, you may qualify for a CIBC Home Power Line of Credit. It leverages the equity in your home to offer flexible on-going access to cash and a lower interest rate. And once you've paid it back, you can use it again and again for any need without having to re-apply.

You can also look at increasing your cash flow by extending the amortization of your mortgage, allowing you to spread your payments over a longer period and lower your monthly mortgage payments. These lower payments can also be a lot easier on your budget.

If you like, you can change your amortization to see how this strategy can increase your cash flow each month.

Keep in mind that lowering your payments will increase the amount of interest you pay in the long run.

When you're able to afford higher payments you can shave years and interest off your mortgage by increasing the amount of your monthly mortgage payments, by making extra payments, or both.

To learn more about the topics we discussed or for other useful information for first time home buyers, simply click on Helpful Hints or the Canada Mortgage and Housing Corporation icon.

When you're ready we can help you review your financing options to ensure your next home is everything you want it to be. Be sure now to click on the link to print your summary. Having it with you when you call or visit a CIBC branch will save time and help you achieve your goals sooner.

You know, buying a home is an exciting event and the financial decisions you make are very important. And that's worth a talk.

Renovating

Whether it's to increase the enjoyment of your home, attend to much-needed repairs, increase your home's market value, or invest in energy efficient upgrades — there are lots of reasons to renovate.

Your first step is to determine the cost of your renovation. This will help decide which financing option is best for you. Begin by calculating how much money you'll need and when you'll need it.

Consider whether or not you'll need it all upfront or in stages as the job progresses. It's also a good idea to allow for a buffer, this is typically 10-15% of the cost of the renovation, as home improvement projects can often lead to surprises.

If you don't have a budget, now would be a good time to assess the scope and scale of your renovation. Why don't you use our budget calculator — it will help you set priorities and determine what you can afford.

If you already have a budget, simply continue to the next step.

Once you've established a budget, your next step is figuring out the financing. There are a number of options, but it will ultimately depend on your needs. For example: are you looking for on-going and convenient access to funds, the security of fixed monthly payments, or the ability to vary your payment amounts depending on cash flow.

Using the existing equity in your home may provide the most cost effective solution for financing your renovations. Equity is defined as the current value of your home, often referred to as the 'appraised value' less your outstanding mortgage balance and any other amount owed on your home.

Using the equity in your home can offer greater flexibility and lower interest rates. Keep in mind you must have 20% equity built up in order to borrow against your home with a secured line of credit.

So, would you consider using the equity in your home to borrow?

Selecting ‹Yes or Maybe›

Okay, here's where we estimate the amount you can borrow based on the equity in your home.

Start by selecting your property location and a reasonable appraised value of your home — you probably have a pretty good idea of what your home is worth.

Next, subtract the amount left owing on your mortgage including any other amount owed on your home. The result is your equity.

If user's equity is less than 20%

Since you have less than 20% equity you will not be able to borrow against your home with a secured line of credit. However you may still benefit from a Unsecured Personal Line of Credit. It offers similar on-going flexible access to cash but usually for a lower amount overall. And once you've paid it back, you can use it again and again without having to re-apply. Click on the link to learn more about an unsecured personal line of credit.

Whatever the scope of your renovation, you're making a wise investment. From painting a bathroom to remodelling a kitchen, you can often expect a return of 50 to 100%. You're also making your home a nicer place to live in, while adding to the value of your largest asset.

By the way, for advice on how to increase your home's value with the right upgrades, be sure to explore our Helpful Hints. Also, for more information and fact sheets on home renovations click on the Canada Mortgage and Housing Corporation icon.

Be sure now to click on the link to print your summary. Having it with you when you call or visit a CIBC branch will save time and help you achieve your goals sooner. After all, renovating a home is an exciting event and the financial decisions you make are very important. And that's worth a talk.

If user's equity is greater than 20%

Based on the numbers you've provided, you have many options. Putting your equity to work with a CIBC Home Power Line of Credit, for example, offers flexible on-going access to cash and a lower interest rate. And once you've paid it back, you can use it again and again for any need without having to re-apply.

Click on the links to learn more about the savings benefits a CIBC Home Power Line of Credit.

Whatever the scope of the renovation you have in mind, you're making a wise investment. From painting a bathroom to remodelling a kitchen, you can be looking at a return of up to 50 or even 100%. You're also making your home a nicer place to live in, while adding to the value of your largest asset.

By the way, for advice on how to increase your home's value with the right upgrades, be sure to explore our Helpful Hints. Also, for more information and fact sheets on home renovations click on the Canada Mortgage and Housing Corporation icon.

Be sure now to click on the link to print your summary. Having it with you when you call or visit a CIBC branch will save time and help you achieve your goals sooner. After all, renovating a home is an exciting event and the financial decisions you make are very important. And that's worth a talk.

Selecting ‹No›

There are still many options available to you without using the equity in your home. For instance you may want to consider an unsecured personal line of credit. It offers flexible on-going access to cash, allowing you to achieve the things that are important to you.

And once you've paid it back, you can use it again and again for any need without having to re-apply. Click on the link to learn more.

For advice on how to increase your home's value with the right upgrades, be sure to explore our Helpful Hints. Also, for more information and fact sheets on home renovations click on the Canada Mortgage and Housing Corporation icon.

Whatever the scope of the renovation you have in mind, you're making a wise investment. From painting a bathroom to remodelling a kitchen, you can be looking at a return of up to 50 or even 100%. You're also making your home a nicer place to live in, while adding to the value of your largest asset. After all, renovating a home is an exciting event and the financial decisions you make are very important. And that's worth a talk.