Mortgage FAQ

Why Choose A Mortgage Broker?

Mortgage brokers and agents work on your behalf as the borrower. We have access to a wide range of lenders and products that are tailored to your specific needs and objectives. We prioritize the needs of our clients. Because mortgages are our specialty, we are up to date on the products that are currently available, as well as all of the regulations that must be followed.

How Does A Mortgage Broker Calculate What I Can Afford and Qualify For?

That is two separate questions. Your monthly home ownership costs (mortgage payment, taxes, heating and condo fees) plus all other monthly debts (credit cards, loans, lines of credit) vs. gross income determines your eligibility. Monthly savings, RRSP contributions, and basic expenses such as groceries, phone, cable, and car payments should all be included in your budget.

What Is The Minimum Down Payment Required?

A 5% down payment is required to purchase a home, subject to certain maximum price limits. In addition to the down payment, you must be able to demonstrate that you can cover the applicable closing costs, which are typically 1.5% of the purchase price (i.e. legal fees and disbursements, appraisal fee, land transfer tax and a survey certificate, where applicable, etc.). Regardless of the size of your down payment, at least 5% must come from your own funds or from a gift from an immediate family member. A 10% down payment is usually required for newcomers to Canada. Non-residents require 35%. Even from a family member, the down payment cannot be borrowed. Mortgage default insurance is required for mortgages with less than 20% down.

What Is Mortgage Protection Insurance?

Mortgage protection insurance and mortgage life insurance are not the same thing. Mortgage protection insurance is required by law to protect lenders against loan-to-value ratios greater than 80%. It is provided by the Crown Corporation of Canada, CG-Canada Guaranty, or Genworth (both approved private corporations). The premiums range from 0.60% to 6.0% and can be added to the amount of your mortgage. Some provinces impose a sales tax.

Do I Need To Get Pre-Approved For A Mortgage?

Pre-approval is not required, but it has numerous advantages. It can assess your qualifications and determine how much you can afford. Their 120-day rate guarantee protects you if interest rates rise while you’re looking for a home. They make you appear more professional to sellers and real estate agents. (They’re almost always required in competitive bidding situations.) They are free, and you are not required to use the lender who pre-approved you.

When Should You Get Pre-Approved For A Mortgage?

We recommend speaking with a mortgage broker 6-12 months before you plan to buy a new home or refinance an existing one. This gives you enough time to gather all of the necessary paperwork, assess your credit, and schedule appointments to discuss what you need and want in a mortgage. The majority of our lenders will guarantee an interest rate for 120 days prior to closing. This gives you time to look for the right house and get a good deal. You get a lower rate if the rate is lower when you find the right home.

What Is A Conventional Mortgage?

A conventional mortgage requires a 20% down payment or more of the purchase price. (LTV: loan-to-value ratio of 80% or lower.) For this type of mortgage, mortgage loan insurance is typically not required.

How Does Bankruptcy Affect My Qualification For A Mortgage?

Depending on the circumstances surrounding your bankruptcy and your credit history since the bankruptcy was discharged, some lenders may consider providing mortgage financing. Please contact us to go over your options.

Should I Wait For My Mortgage To Mature?

We recommend that you contact a broker 6 months before your current mortgage matures. This gives you time to consider all of your options, whether it’s to plan the purchase of another property, consolidate debt into your new mortgage, or simply renew. Lenders frequently send out renewal notices with their posted rates. This is not always the best rate available. The majority of lenders will guarantee a rate for 120 days prior to renewal/closing. This will get you the best rate available in the four months leading up to your renewal. Please contact us with your renewal date so that we can discuss your options.

What Is The Difference Between A Fixed and Variable Rate Mortgage?

A fixed-rate mortgage is one in which the interest rate is fixed for the term of the loan; most lenders offer terms of 1, 2, 3, 4, 5, 7, and 10 years. The interest rate on a variable-rate mortgage is determined by the lender’s prime rate. (That is, Prime minus 0.20%) This rate is based on the Bank of Canada’s prescribed rate and is adjusted accordingly by the lenders. This can result in an increase or decrease in monthly payments, as opposed to a fixed rate, where payments remain constant throughout the term. Variable rates fluctuate and are thus a riskier product, but they have the potential to average a lower rate over the term. Make an appointment with us to discuss the best mortgage for you and your family.