frequently asked questions
The mortgage process can come with a lot of questions. If you still have questions once you’ve read through all of the answers below feel free to reach out directly. We may not know the answer but we know how to get it!
In 99% of cases it’s completely free! Mortgage Professionals are paid a commission from the lender for facilitating the loan. In extremely rare cases a borrower will need the assistance of a private lender. In these instances a small fee would be charged to the borrower.
Bank Specialists are employees of a particular bank and can offer you the products associated with that specific bank. Mortgage Brokers work with multiple lenders to help clients find the right mortgage solution to fit their needs.
With a client first mentality Ron is committed to communication throughout all stages of the mortgage process. He also believes in educating clients so they fully understand the mortgage products they are receiving. This all leads to a 5-star client experience.
There are times when your current lender will have rate specials or products not offered by a mortgage broker. The best course of action is to check with your broker to see if they have a better solution to suit your needs. In this way you can ensure you are getting the best of both worlds.
In Canada the minimum down payment for a primary residence is 5%. Minimum down payments can vary depending on the borrowers employment status, credit score, and whether or not they are occupying the home. It’s important to remember that in order to avoid Mortgage Default Insurance a borrower will need to have at least a 20% down payment.
A variable rate mortgage can increase and decrease during the mortgage term based on the Bank of Canada’s lending rate. Important factors when choosing a variable rate are the potential net savings and the beneficial prepayment penalties.
A fixed rate mortgage will maintain the same payment for the entire mortgage term. Rates are typically higher with fixed rate mortgages and typically carry bigger prepayment penalties.
A prepayment penalty is a charge your mortgage lender may charge if you break any terms of your mortgage commitment. The penalty typically comes in two forms. A three-month interest penalty or an Interest Rate Differential penalty.
An open mortgage allows you to pay off the full mortgage balance without incurring any prepayment penalty. Typically these types of mortgages have short terms (1-6 months) and carry a high rate of interest.
A closed mortgage outlines a specific time frame of when and how the mortgage will be repaid. If the borrower breaks this commitment they will incur a prepayment penalty. These mortgages have longer terms and will carry a lower rate of interest.
Porting your mortgage is when you take an existing mortgage balance and move it to a new property. This is beneficial if you would like to avoid a large prepayment penalty or keep an existing mortgage rate.
A B lender is an alternative lender that can assist borrowers who have trouble qualifying. This could be due to poor credit or lack of employment experience. B lenders typically charge fees that are added to the mortgage balance, they have higher rates and they require 20% down payments.
A reverse mortgage is a mortgage secured against the value of your home. It can only be used by Canadians 55 years and older. It allows those clients to access up to 55% of the home’s value. Clients have the choice of making regular mortgage payments or paying back the loan when they move or sell. Feel free to ask for more details on this program.
The Purchase Plus Improvement Mortgage allows borrowers to include a renovation into the purchase of their home. It has to be done as soon as they move into the home and renovations must add value to the home. Feel free to ask for more details on this program.
The biggest mistake a first-time home buyer can make is not getting pre-approved before looking for houses. A pre-approval sets the borrower up for success as they will know what their maximum mortgage amount is and gives the borrower and broker time to address any concerns before the borrower starts making offers on houses.
There are a few costs you will need to cover when purchasing a new property. Here are a few potential closing costs; Title Transfer, Registration of the Mortgage, Title Searches, Title Insurance, Property Taxes, PST on Mortgage Default Insurance. For a complete quote, reach out and we can put you in touch with a qualified real estate lawyer.
Gifted down payments are acceptable in some mortgage scenarios. The money must be coming from an immediate family member and must be given with no repayment agreement. The family member will need to sign a gift letter provided by your mortgage broker.
Yes, as long the student loan repayment amount fits into your debt-servicing ratios.
The clear answer is yes. More and more Canadians are choosing to use the expertise of brokers to help them secure the loan for their home. Not only are Mortgage Broker’s securing your current loan, they are helping you manage that loan throughout its entire term. When it comes time to renew they are right by your side fighting for the best rate and flexibility. Because a broker is not a direct employee of a particular lender they can focus on what is right for the client.
Here’s a little industry secret: getting a loan always comes with a small degree of uncertainty. A mortgage approval is dependent on many factors that are uncertain. If a client changes jobs, takes out extra credit, co-signs a loan for a family member during the home-buying process they can lose their approval. It could also be that the house you are looking to purchase has a structural flaw that most lenders will not accept. Here’s the good news, an experienced mortgage broker will get you pre-approved and take as much uncertainty out of the process as possible. This will eliminate stress and help you the buyer buy a house with confidence
Maybe. Depending on many factors including your employment, down payment and the reason you have no credit score. There are programs to help people New to Canada who may have no credit score in Canada. If however you’re from Canada and have no score it’s a good idea to start building it today. Lenders like to see two active lines of credit with a two year history that show a good repayment history. If you need more advice on credit please get in touch. We’ll be happy to address your individual situation.
A higher rate of interest means a borrower will end up paying a larger amount of interest to the lender throughout the mortgage term. This brings up a couple points. It’s important for a borrower to have a strategy on mortgage prepayment. If a borrower prepays their mortgage they are automatically paying the balance down and saving money on interest. Secondly, interest rates have been historically low for the last couple of years. If interest rates rise borrowers may be renewing their mortgage in a higher rate environment. This means higher monthly payments with less of the payment going towards paying the mortgage down and more money going to the lender.
Because mortgage interest rates can change day to day, locking your rate is an important part of the mortgage process. Locking your interest rate guarantees a certain interest rate for a specific period of time (up to 120 days). In some cases, you can lock your interest rate as soon as your initial loan is approved. However, most buyers wait until they have found a specific home to purchase and are officially under contract.
A mortgage payment is made up of two parts. The principal and interest. The principal portion goes towards paying down the overall balance of your loan. The interest is the fee the lender charges for lending you the money.
So what happens when you send in that mortgage payment every month? It’s nice to think the whole amount just reduces your principal, but your monthly payment actually goes toward a lot more.
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