Frequently Asked Questions
What does a mortgage broker do?
Negotiate a client’s mortgage application with several financial institutions. Get you the best mortgage conditions available on the market, depending on your financial situation and credit history. Advise you on the best products and financial institutions available for your particular circumstances.
What is a fixed rate mortgage?
The interest rate on a fixed-rate mortgage is set for a pre-determined term - usually between 6 months to 5 years. This offers the security of knowing what you will be paying for the term selected.
What is a variable rate mortgage?
A mortgage in which payments are fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest. Open variable rate mortgages allow prepayment of any amount (with certain minimums) on any payment date.
What is a down payment?
Very few home buyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage the first step in a potentially long-standing relationship. But even with a mortgage, you will need to raise the money for a down payment. The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting. The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings.
What is mortgage loan insurance?
Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, Canada Guaranty and Sagen, approved private corporations. This insurance is required by law to insure lenders against default on mortgages with a High Ratio. The insurance premiums are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.
What is a conventional mortgage?
A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price, a loan to value of or less than 80%, and does not normally require mortgage loan insurance.
Whether you are starting out and buying a home for the first time, making your second or even third home purchase, or looking to invest in a rental or vacation property, mortgage financing can be challenging. Just over the last year or so, policies and regulations have significantly changed the way we qualify for mortgages. In the last 10 years, changes have affected amortization terms, down payments, refinancing options, and credit score guidelines. Whatever those changes are, my job as a mortgage broker is to stay current and explain everything in terms you will understand and eliminate any doubts you might have.
If you are a first time home buyer you might have many questions such as: How much can I really afford? How big of a mortgage can I get approved for today? What is my credit score and how does a lender rate me? Is the home buying process very difficult? It may all seem daunting at first but I assure you that I can explain the entire process to you and make it simple to understand. From finding a realtor to arranging every aspect of your financing, I can help and I will be with you every step of the way.
If you are investing in a second home, note that the process is a bit different from how you bought your current home. Give us a call and we'll walk you through it.
There are multiple reasons for wanting to refinance your mortgage. You might be interested in getting a lower interest rate, looking into making some major home renovations, consolidating some debt that has been hanging around or just wanting to leverage the equity built up in your home. Whatever the reason, it is important to understand what type of mortgage you currently have and what, if any, the penalties are for breaking it early. If you are looking into a refinance, let us crunch some numbers for you to see if it is your best option.
If it makes sense to switch, we can handle the entire process for you. At the very least, we can analyze your situation and you will have the information that you need to move forward.
Is your mortgage renewal coming up? Have an offer from your current lender already in hand? Have a chat with a mortgage broker. Your current lender may not be offering you the most competitive rates or terms. Over half of Canadians simply renew their mortgage with their current lender without shopping around and risk losing out on substantial savings. Transferring your mortgage to a different lender will require a new application, more paperwork, and costs for legal fees, an appraisal, and administrative expenses. Even with all that, the savings could still make it worth your while. Our team will do the research for you and make the process as simple as possible.
New To Canada Mortgage
A recent statistic from Sagen Canada stated that 73% of newcomers to Canada believe that buying a home is a sound investment strategy. I was new to Canada not too long ago and I was able to get a mortgage and purchase my first home. Personally, I wanted to buy a home because I believed that it would connect me to my community and I certainly feel that way now.
Did you know that qualified newcomers to Canada can purchase a property with as little as 5% down? There are different criteria to determine borrower qualification and I can help you through the process.
Self-Employed Mortgage Options
In addition to being a newcomer, I was also self-employed. This made my mortgage application even trickier but we were able to get it done. Qualifying for mortgages as a self-employed professional comes with its own set of challenges and you should not have to pay a premium for your career choice. The number of Canadians who are self-employed grows annually and the industry has started to take steps to better recognize this. Whatever your situation is, I'm sure we can find a solution for you.
Mortgage For Rental/Investment Property
All it takes is a conversation. If you have goals of owning a real estate portfolio, don't sit around waiting for too long. Start the conversation and see if we can bring that dream to life. Arrange a consultation and gain a better understanding of your financing options and how you can potentially accumulate multiple investment properties.
This mortgage product is designed as a financial solution for homeowners who are 55 or older and wanting to access the equity that they have built up in their home. With a CHIP reverse mortgage, you can access up to 55% of your home's equity. You will maintain ownership of your home and never have to move or sell. You can also choose to receive your money in one lump sum or as monthly payments. It is advisable to talk to both a mortgage broker and a financial planner when contemplating a reverse mortgage.
Commercial mortgages are arranged differently from residential mortgages and have their own set of rules for qualification and funding. Please email for more information. Different professionals have strengths in different areas of commercial lending and we want to make sure we are the right fit for you or if we can refer you to someone who can help.
Rental Lease Agreement
This agreement will need to show the tenants name, their monthly rent amount and it needs to be signed by the tenant.
Letter from your employer on letter head stating your tenure at the job position, wage and hours worked per week. If you have less than 3 months on the job, it will need to state if you are off probation.
You will need a paystub dated within the last 30 days showing your year to date gross earnings. Note: if your paystub is not showing your year to date, you will need to supply a T4 as well.
This form is supplied to you by your employer every year. It states your total earnings and deductions for the previous year.
Notice of Assessment (NOA)
This is sent to you from Canada Revenue Agency (CRA) after they have reviewed your tax return and will state the main lines/amounts used to calculate if you have a refund or balance owing.
Property Tax Statement
This form is provided to you by the Provincial Government showing you what your property assessment is for the previous year and the balance owed for the current year. Most lenders require this form as they need to see that your property taxes are paid up to date.
You will need to provide your most recent mortgage statement which is provided by your lender once a year. Showing the breakdown of principal and interest paid over the year and the details of your mortgage (eg. Remaining time left on your current term, maturity date, amortization, etc.)
An estimate of the value in real property. These are conducted by certified appraisers, for lending institutions to accurately gauge property value. Appraisals are often required by lenders so that they can receive an objective value of the subject property.
AGMS (Annual General Meeting)
This is a meeting of the stakeholders in strata in which they go over the financial history of the year and discuss any issues that need to be resolved.
These are the notes documented from AGMs and other strata meetings. These notes will help provide an in-depth look into the building as well as the operations of the building.
Strata Form B
This form details a variety of information about a strata lot and the strata corporation. It is requested when someone is considering buying a strata property.
Provides useful information to strata lot owners, prospective purchasers, and lenders about a strata property and its projected costs/plans for repairs, as well as replacement costs, over a 30-year period.
Property Disclosure Statement
This two-page document obligates the seller to disclose any and all known defects on the property. Its purpose is to protect the purchaser in the real estate transaction.
The T1 General breaks down all sources of income claimed and is most often requested if you are self employed or own a corporation. The additional details help establish income for mortgage qualification.
Mortgage Policy Changes
All uninsured mortgages by federally-regulated financial institutions must be tested using the greater of two percentage points above the contracted interest rate or the 5- year posted rate. Lenders are expected to not engage in “co-lending” activities that would circumvent loan-to-value limits.
All insured mortgages must be tested using the 5-year posted rate (this includes low ratio portfolio insured mortgages).
For homes priced above $500,000, the minimum down payment is 10 per cent on the portion of the price above $500,000.
Reduce maximum insured refinancing to 80% from 85%. Elimination of insurance for homes priced over $1 million. Reduce maximum amortization to 25 years from 30 years. Minimum credit scores for 39% GDS and 44% TDS ratios
Reduce maximum amortization to 30years from 35 years. Reduce maximum insured refinancing to 85% from90%. Withdraw insurance for Home Equity Lines of Credit
Borrowers with variable-rate mortgages or fixed-rate mortgages with terms less than five years be qualified based on posted rates for 5-year fixed rate mortgages. Reduce maximum insured refinancing to 90% from 95%. Require 20% down payment for small rental properties
Reduce maximum amortization to 35 years from 40 years. Requirement for minimum 5% down payment. New loan documentation standards. Establishment of minimum credit scores.