FREQUENTLY ASKED QUESTIONS
What are the Benefits of Using a Mortgage Professional
There are generally two ways to get a mortgage in Canada: From a bank or from a licensed mortgage professional.
While a bank only offers the products from their own institution, Licensed Mortgage Brokers send millions of dollars in Mortgage Business each year to Canada’s biggest Banks, Trust Companies, Credit Unions, and Financial Institutions. We have the ability to offer our clients more choices and access to hundreds of Mortgage Products!
Therefore, our Clients benefit from the trust, confidence and security of knowing they are getting the most beneficial Mortgage Product.
Whether you’re Refinancing your home, purchasing your first home, taking out equity from your home for investment or pleasure, or simply Renewing your Mortgage, you need to know that you are making the most educated buying decision with professional , unbiased advice.
How Much Does It Cost?
Mortgage professionals work for you, and not the banks; therefore, they work in your best interest.
From the first consultation to the signing of your mortgage, their services are FREE.
A fee is charged only for the most challenging credit solutions, and it's especially under those circumstances that a mortgage professional can do for you what your bank cannot.
What is the Difference Between a Fixed Rate Vs. a Variable Rate?
The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand increases in mortgage payments.
You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.
Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.
A variable rate mortgage often allows the borrower to take advantage of lower rates – the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus or plus a set percentage. For example, if the current prime mortgage rate is 5.5 percent, the holder of a prime minus 0.5 percent mortgage would pay a 5.00 percent variable interest rate.
As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage.
How Do I Understand My Credit Report?
As credit has become more and more abundant in our society, your credit report, and thus your credit rating, has become more important in your daily life.
Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account.
Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report.
The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives.
The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk. Credit scores range from 300 to 900, the higher your credit score the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.
One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct.
The good news is that your credit report is a working document. This means that you have the ability over time, to repair any damaged credit and increase your credit score.
How Do I Determine the Right Term?
Choosing the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers.
By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is right for you.
There are many factors, either in the financial markets or in your own life, which you will also have to take into consideration when you select your mortgage term length.
If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer term mortgage, for instance ten years, so that you can ensure that you will be able to afford your mortgage payments should the interest rates increase. By the end of a ten year mortgage term, most buyers are in a better financial situation, have a lower principle balance due, and should interest rates have risen, will be able to afford higher mortgage payments.
If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term. This will allow you to know that the mortgage payments on the property will be steady for a long time and allow you to more accurately project your future income from the property.
Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, a mortgage professional can assist you in choosing the mortgage term which will work the best.
How Do I Pay Off My Mortgage Faster?
Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems a long time, it does not have to take anyone that long to pay off their mortgage if they choose to do so in a shorter period of time.
With a little bit of thinking ahead, and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:
- Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to approximately 21.
- When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits.
- Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Apply this money to your mortgage as a lump-sum payment and watch the results.
By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years faster!
I am Self-Employed, What are My Options?
While many Canadians take advantage of self-employment opportunities, those who are self-employed sometimes face roadblocks when they are in the market to obtain personal financing, such as a mortgage or vehicle loan.
Proving self-employment income, and income stability for the years to come, can be difficult for new business owners.
Many Canadians have successful small business ventures and would not trade the lifestyle for anything in the world. However, many begin to question their lifestyle and business choices when they first attempt to obtain financing for their home, or even something as simple as a new credit card or vehicle. The nature of self-employment income can sometimes leave the self-employed looking like poor credit risks, even though they may actually have a more stable source of income than those who are working 9 to 5 for an employer.
Thankfully, Canadian mortgage lenders are starting to understand the importance of self-employment in our culture, and are making great mortgage programs available to the self-employed to finance their primary residence and even their vacation homes.
Licensed mortgage professionals are experts at assisting self-employed individuals with getting a mortgage, and they will ensure you get the best mortgage available through one of Canada’s largest lenders.
Obtaining a mortgage if you’re self employed has never been easier, and you will be excited to learn that the mortgage products available today are structured to help you succeed in your business and your personal life.
What is a Purchase Plus Improvements Mortgage and How Does it Work?
What is Purchase + Improvements?
It a program that allows you to include the cost of renovations in your new mortgage.
Get quotes for all the work that will be include
- Any work that you plan to do yourself, you can provide quotes for the materials needed.
- Please keep in mind, you will need savings or a Line of Credit to purchase the material for the work that you plan to do yourself.
- Lenders are looking for items that increase the value of the home and cannot be removed from the property. Appliances and luxury items like a new hot tub would not be accepted by the Lender in Purchase + Improvements.
Lenders allow up to $40,000 or 20% (the lesser) of the purchase price in improvements
- We submit your Mortgage for approval.
- Your total value is the quoted amount + your purchase price.
- Down Payment is based on the Total Value.
- Once you take possession of the home, you can start the renovations.
- The funds for your renovation project will be held in trust with your Lawyer.
- Make sure you know your Lender’s time limit on the renovations, generally Lenders allow up to 120 days to complete the project.
- Once the renovations are 100% complete, you need to contact your Mortgage Broker & we will order an inspection to confirm all the work is complete. The inspection will be a cost to the borrower.
- Some Lenders will require proof of work complete via invoices from the contractor/receipts for materials.
Once your Lender has confirmation the work is complete, the Lawyer will release the funds for the renovation project.
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