Frequently Asked Questions

 A numerical representation of an individual's creditworthiness, based on their credit history. Higher scores generally indicate lower risk to lenders. Your credit score is impacted by several factors, including your payment history (timeliness of payments), amounts owed (credit utilization), length of credit history and new credit. Late payments, defaults, high balances, and too many new credit applications in a short period can negatively affect your score. 

 No! When applying for a mortgage, having a good credit score is important. Ideally, you want to make sure your credit score is over 680. If it isn't, it doesn't mean that you won't qualify, but you might not be able to access the top lenders, the lowest mortgage rates and fee maybe charged. 

 This is an easier mortgage question to answer, though it can still vary quite a bit. In general, you might be looking at anywhere from fifteen to twenty-five days for a typical residential mortgage transaction, whether it’s a mortgage refinance or home purchase. Of course, stuff happens, a lot so it’s not out of the ordinary for the process to take up to thirty to thirty-five days. 

 Closing costs include things like title insurance, survey, prepaid escrows, mortgage loan insurance tax, Realtor commissions and legal costs. A good rule of thumb is to put away two-to-three percent of the home's price in anticipation of these outlays. For pre-construction it is recommended to put away five-to-seven percent. 

 Working with a Mortgage Broker has almost no downside, because you aren’t obligated to move forward with your mortgage application until after you find out what mortgage product you can secure and from which lender. A Mortgage Broker can pull your credit report once, to use with different Lenders within a thirty-day period. In the best-case scenario, you’ll save thousands of dollars in interest on your mortgage. The worst-case scenario is that you receive free, unbiased advice that is personalized for your financial situation. 

 Fixed rate mortgage payment will not change through the term, but a variable rate mortgage can if the Lender changes their prime rate. 

 With a fixed-rate mortgage, the mortgage rate and payment you make each month will stay the same for the term of your mortgage. With a variable-rate mortgage, however, the mortgage rate will change with the prime lending rate as set by your Lender. A variable rate will be quoted as Prime +/- a specified amount, such as Prime - 0.45%. Though the prime lending rate may fluctuate, the relationship to prime will stay constant over your term. If you are looking for a stable monthly payment and do not want to be dealing with the uncertainty, it is advisable to go for a fixed rate mortgage. 

 The fee you pay for mortgage loan insurance is called a premium. Mortgage loan insurance premiums range from 0.6% to 4.5% of the amount of your mortgage. Your premium depends on the amount of your down payment. The bigger your down payment, the less you pay in mortgage loan insurance premiums. 

 The collection of paperwork lenders require to process a mortgage application. This documentation serves to verify your income, debts, and overall financial standing. The specific forms needed for a home loan vary depending on your individual situation; for instance, a self-employed applicant will likely submit different documents than someone employed by a company. Lenders may request items such as pay stubs, job letters, bank statements, tax documents, photo ID, business licenses, and business financial 

 We are paid by the Lender where the mortgage is placed - not by the client. In cases where private financing or commercial financing is arranged, or where there are complex financing situations, a fee may be charged, but ALWAYS with our client's consent, so there are no surprises. The actual amount paid to the Broker varies by the Lender but is based on the mortgage amount and not on the interest rate arranged on your behalf. Because compensation is tied to mortgage size rather than rate, clients are assured that Brokers are not “holding back” on giving the best rate in order to be paid more. This means that you will always be offered the best interest rate 

 A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. In addition to the down payment, you must also be able to show that you can cover the applicable closing costs (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable). Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or a gift from a family member. It cannot be borrowed. Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor. Mortgages with less than 20% down must have mortgage loan insurance provided by either CMHC or Sagen™

 To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Give us a call today and we'll walk you through how much income you can use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation. Second, we'll calculate a % of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines. When considering what the ratios say you can afford, make sure you calculate how much you think you can afford. Make sure you don't leave yourself house poor and structure your payments so that you can still afford simple luxuries.

 A pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process. A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually up to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation' and 'down payment from your own resources'. Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range.

 A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection. A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

 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.

 Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing.

 Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for. Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

 Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. If you are a first-time home buyer, the Home Buyers Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plan (RRSP) tax-free to make your down payment. The HBP is administered by the Canada Revenue Agency (CRA).

  The length of mortgage terms varies widely - from six months right up to 10 years. As a rule of thumb, the shorter the term, the lower the interest rate the longer the term, the higher the rate. While four or five year mortgages are what most home buyers typically choose, you may consider a short-term mortgage if you have a higher tolerance for risk, if you have time to watch rates or are not prepared to make a long-term commitment right now. Before selecting your mortgage term, we suggest you answer the following questions: 1. Do you plan to sell your house in the short-term without buying another? If so, a short mortgage term may be the best option. 2. Do you believe that interest rates have bottomed out and are not likely to drop more? If that's the case, a long mortgage term may be the right choice for you. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term hoping that rates drop by the time your term expires. 3. Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses. 4. Are you willing to follow interest rates closely and risk their being increased mortgage payments following a renewal? If that's the case, a short mortgage term may best suit your needs.

 Needless to say, you'll have financial responsibilities as a home owner. Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses. 1) The Mortgage Payment For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization. 2) Property Taxes Property tax can be paid in two ways - remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment. 3) School Taxes In some municipalities, these taxes are integrated into the property taxes. In others, they are collected separately and are payable in a single lump sum, usually due at the end of the current school year. 4) Utilities As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable. 5) Maintenance and Upkeep You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighbourhood and, depending on the kind of renovations you make could add to the worth of your property.

 A longer-term mortgage is worth considering if you have a busy life and don't have time to watch mortgage rates. Our 4, 5 and 7-year mortgages let you take advantage of today's rates, while enjoying long-term security knowing the rate you sign up for is a sure thing. If you want to keep your mortgage flexible right now, you can explore a shorter-term mortgage that usually allows you to take advantage of lower rates and save.