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A scenario we often hear as Mortgage Planners is, "I've been with my financial institution for many years and now they can't do my mortgage…"
Don't take "No" from your lender as the final verdict! This is just one of the many reasons it's in your best interest to consult a Mortgage Planner. We have access to a wide variety of options through numerous lenders – including banks, credit unions and trust companies. Access to more lenders means more choices for borrowers! We’ll ensure you receive the best mortgage product and rate catered to your unique situation.
Mortgage Planners listen to your story, evaluate your needs, and seek out the best lender in order to make your mortgage goals a reality. The best part is, our services are typically free! We get paid by the lender once your mortgage funds, so it’s always in our best interest to match you with the mortgage that best meets your needs. Contact one of our fully trained and licensed Mortgage Planners today to get a second opinion, or to simply get the best deal with the best options for you!
Mortgage brokers deal with hundreds of lenders and have a wide variety of options vs the one or two options your bank can offer you. We don't have huge overhead due to big business expenses or bureaucracy. Mortgage Brokers specialize only in real estate financing and can afford offering low rates based on the large variety of lenders we have to use.
As Independent Mortgage Planners, we have seen a lot of changes in this regard as of late. In most cases, we can ignore 0 balances on available credit and use just the balance on the credit card or line of credit when qualifying. Many financial institutions, on the other hand, often have to take into account all available credit, regardless of whether it’s being used.
Another big change we’re seeing a lot of lenders making is using a 3% payment on the balance you carry, which can greatly affect the amount for which you can qualify. We still have a few lenders who’ll use minimum payments on credit cards and lines of credit, although these lenders are getting to be few and far between. Contact one of our fully licenced and trained Independent Mortgage Planners today to find out what you may qualify for without all the imaginary payments a lender may include in your home purchase or refinance picture!
You might receive the lowest rate your 'bank can offer' to it's loyal customers but unfortunately this does not mean that this will be the lowest rate available in Canada . Typically, your bank will offer a mortgage broker an even a lower rate because we do many mortgages and are competive with our rates. So before you sign your bank's rate offer, give your Mortgage Broker a call just to see if we can get you a better mortgage to suit your needs. The reality is your bank is here to make money, even on its preferred customers and they always try and sell you a higher mortgage. We give you our best mortgage the first time, no games.
Most lenders offer pre-payments privileges, which allow you to put money down to your principle mortgage amount and pay out your mortgage sooner. The amount of pre-payment every year varies from 10% to 25% of the original mortgage amount depending on the lender. You can also double up your regular mortgage payments.
When you arrange a mortgage loan, you can choose how often you would like to make your mortgage payments. Options available to you are:
While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 30 years. The main reason to opt for a shorter amortization period is that you’ll become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced. A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value. While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.
If for whatever reason you cannot confirm your income (for instance, you are self-employed), there is a variety of mortgage products available to you. In cases like this, the typical requirements are a solid downpayment (usually 25% or more) and the applicants need to have a good credit. We use creative ways to confirm your income and have a large variety of lenders who are willing to work with us. Unconfirmed income can be anything from tips at a restaurant to a small home based business.
Home buyers usually confuse an appraisal with a home inspection. An appraisal is a written estimate of value based on comparable properties that have recently sold in the marketplace. Lenders need some form of assurance on every mortgage. In the case of a high-ratio mortgage (when your downpayment is less than 25% of the purchase price), CMHC or GE Capital will provide insurance, that protects the lender in case the buyer defaults on his mortgage payments. With a conventional mortgage when your downpayment is 25% or more, for the lender to be assured that they are lending on quality property, an appraisal is usually ordered. It is typically the borrowers' responsibility to cover the cost of an appraisal. In some cases, the lender simply wants an appriasal and they would then pay for it themselves.
Selecting the mortgage term that’s right for you can be a challenging proposition for even the saviest of homebuyers, as terms typically range from six months up to 10 years. The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn’t always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you’ll also have to take into consideration when selecting the length of your mortgage term. 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 mortgage term, such as five or 10 years, so that you can ensure that you’ll be able to afford your mortgage payments should interest rates increase. By the end of a 5 or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of your term, you’ll be able to afford higher mortgage payments. The most common term is a five year, it usually offers great rates and is a good time period when someone is looking to sell or refinance.
Fixed-rate products usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. With variable-rate mortgages, however, porting is usually not available. This means that when breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage. While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, it’s best to check with your mortgage broker for specific conditions. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods.
1. Proof of Downpayment
2. For a Salaried/Hourly Employee
3. For a Salaried/Hourly Employee (Overtime & Bonuses)
4. For Self Employed / Commissioned Clients
5. Other Documentation
The answer to this question often depends on your specific lender and what type of mortgage you have. While fixed mortgages are often portable, variable are not. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods. As long as there’s not too much time between the sale of your existing home and the purchase of the new home, as a rule of thumb most lenders will allow you to port the mortgage. In other words, you keep your existing mortgage and add the extra funds you need to buy the new house on top. The interest rate is a blend between your existing mortgage rate and the current rate at the time you require the extra money.
Absolutely! We can help you get approved for a construction process draw mortgage. Advances will be made as construction progresses. The key features of draw mortgage are the house can't be self-built, it needs to be HEWDAC approved (Registered under the Provincial / National New Home Warranty Program) and the land should be owned free and clear. Many banks and lenders are unable to finance this type of mortgage but we have multiple options!
Title insurance protects both you and the lender and is mandatory on all mortgages. The best way to prevent fraud is to be aware of how it’s committed. Following are some red flags for mortgage fraud: someone offers you money to use your name and credit information to obtain a mortgage; you’re encouraged to include false information on a mortgage application; you’re asked to leave signature lines or other important areas of your mortgage application blank; the seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing; or the seller or developer rebates you money on closing, and you don’t disclose this to your lending institution. Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you’re the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud. Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft. Following are ways you can protect yourself from title fraud: always view the property you’re purchasing in person; check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable; make sure your representative is a licensed real estate agent; beware of a real estate agent or mortgage broker who has a financial interest in the transaction; ask for a copy of the land title or go to a registry office and request a historical title search; in the offer to purchase, include the option to have the property appraised by a designated or accredited appraiser; insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab; ask to see receipts for recent renovations; when you make a deposit, ensure your money is protected by being held “in trust”; and consider the purchase of title insurance.
The best way to ensure you receive the best mortgage product and rate at renewal is to enlist your Mortgage Broker once again to get the lenders competing for your business, just like they did when you negotiated your last mortgage. A lot can change over a single mortgage term, and you can miss out on a lot of savings and options if you simply sign a renewal with your existing lender without consulting your mortgage broker. We suggest you contact your Mortgage Broker at least 3 months before your mortgage renews and we can run the numbers and decide if a new lender is better then renewing with your existing lender. Often times, when you switch to a new lender at renewal, the new lender will pay your legal fees.
To determine the amount for which you will qualify, there are two calculations you’ll need to complete. The first is your Gross Debt Service (GDS) ratio. GDS looks at your proposed new housing costs (mortgage payments, taxes, heating costs and 50% of strata/condo fees, if applicable). Generally speaking, this amount should be no more than 32% of your gross monthly income. For example, if your gross monthly income is $4,000, you should not be spending more than $1,280 in monthly housing expenses. Second, you will need to calculate your Total Debt Service (TDS) ratio. The TDS ratio measures your total debt obligations (including housing costs, loans, car payments and credit card bills). Generally speaking, your TDS ratio should be no more than 40% of your gross monthly income. Keep in mind that these numbers are prescribed maximums and that you should strive for lower ratios for a more affordable lifestyle. Before falling in love with a potential new home, you may want to obtain a pre-approved mortgage. This will help you stay within your price range and spend your time looking at homes you can reasonably afford.
Most lenders look at five factors when determining whether you qualify for a mortgage: 1. Income; 2. Debts; 3. Employment History; 4. Credit history; and 5. Value of the Property you wish to purchase. One of the first things a lender will consider is how much of your total income you’ll be spending on housing. This helps the lender decide whether you can comfortably afford a house. A lender will then look at your debts, which generally include monthly house payments as well as payments on all loans, credit cards, child support, etc. A history of steady employment, usually within the same job for several years, helps you qualify. But a short history in your current job shouldn’t prevent you from getting a mortgage, as long as there have been no gaps in income over the past two years. Good credit is also very important in qualifying for a mortgage. The lender will also want to know that the house is worth the price you plan to pay.
The answer to this question depends on your personal risk tolerance. If, for instance, you’re a first-time homebuyer and/or you have a set budget that you can comfortably spend on your mortgage, it’s smart to lock into a fixed mortgage with predictable payments over a specific period of time. If, however, your financial situation can handle the fluctuations of a variable-rate mortgage, this may save you some money over the long run. Another option is to opt for a variable rate, but make payments based on what you would have paid if you selected a fixed rate. Finally, there are also 50/50 mortgage options that enable you to split your mortgage into both fixed and variable portions. Talk to your Mortgage Broker about more specific details regarding the best option for your needs.
As a general rule of thumb, it’s recommended that you put aside at least 1.5% of the purchase price (in addition to the down payment) strictly to cover closing costs. There are several items you should budget for when it comes to closing costs. Property Transfer Tax is charged whenever a property is purchased, unless you are a first time home buyer. The tax will vary from jurisdiction to jurisdiction, but your Mortgage Broker can help with the calculation. GST/HST is only charged on new homes, and does not affect homes priced at less than $400,000. Even homes that exceed the price threshold are only taxed on the portion that exceeds $400,000. Certain conditions may apply. Please contact you lawyer/notary for more detailed information. Your lawyer/notary will charge you a fee for drawing up the mortgage and conveyance of title. The amount of the fee will depend on the individual that you use. The typical cost is $900. If you’re purchasing a single-family home, you’ll need to give your lender a survey certificate showing where the property sits within the property lines. Some exceptions are made, however, on low loan-to-value deals and acreage properties. A survey will cost approximately $300-$350, but the lender will often accept a copy of an existing survey. Other costs include such things as an appraisal fee (approximately $200), title insurance and a home inspection (approximately $350).
When you go to your bank for a mortgage, you're only gaining access to one product line, which also translates into one set of rates. When working with one of our Independent Mortgage Planners, not only are you dealing with a true specialist who is fully licensed and trained, but you're also dealing with someone who has access to a wide variety of options through numerous lenders.
Speaking of rates, it's not always the lowest rate that's the best option for you, and it's important to know this! If you go strictly on rates and ignore the terms you’re agreeing to, you may be entering into a mortgage contract that sounds great upfront but ends up costing you exorbitant amounts of money to break.
You never know when something will happen in your life that can lead to the need to sell your home or refinance your mortgage. Sometimes lenders may push a particular rate and product they're told to push by their employer, but fail to explain the small print that's attached to that rate and product. As Independent Mortgage Planners, it's our job to work for YOU! We will find the best rates and options that work for your scenario, taking into account your longer-term plans. This means that it's also our job to explain to you what it means to opt for specific rates and options we suggest. Contact one of our fully licensed and trained Independent Mortgage Planners.
A mortgage broker will pull your credit when qualifying you for a mortgage but the report is coded and not consumer friendly.
To check your credit, we suggest you check it every 12-24 months, go to the Equifax Website and request your own credit report. It is inexpensive, easy to read and wont affect your credit score when you check it. Look for fraudulant accounts or collections and have them cleared up right away. The report will give you details about what is impacting your credit score.
There are several things you can do to ensure your credit remains in good standing. Here are five steps to follow:
1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on.
2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there’s a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month.
3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close.
4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. Use these cards periodically and then pay them off.
5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation. Pay off any and all collections ASAP.
A down payment can come from several different resources.
1. You can use your RRSP's as a down payment. You are required to pay them back within 15 years but you can deduct them tax free when using an RRSP as a down payment on a home as a first time home buyer.
2. Your down payment can come from your savings. A lender would ask to see your last three months bank statements to confirm the money has been in your account for a number of months.
3. You can have your down payment gifted from a direct reletive. A lender would require a signed gift letter and a bank statement confirming the deposit.
4. Your down payment can come from the sale of your current or previous home. A lender would want to see a signed sale agreement and a proceeds of sale statement as well as any mortgage statement to confirm what amount you have available after selling your home and paying out your existing mortgage.
First time home buyers can use their RRSP savings as their downpayment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP. To qualify, the RRSP funds you're using must be in your account for at least 90 days. You'll also need a signed agreement to buy a qualifying home. For more information, visit Canada Customs & Revenue Agency Web site.
The minimum down payment required is 5% of the purchase price of the home. And in order to avoid paying mortgage default insurance, you need to have at least a 20% down payment.
Yes. Mortgage life insurance is a life insurance policy on a homeowner, which will allow your family or dependents to pay off the mortgage on the home should something tragic happen to you. Mortgage default insurance is something lenders require you to purchase to cover their own assets if you have less than a 20% down payment. Mortgage life insurance is meant to protect the family of a homeowner and not the mortgage lender itself. We strongly suggest mortgage insurance to help cover the affects of the unexpected. Talk to your Mortgage Broker regarding the best options for you!
Mortgage insurance allows home buyer to put as little as 5% down. So if your downpayment is less than 20% of the purchase price, you will be required to purchase mortgage insurance through your lender. Mortgage insurance protects your lender against payment default. Mortgage insurance premiums are calculated based on the amount of your downpayment. For instance, if your downpayment is 5%, premium on the total loan amount will be 2.75%. In other words, if your loan amount less 5% of the downpayment is $100,000, your CMHC or GE insurance will be $2,750. Homebuyers can either pay this amount upfront, or add it to their mortgage.
If your mortgage is insured (or in other words high-ratio), CMHC or GE wants to make sure that other than your downpayment, you have funds saved for expenses associated with purchase and moving to your new home. This amount is calculated by CMHC as 1.5% of your original loan amount. If the sale price is $100,000 and you are putting 5% down, you will need to have $6,500 saved ($5,000 for the downpayment and $1,500 for moving expenses). For more information, please visit the CMHC Website
Mortgage lenders typically expect a down payment of at least 20% for a conventional mortgage. One common option is to draw on the equity from your principle residence, so refinance, do an equity take out or use a home equity line of credit for the down payment on a rental property. Some lenders allow up to 80% of monthly rental revenue as 'other income' when qualifying you to purchase the rental; this increase your income thus increasing the amount you can afford to purchase.
The goal is to make money, keep payments down and not have a mortgage that restricts your options. Your mortgage broker can explain all your options based on your longterm plans for the property.
We often see clients getting variable rate mortgages for investment properties. A variable rate mortgage is generally a lower rate so you are paying less interest on the mortgage and increasing your profit. A variable rate isnt predictable though and has the ability to change during the term of your mortgage so there is some risk involved when taking a variable mortgage. A variable rate mortgage generally has a lower penalty if you choose to sell your home or break your mortgage before your term is up.
The amortization depends on your plans for the property. If you want to pay it off quickly, we often see clients choosing a shorter amortization and more frequent payments. If you are looking to lower monthly payments and have no urgency to pay off the property, we can look at lengthening the amortization so you take longer to pay off the mortgage but have low monthly payments in mean time.
Talk to one of our mortgage specialist to discuss the best options for you!
There are many ways to pay down your mortgage sooner that could save you thousands of dollars in interest payments throughout the term of your mortgage. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage). Another way to reduce the time it takes to pay off your mortgage involves changing the way you make your payments by opting for accelerated bi-weekly mortgage payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage. With accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year. In addition to increased payment options, most lenders offer the opportunity to make lump-sum payments on your mortgage (as much as 20% of the original borrowed amount each year). Please note, however, that some lenders will only let you make these lump-sum payments on the anniversary date of your mortgage while others will allow you to spread out the lump-sum payments to the maximum allowable yearly amount.
Most lenders enable lump-sum payments and increased mortgage payments to a maximum amount per year. Since each lender and product is different, it’s important to check stipulations on prepayments prior to signing your mortgage papers. Most “no frills” mortgage products offering the lowest rates often do not allow for prepayments. We generally dont suggest a no frills mortgage as it rarely benefits you in the long run. A commom pre-payment plan would include 20/20 prepayment privledges. You can bump up your payment by 20% each month or you can pay up to 20% against your principle balance each year. Check the mortgage commitment for details on your mortgage options!
About 1 out of 3 people who purchase a second home use it as an income-producing property and rent it out. A lender can deduct the rental income from your total monthly debt payments and decrease your monthly debt per month thus increasing the amount you can afford to purchase. Talk to one of our mortgage brokers today to discuss your best options!
As of May 30, 2014 CMHC no longer offers is Second Home Insurance program. If your current home is CMHC insured and you have more than 20% equity, talk to your mortgage broker about having the insurance removed so you can purchase a second home with CMHC insurance. There are other lender insurers your mortgage broker can use like Canada Guaranty and Genworth but their programs dont always fit your mortgage needs when purchasing a second home.
There are many different mortgage products for purchasing a second home. In speaking with your mortgage professional, they will help you decide on the best mortgage for your needs. When qualifying for a vacation home financing, the lender will add the new mortgage payment amount onto your total monthly debt payments. If those do not exceed 42% of total monthly household income, the loan will most likely be approved.
If you are self employed, depending on how to earn and report income, a lender could request these documents:
- Last two years T1 Generals and statement of business activities
- Last two financial statements
- Last two business licenses
- Incorportation documents or partnership agreements
Self employed individuals need to reply on stated income. As the name suggests, stated income is how much money you claim to earn. As Mortgage Brokers we understand that reporting less means less income tax owed each year so we have a number of products and options designed to help stated income clients.
Mortgage lenders look at a lot of the same things from self employed individuals as they do from other borrowers. Steady income, good credit and low debt. It also doesn't hurt to have a higher down payment of about 20% as opposed to the minimum 5% down. Based on income, property and other key factors, the lender or the lenders insurer may require you have a higher down payment around 20%.
Over the past two years, new regualtions have been creating more limitations for self employed/stated income applicants. The mortgage rules are making it harder to be approved based on the income you state. Many accountants advise business owners to report less income so they pay less tax but these days, you want to report more income so you dont limit yourself in terms of what you qualify for a mortgage. We have a number of lenders with great self employment mortgage products, talk to one of our Mortgage Brokers today and find out how we can help you out!