Your mortgage in 4 easy steps
With my knowledge and expertise, I’ll help you save time, reduce stress, and find the mortgage and lender that is right for you.
The mortgage process:
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As you navigate your financial future, whether it’s purchasing one home or three, I want you to feel confident and strong – that your real estate purchases and your financial plan can withstand time, economic challenges, life changes, children, marriage, divorce or whatever else this crazy world throws your way.
Frequently Asked Questions
Chances are, you’re not the first person to ask! Take a look at some frequently asked questions and answers.
WHAT IS THE MINIMUM DOWN PAYMENT REQUIRED TO PURCHASE A HOME?
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) which typically ranges from 1.5% -4% of the purchase price. 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.
WHAT IS MORTGAGE DEFAULT INSURANCE?
A mortgage with less than 20% down payment is called an insured mortgage and must have mortgage default insurance provided by either Canada Mortgage and Housing Corporation (CMHC), Sagen (Previously known as Genworth) or Canada Guaranty. The insurance premium is based on the size of your mortgage and down payment, the premium is paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.
A mortgage with 20% or more down payment is called a conventional mortgage and does not require mortgage default insurance.
WHAT’S THE DIFFERENCE BETWEEN A FIXED AND ADJUSTABLE RATE MORTGAGE?
In a fixed-rate mortgage, the interest rate and monthly payments stay the same for the entire mortgage term. If interest rates go up during the term, you’re protected because your rate stays the same. Over the course of the mortgage, less of the payment counts toward interest and more toward the principal.
If you have an adjustable-rate mortgage, your interest rate adjusts with the Prime Rate. Your mortgage agreement explains how and when your interest rate will change. If interest rates go down, your mortgage payment will decrease. If rates go up, your mortgage payment will increase.
WHAT’S THE DIFFERENCE BETWEEN THE MORTGAGE TERM AND AMORTIZATION PERIOD?
Mortgage term is how long you commit to your mortgage rate, details and conditions with a lender. When a term ends, you pay off the mortgage or renew it for another term if your lender agrees. Terms range from 6 months to 10 years, but 5 year terms are most common.
Mortgage amortization period is the length of time it takes to pay off a mortgage, including interest. It may be between 5 and 30 years, depending on how much you can afford to pay. For a new mortgage, the amortization period is usually 25 years.
WHAT INFORMATION IS NEEDED FOR AN APPLICATION?
There is no reason to be daunted by applying for a mortgage. Your job is to simply gather the information together that your Mortgage Broker will need in order to process your application. You’ll need to provide: identification, proof of employment and closing costs, proof of down payment, and information about your assets and debts. Your Mortgage Broker will also want to see how well you have paid your bills in the past, to do this, your Mortgage Broker will pull your credit report.
Every situation is unique and you may be required to provide additional documentation. So, if you are asked for more information, the sooner you provide the information requested, the better. It will help speed up the application process.
HOW MUCH CAN I AFFORD TO PAY FOR A HOME?
Your debt service ratios – gross debt service ratio (GDS) and total debt service ratio (TDS) – are used to calculate the maximum mortgage the lender can offer. Lenders use these ratios to ensure you can consistently make your monthly payments as they place a limit on the amount of your income that can go towards your housing expenses and monthly debt obligations. The industry standard guideline for GDS is no more than 32% and 42% for TDS, however, you can exceed these limits if you good credit (over 680) up to 39% and 44%.
Affordability is the pillar of responsible homeownership. Buying within your financial means will ensure you can meet your financial obligations with confidence each month.
WHAT IS A MORTGAGE PRE-APPROVAL?
A mortgage pre-approval provides an interest rate guarantee from a lender for a specified period of time (usually up to 120 days) and for a set mortgage amount. 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.
Most Realtors will want to ensure you have a mortgage pre-approval 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 pre-approval is one of the first steps a home buyer should take before beginning the buying process.
WHAT IS A PAYOUT OR PRE-PAYMENT PENALTY?
A payout or pre-payment penalty is a fee charged to the borrower by the lender when you make more than the allowed additional payments toward your mortgage, you break your mortgage contract, borrow money using home equity, or transfer your mortgage to another lender before the end of your term.
The penalty will usually be the the greater of the Interest Rate Differential (IRD) or 3 months interest on what you still owe. The payout penalty calculation varies from lender to lender so be sure to talk to your Mortgage Broker about payout penalties.
WHAT ARE PRE-PAYMENT PRIVILEGES?
Mortgage pre-payment options allow you to pay off your mortgage at a faster rate than the original payment schedule outlined by the lender. Your mortgage contract may allow you to increase the amount of your regular payments by a certain percentage, make a lump sum payment up to a certain percentage of the original mortgage amount and double up your payment. Pre-payment privileges vary from lender to lender so it’s important to speak with your Mortgage Broker if you want flexible pre-payment options to accelerate the time it takes to pay down your mortgage.
WHEN SHOULD I SPEAK TO A MORTGAGE BROKER?
Are you getting ready to buy a home, or at least thinking about purchasing a property? Timing and knowing when you are ready to buy is usually the most difficult question for a first time home buyer. The answer, in just about every case, is going to be that you should speak with a Mortgage Broker as early as possible in the process.
One thing to avoid – finding the perfect house first! You may not be able to afford what you fall in love with and that will be frustrating. If your financing is not in order, other buyers could swoop in and buy it from under you.
Benefits of a Mortgage Broker
With access to multiple lenders, I can find solutions to your mortgage needs that one lender alone cannot accomplish. Each lender has its own internal policies regarding income, credit, down payment and acceptable properties. After completing a single application, I take on the heavy lifting of sorting through potential lenders to find the right one for you. This takes the stress of finding a lender off your shoulders.
Residential Mortgage Services
A mortgage broker works with many different lenders on an ongoing basis, some of whom offer rates only accessible through a mortgage broker. Because mortgage brokers are not tied to one lender, we have multiple mortgage options to choose from and can negotiate on your behalf.
How it Works
Three key financial factors that affect getting approved for a mortgage. In addition to the approval of the applicant, the lender will also ensure that the home you’re buying is in good condition and is worth what you’re paying for it.
Your income plays a large role in the approval of your mortgage as it determines how much you can afford to pay in mortgage payments. Lenders are concerned with your income and want to know that you have the ability to repay the mortgage loan.
Your credit score is a measure of your financial health and reliability, and it shows lenders their level of risk if they lend you money. It can be used to predict whether you’ll pay back your loans or pay debts on time.
Your down payment is the amount of money that you put towards the purchase of a home. You must prove the source of the down payment, from your own resources or gifted, as well as an additional 1.5% – 4% of the purchase price for closing costs.
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Whether you are looking for a home purchase mortgage, renewing an existing mortgage, refinancing, debt consolidation, financing revenue properties or a new home construction mortgage, I take the stress and worry out of the equation.
As opposed to dealing with the bank, I work for you and have access to 30 well known lenders. Using my knowledge and resources, I will find you the best possible mortgage that fits your needs. In almost every case, the lender pays my fee so the service that I provide for you costs you nothing.
Are you ready?
Whether you’re looking for your first home, your second home, an investment property, refinancing or renewing your current mortgage, you’ll benefit greatly from working with a Mortgage Broker.
IT ALL STARTS WITH AN APPLICATION