FAQ

What is a fixed rate mortgage?

The interest rate on a fixed-rate mortgage is set for a pre-determined term. This gives the security of knowing how much you’ll be paying for the entire term.

What is a variable rate mortgage?

The rate on the mortgage will fluctuate month to month, depending on the prime rate. If the prime rate goes up, your payment will increase. This is risky, but it could also be a great money-saving opportunity if you’re good at watching your rates.

What can a mortgage broker do for me that a bank can’t?

We can give you access to over 90 different lenders with just one application and one credit check! Bank application is a difficult and time-consuming process. Why search one by one when you can apply to all of them in just one application? To best suit your financial needs, mortgage brokers are searching the market. Remember: we don’t work for the lenders, we work for you!

What is a down payment?

Nobody usually has the money to buy a house outright, so the first step is to get a loan from a bank. However, rarely any banks will give you a loan unless you have some money to contribute. To secure the house, a down payment will be made to the seller. This is deducted from the home’s purchase price and the bank should cover anything left over.

If I get pre-approved, does that mean I am secured in getting the loan?

Depending on the lender, a pre – approval can mean nothing. However, a good broker can immediately let you know whether you will be approved or not. A mortgage broker should be able to know how an application will be considered by an underwriter.

How much down payment do I need to put down?

The minimum amount to be applied to a down payment is 5%. However, you must also be able to demonstrate that you can cover the closing costs (usually 1.5% -3% of the purchase price). If you can afford to spend more money without straining your wallet, we recommend that you put more down payment. Not only will it take less time for you to pay off your mortgage, but you will also possibly get a lower rate. Homebuyers who deposit more than 20 % down payment are not required to be insured by CMHC. You can also have a longer period of amortization which means more time to pay off your loan.

I got denied by a bank, what do I do now?

People often think that their mortgage application process ends with a bank denial. However, this is where you see the advantages of hiring a mortgage broker: if one lender denies you, there is a long line of other lenders waiting to review your application! We do our best to accomplish the financial goals of every client.

What is Mortgage Loan Insurance?

A mortgage insurance is required for people who are buying a home with a down payment of less than 20%. It is provided by the Canadian Mortgage and Housing Corporation. In cases where the borrower is unable to make a payment to the loan and goes into default, it insures the lenders from loans exceeding 80%. Please note that this is different from a life insurance policy for mortgages.

I was previously bankrupt; will this affect my mortgage application?

If you are dismissed from your bankruptcy, there are ways to still get a mortgage loan. Your loan will probably be subjected to more stringent conditions, but it is still possible to obtain a mortgage.

What are the monthly costs of owning a home?

Some of them may not be billed on a monthly basis, like taxes, so do the calculations to divide them into monthly costs. Below is a list of these major expenses. Keep in mind that these expenses are also calculated when considering your mortgage loan, to see if you can afford these monthly payments without financially straining yourself.

The Mortgage Payment: this depends on some variables like the amount of the mortgage, the rates and the term. You should know how much you expect to pay through the amortization schedule. Online calculators can also help you get an idea of how much you’re going to pay on a monthly basis.

Property Taxes: this is tax due to your municipality and payable in two ways – you directly pay to the municipality through installments or as part of your monthly mortgage payment.

Utilities: As a homeowner, you will be responsible for all utility bills. This includes heating, gas, electricity, water, telephone, internet and cable.

Insurance: It’s recommended to have insurance for your house although it is not always required. If anything goes wrong with your source of funds, you can rely on the insurance company to help you pay off your house.

Can we make changes to the mortgage application, such as length of term, repayment frequency, etc. once the payment application has been submitted?

Yes. Your ideal mortgage formula has probably already been generated, but if you want to consider a change, let’s look at the potential benefits and implications.

Is GST paid on a resale home?

Unless the house has been substantially renovated, there is no GST, and the tax is then applied as if it were a new house.

What is an IAD or interest adjustment date?

If your transaction is due to close in the middle of month, but your regular mortgage payments are set for the month’s beginning, your first mortgage payment may be delayed for several weeks. Let’s just say 15th of the month is the closing and therefore IAD will be collected at the time of closing along with your downpayment.

What is the difference between High Ratio Mortgage Insurance and Mortgage Life Insurance?

High Ratio Mortgage Insurance protects the lender from home buyer’s default payment. Most lenders require this if the home buyer’s down payment is less than 20%. There will be an insurance premium. In case of death, Mortgage Life Insurance will protect your dependents and loved ones.

When the mortgage lender pays the Property Taxes, how are payments calculated?

You can add the estimated amount of your property taxes to the mortgage payment and pay them at the appropriate times on your behalf. Depending on the balance in your tax account, it may be necessary to increase or decrease the amount of monthly payments to reflect the timing of Property Tax payments.*

* Tax information only consists of general comments, see the relevant legislation or review with your advisor for full details.