| Q | Why use a Mortgage Broker? |
| A | • Power of professional negotiating expertise. • One stop convenience for access to numerous mortgage products. : • Unbiased knowledgeable advice. : • Access to unadvertised rates. : • Work for you, not the Bank. : |
| Q | How do Brokers get better deals than many Banks? |
| A | The lenders who work with mortgage brokers include traditional sources, such as chartered banks, trust companies, as well as corporate and private pension funds.
In addition to these sources, brokers often develop professional relationships with private sources of funds, termed private lenders. These lenders can provide many various mortgage products not available at conventional sources. |
| Q | How much does it cost to use a mortgage broker? |
| A | The vast majority of mortgage clients do not pay a fee for the services of a Mortgage Consultant. To gain a larger market share, the majority of financial institutions pay a finder's fee to Mortgage Consultants and at the same time offer them their best discounted rates and fast approvals in order to gain their business. This allows the Mortgage Consultant to shop among the various financial institutions for the mortgage rate and product that best suits the needs of the client and, in almost all cases, at no cost to the client.
In situations where traditional lenders will not approve a mortgage because of poor credit, and where the application must be placed with a private or non-traditional lender, a brokerage fee may be charged to the client. This cost must always be disclosed to the client up front and must be authorized in writing by the client before it can be charged. |
| Q | What is required to obtain a first Mortgage? |
| A | In order to get the best rate, terms and conditions, you'll need to provide me with: 1. Employment verification with proof of income 2. A good credit rating 3. Verification of source of down payment 4. An online application |
| Q | How does bankruptcy affect my ability to qualify for a mortgage? |
| A | Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing. If you are a previously discharged bankrupt the best way to determine whether or not you qualify at this time is to discuss your situation with me. I have many lenders to approach based on your circumstances. |
| Q | Should I wait for my mortgage to mature? |
| A | No, have me do the shopping for you for the best interest rate at least 90 days before your mortgage matures. Lenders will often guarantee an interest rate to you between 90-120 days before your mortgage matures. And, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.
Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always ask me to check for the best possible rate. If you don't you may end up paying a much higher interest rate on your renewing mortgage than you need to. |
| Q | Cashbacks and gimmicks, do they save me money? |
| A | Be very careful! Some of the gimmicks used to entice you to take a mortgage at an institution may seem very appealing but the long term effect could be costly. A 3% cash back may seem great on closing, but a 1% discount in your rate may save you considerable more over the 5 years. It is important to look at the numbers. I have the software available on our system to compare your options. Give me a call to do the math |
| Q | Do I qualify for the 5% downpayment program? |
| A | • The home must be located in Canada and is to be occupied as your principal residence. • You have from your own resources a down payment of at least 5% of the purchase price of the home. • Your mortgage payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees (if applicable). • You must be able to cover closing costs equivalent to at least 1.5% of the purchase price. • You meet the lenders eligibility requirements regarding income, employment and credit worthiness. |
| Q | What should I expect for closing costs? |
| A | Closing costs are approximately 1.5% of the Purchase Price. .The following are approximate costs: • Appraisal Fee: $300.00 • CMHC FEE (if applicable): 165.00 • Survey Certificate (if applicable): 250.00 • Home Inspection 250.00 • Legal Fees (approx): 750.00 • Tax Adjustment (if applicable) • Interest Adjustment (if applicable) • Property Transfer Tax (if applicable) |
| Q | What is Property Transfer Tax and do I have to pay it? |
| A | • This tax is charged by the Provincial Government and is collected by your lawyer at closing. • Each Province varies as to the amount but it is usually a percentage of the purchase price. For example in British Columbia, the amount the purchaser must pay is 1% of the first $200,000 and 2% of the balance. • You are exempt from paying PTT in British Columbia if you have never owned a home anywhere. You must finance at least 70% of the purchase price and the maximum home price must not exceed $300,000.00. |
| Q | How do I pay down my mortgage faster? |
| A | There are many ways you can pay down your mortgage faster: • reduce the length of your amortization period. • make weekly payments instead of monthly payments. • increase your payments - you are allowed to do this once per mortgage year up to a maximum of twice the amount of your regular payment. |
| Q | What type of income proof do I have to provide? |
| A | In most situations lenders require a comfort level that the borrower has sufficient income and cash flow to service the mortgage as well as any other obligations that they may have. The higher the Loan to Value (ie mortgage amount vs. purchase price) the more important this becomes as the lender is placing less reliance on the value and equity in the property and more on the earning power of the borrower. The following is a summary of what Lenders require depending on what type of job you have:
Salaried Employees
• Job Letter - Lenders use 100% of the income. Verification is made on company letterhead, signed by appropriate individual. If you are a recent hire, the letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
Hourly Employees
• Pay Stubs - showing year-to-date income verification.
Commission Income
• T4's and/or Personal Tax Returns - 3 years to take an average.
Self-Employed
• Financial Statements of Company - 3 years average of net income used. Depending on Lenders policies, The add-back of various personal expenses run through the company may or may not be allowed (eg's of allowable addbacks - Depreciation, Amortization, CCA (Capital Cost Allowance). |
| Q | How many different types of lenders are there? |
| A | Broadly speaking, there are 3 types of mortgage lenders in Canada: A, B & C. Type A lenders have the lowest interest rates & terms. In return, they look for more qualified borrowers in terms of good steady income, good credit history and reasonably good networth i.e potential for lenders to cross sell their other products. Borrowers that do not qualify for Type A lenders due to either insufficient income or fair credit.or any other issues, there are the Type B lenders. They are less strict in their requirements; they allow for some blemishes in credit, lower income or other shortfalls that are unacceptable to Type A lenders. Due to higher risk to lenders, borrowers are mostly charged a one time lender fee. Type C lenders are mostly private investors and mortgage investment companies. Their emphasis is on the quality of the secured property. Hence most of them have their own specified list of appraisers to evaluate the value of the property. They are even more relaxed on the income and credit requirements of the borrowers. However, interest rates and fees charged are higher and relative to the level of risks posed to these lenders. |