Q. Why use a mortgage consultant as opposed to a bank?
A. When dealing with a bank, you are limited to their product line, which may not be the best product for you. But they won't tell you that, because it's their job to sell you their products. As well, the bank has to look out for their bottom line and at times clients suffer by getting much higher rates than they deserve.

When dealing with a mortgage consultant like me, it's much different - a consultant can provide you with a wider range of mortgages designed to fit your needs, and you can benefit from lower rates without the haggling. You can also rest assured that I will be fully looking out for your best interests, and you can expect the highest level of customer service from me, as a result of my long experience in the financial industry.

Q. Are there any fees involved with a mortgage consultant?
A. In most instances, there are no fees involved. Mortgage consultants receive a commission from the lending institution that received and funded your mortgage application. If you do not qualify normally due to bad credit, job instability or other unseen factors there may be a brokerage fee, but it will be disclosed to you prior to proceeding.

Q. Should I wait for my mortgage to mature?
A. No. Allow me to to begin shopping around for an interest rate at least 120 days before your mortgage matures. Lenders will often guarantee you an interest rate as much as 120 days before your mortgage matures. As long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage as well. This means a rate promised well in advance of your maturity date, which eliminates any worries about higher rates and if rates drop before the actual maturity date, the lender will adjust your interest rate to the lowest it has been during the 120 days since the application was submitted,

Q. What is mortgage loan insurance?
A. Mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and Genworth, an approved private corporation. This insurance is required by law to ensure lenders against defaults on mortgages with a loan to value ration of more than 75%. The insurance premiums, ranging from .50% to 2.9% are paid by the borrower and can be added directly into the mortgage amount. This is not the same as mortgage life insurance.

Q. What is a conventional mortgage?
A. A conventional mortgage is usually one where the down payment is equal to 25% or more of the purchase price; a loan to value of less than 75%; and does not normally require mortgage insurance.

Q. What is a high-ratio mortgage?
A. A high-ratio mortgage is one where the amount to be borrowed is greater than 75% of the purchase price or appraised value. High-ratio mortgages generally require mortgage loan insurance provided by either CMHC, a crown corporation or Genworth, a private insurer.

The mortgage loan insurance premium paid to CMHC or Genworth protects the lender in case of default in the event the mortgage is not repaid, and the bank has to take back the property. The benefit to the borrower is that they can purchase a home with less than 25% down, to as low as 5% down. The insurance premium is paid by the borrower and can be added directly into the mortgage amount. This is not the same as mortgage life insurance.

Q. What can I use for a down payment?
A. In most cases:

Registered Retirement Savings Plans (RRSP's) may be used as a down payment up to a maximum of $20,000 and is not subject to income tax if repaid within 15 years.
Gift from immediate family
Accumulated savings
Sale of existing home
Equity

Q. What is the minimum down payment needed to buy a home?
A. A minimum down payment of 5% is usually required to purchase a home, but there are exceptions. For instance at Invis we have relationships with lenders that will actually lend you 100% of the purchase price or appraisal value of your home. However to qualify for this your credit must be clean and in good standing. Regardless of the down payment chosen you must be able to show that you can cover the applicable closing costs (Legal fees, appraisal fees and a survey certificate when appropriate).

Q. How much can I afford to pay for a home?
A. To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half the monthly condominium maintenance fees will also be included in this calculation.

Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. Both of these two calculations will be used to help determine how much of your income will be used towards housing payments, including your mortgage payment. The calculations are based on lenders' usual guidelines.

In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so you can still afford simple luxuries.

Q. How does bankruptcy affect my ability to qualify for a mortgage?
A. Depending on the circumstances surrounding your bankruptcy, generally some lenders will consider providing mortgage financing.