Frequently Asked Questions
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 80%. 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 20% or more of the purchase price; a loan to value of less than
80%; 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 80% 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 20% 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. How much can I afford to pay for a home?
A. The answer to this question will depend on your credit bureau
report rating - this is called your "beacon score". Please give
us a call so we can go over your options in detail.
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.