Let Us Answer Some Of Your Most Asked Questions
Frequently Asked Questions
See some answers to our most frequently asked questions.
Independent Mortgage Broker FAQ
Most lenders will allow a rate lock-in for switching to them for 60-90 days. They will guarantee that you will get that rate, or lower if rates drop by the time your current mortgage matures. Let us start shopping around, don’t leave it until the end because you may miss a very low rate window of specials that may come on the market. If you are doing a straight switch of your mortgage and not increasing the amount (re-financing), your new mortgage company may cover the costs of the switch.
Renewal notices sent out by most lenders will offer to their borrowers their posted rates. These rates are usually not their best rates. We will investigate a lower rate in the market and secure that for you. Making a simple phone call (204) 885-3438 or Email Us is all it takes to get you the lowest rate on the market and save thousands of dollars!
Mortgage clients typically do not pay a fee for the services of a Mortgage Consultant/Broker. Financial institutions pay a finder’s fee to Mortgage Brokers and at the same time offer them their best discounted rates and fast approvals in order to gain their business. This helps financial institutions gain a larger share of the market. A Mortgage Broker can shop among many financial institutions for the best rate and mortgage product for the needs of the client.
A fee may be necessary for clients who have difficult credit and cannot be placed with a traditional lender. 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.
For the inexpensive method of working through an independent mortgage broker, lenders allow brokers access to wholesale lending rates for the market. Putting mortgages out through their branches is an expensive way for banks to get the business. Paying only for good mortgages successfully brought into the bank/lender is a cheaper and more effective way to build their mortgage portfolio.
When you shop Financial Institutions directly by yourself, your credit bureau is pulled each time and this will, in itself, reduce your credit rating each time. If your mortgage application, for whatever reason, is declined you will have to begin the process all over with another Lender. When you deal with a Mortgage Logic broker only one credit bureau is pulled and shopped to the appropriate Lender, or lenders, for review and approval.
Contact Us to proceed with getting the best mortgage at the best rate on the market.
What is your Total Income (line 150 on your tax return or notice of assessment),
GDSR: For a principal residence, up to 32% of your Total Income can be used toward mortgage payments, property taxes and heating costs (if applicable, one half of the monthly condominium common/maintenance fees are also included into this calculation).
TDSR: 40% of your Total Income minus all of your debt payments or obligations (other than current mortgage payments, property taxes and heating costs), including car loans, credit cards, lines of credit, etc.
The lesser of the first or second calculation will tell you how much of a housing related payment you can afford, including your mortgage payment.
These calculations are fairly standard amongst Lenders, although different lenders will have different rules as to what they may include or remove from these calculations. There are various non-conventional lenders in the market that will qualify clients at higher ratios that these. These types of mortgages will typically have higher rates of interest applicable.
Don’t become house poor! Be sure that you are comfortable with how much you commit to paying a mortgage, property taxes and heating costs. If these costs equal 32% of your income, you will qualify as long as TDSR does not breach 40%.
For a detailed calculation Contact Us at Mortgage Logic.
Mortgage Loan Insurance is required by law for certain lenders to insure them against default on mortgages with a loan to value ratio greater than 80%. The insurance is provided by Canada Mortgage and Housing Corporation (CMHC, a crown corporation), and Genworth Insurance Company, (an approved public corporation), Canada Guaranty (an approved public corporation) and other entrants into the Canadian market. The premiums for this insurance, (ranging from .50% to 7.3% of the mortgage amount), are paid by the borrower and can be added directly onto the mortgage amount, and amortized over the life of the mortgage. Mortgage loan insurance is not the same as Mortgage Life Insurance. Find out more at the Canada Mortgage and Housing Corporation website.
If you receive Support and/or Alimony, the amounts are generally included in your total income to determine the mortgage that you qualify for. You will need to show that the amount of this payment has been regularly received. Showing your last three months receipts will usually suffice. This may vary from lender to lender. A copy of your separation agreement or divorce decree is usually requested. If none exists then you will typically be asked to sign a declaration that says you have no outstanding liabilities remaining from your separation.
If you pay Child Support and/or Alimony, the amount paid out is deducted from your total income before determining the mortgage that you qualify for.
Depending upon the circumstances of your bankruptcy, some lenders would consider providing mortgage financing. If you have been discharged from bankruptcy and have re-established some credit, chances are you and your property are mortgage able. The best way to determine whether or not you qualify is to discuss your particular situation with us.
A Pre-approval is the first step that you should take if you are in the market for a property. Based upon the information that you give to a Mortgage Logic broker he/she will submit an application to a lender that best suits your needs and have them respond with a pre-approval that will guarantee an interest rate and mortgage amount for a certain period of time. A pre-approval essentially approves all aspects of you as the borrower with a financial institution. Once property aspects are known then this will be added to the pre-approval in order to obtain an approval.
Both pre-approvals and approvals done properly require that you provide verification of information provided. This would be verification of income, employment and property representations. Good effective realtors will require that you have a pre-approval before they start showing you property.
Mortgage Financing FAQ
A High-Ratio mortgage is one with an amount greater than 80% of the value of the property being purchased. Value is determined by the lesser of purchase price or appraised value. High-Ratio mortgages require Mortgage Loan Insurance.
A conventional mortgage is one where the down payment is equal to 20% or greater of the purchase price, or a loan to value (LTV) of 80% or less. Conventional mortgages do not normally require Mortgage Loan Insurance.
Yes you can include improvements into your mortgage when you buy your house. There are certain conditions that must be met in order to qualify for this.
Purchase plus improvement can be financed with 10% and even as little as 5% down. Canada Mortgage and Housing Corporation (CMHC), Genworth and Canada Guaranty are available to insure a mortgage for the purchase price of a home plus an amount to pay for immediate improvements that the purchaser would like to make. This enables you to finance renovations or improvements without having to establish separate financing.
If the improvements are structural in nature, the mortgage loan insurance premium is increased by one half of one percent (.5%).
A home inspection should be performed by a qualified professional. It is a visual examination of the property to determine the general condition of the home. The inspector will visually review and check all major components and working systems of the property. A detailed formal report of the results of the inspection should be provided to the purchaser within 24 hours.
An inspection can give you a feeling of comfort for one of the largest and most important purchases you will ever make. It can make your decision less stressful. The results of an inspection can be used to negotiate further on your purchase. It can indicate major or minor repairs required. An inspection report can recommend having an engineering inspection/report done if more serious foundational problems are suspected. Typically a home inspection can not give opinion, confirm or report on foundational issues.
Home inspections will help take away doubts and unknowns and should give you a very good idea of how much you may need to spend or re-negotiate due to repairs and replacements required for the property.
It is possible to qualify for 100% financing that allows for a borrowed down payment. There are certain lenders / products in the market that offer this option and it depends upon your credit standing to determine what interest rate you would qualify for, as long as the payments for the borrowed down payment work within your qualifying debt service ratios. Call our us for details.
Down payments as small as 5% to buy a home are available from most lenders, with CMHC, Canada Guaranty or Genworth mortgage loan insurance, subject to certain maximum price restrictions. In addition to the down payment, you must also be able to show the ability to pay applicable closing costs (i.e. legal fees, prepaid property taxes, disbursements, appraisal, and survey certificate).
Your down payment is typically from your own savings (resources) or a gift from a family member. A gift letter signed by the donor is required that irrevocably forgives any claim to the gift. Mortgage Loan Insurance from Canada Mortgage and Housing Corporation (CMHC), requires that the gift money must be in the your possession before the application is sent to CMHC for approval. Mortgage Loan Insurance provided by Genworth, does not require that the gift money be in your possession until the closing date.
Mortgages with less than 20% down payment will require Mortgage Loan Insurance provided by CMHC, Genworth, Canada Guaranty or a lender’s own self insurance program.
You can now re-finance up to 85% of the value of your home through certain lenders. This is based upon the current appraised value of the property. Through most lenders you can re-finance up to 80% of your home with mortgage loan insurance from CMHC or Genworth or Canada Guaranty.
Save interest by buying your mortgage through a mortgage brokerage like us. Lower your interest cost over the life of your mortgage by using the accelerated payment approach. You can save some interest making bi-weekly or weekly payments, but the most significant impact on reducing your amortization period (life of your mortgage) is increasing the total payments made against your mortgage each year.
Biweekly payments total 26 times per year, whereas semi-monthly payments occur 24 times per year. If the monthly payment is divided by two and paid biweekly, you in effect are accelerating your payments by making the equivalent of one extra monthly payment per year. The extra monthly payment is what reduces the length of your mortgage. You can accomplish the same thing by just increasing your monthly payment, if monthly is a more convenient payment frequency for you. Another option is to take an accelerated semi-monthly payment frequency.
A payment frequency that is tied to your pay dates usually makes the most sense, and should typically be used.
The costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes, can be a particular burden for first-time home buyers, who must pay these costs on top of saving the money for a down payment.
To assist first-time home buyers with the costs associated with the purchase of a home, Budget 2009 proposes to introduce a First-Time Home Buyers’ Tax Credit a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009.
For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009. It is also proposed that the First-Time Home Buyers’ Tax Credit be made available to existing homeowners in respect of a more accessible or functional home purchased by an individual eligible for the Disability Tax Credit (DTC), or for the benefit of a DTC-eligible person who is related to the individual purchasing the home. For more information on the first time home buyers’ tax credit click here.