-
What is a pre-qualification?
A pre-qualification is when you provide generalized information to a lender or online calculator, without the information being confirmed, and receive an estimated max purchase price.
-
What is a pre-approval?
A pre-approval is when a qualified mortgage professional reviews the information provided, such as your mortgage application, income & down payment documents, along with verifying your credit bureau to provide you with a more accurate max purchase price.
-
What is an approval?
After you have an accepted offer to purchase your dream home, your Mortgage Broker will submit your information to a lender. Once the lender reviews & confirms all the information provided, they will provide you with a full approval.
-
How much can I qualify for?
The best way to find this out is to work with a qualified mortgage professional and complete a pre-approval. You're Mortgage Broker/Agent will work with you to determine your max purchase price & work within your budget.
-
How much money do I need for a downpayment?
If you're buying an owner-occupied property, you may be eligible to put as little as 5% down. Keep in mind that just because the minimum down payment is 5%, you still need to qualify for the total mortgage amount (based on your income & debts). Many people don't realize that the rules change for a purchase price above $500,000. In this case, you will require 5% on the 1st $500K and 10% on the remainder (up to $1M). If you're purchasing a home for over $1M you will require a minimum of 20% down. If you're purchasing a rental property you will require a minimum of 20% down.
-
Should I go fixed or variable?
That depends on many factors! With a fixed mortgage, you commit to a term (ex. 5 years) and your interest rate & payment will stay the same for that term. This is great for budgeting and knowing exactly what your payment is every month, giving you peace of mind. Though this may sound great, your short and long-term plans should be considered. Fixed Rate mortgages tend to have much higher penalties since you've signed a contract with your lender to commit to your rate & term. With an adjustable variable rate mortgage, your payment fluctuates with Prime. This can have huge advantages in a declining rate environment or can pose a higher risk in a rising rate environment (since your rate is not committed). The only thing that is guaranteed is your discount off of Prime Rate (ex. Prime - 1.00%). In short, if you plan to stay in your home and want consistent payments, a fixed rate mortgage may be best for you. If you plan to sell your home within your term, need to refinance, or break your term for any reason, a variable rate may be your best bet. Still confused? Reach out to one of our mortgage experts at
Call Anytime
250-320-5555
Call Anytime
250-320-5555-
What if I don't qualify for the home I want?
This is where your mortgage professional can help provide you options, such as adding a co-signer, increasing your down payment and/or paying off debts. A Mortgage Broker/Agent has access to multiple lenders, so even if don't fit certain lender guidelines, they can shop around to see if another lender may approval your application.
-
What is a co-signer?
A co-signer is typically added to your application when you don't qualify for a home on your own. We add their income and debts to your application, to see if it increases your overall approval numbers. When someone cosigns for you, they will be added to the title of the mortgage and mortgage documents. This new mortgage debt will also appear on their credit bureau, which can affect their future credit score & loan affordability.
-
What is a guarantor?
A guarantor is typically added to your mortgage application when you have poor credit repayment or little to no credit history. Sometimes lenders will request a guarantor when your application is slightly weaker than they would want to see to approve you on your own. In most cases, the mortgage will not show on the guarantor's credit bureau, but this can vary from lender to lender.
-
Do I have to pay tax on my purchase?
It depends on what kind of tax you are talking about! Most provinces have a tax called Land Transfer Tax, but as a first-time home buyer, you may be exempt or partially exempt from this. If you're purchasing a brand new home, you may be subject to additional tax (which can typically be rolled into your mortgage). It's best to ask your Mortgage Professional on your specific scenario AND confirm with your lawyer or notary public.
-
Can I use my RRSPs to purchase a home?
If you are considered a first-time home buyer (the definition varies from province to province) you may be eligible to use up to $35,000 of your RRSPs towards your down payment. You then have to set up a repayment system and typically have 15 years to pay in back, tax free!
-
What is default insurance?
Most people refer to this as CMHC fees. That said, there are actually 3 companies that provide this insurance to Canadians, CMHC, Sagen and Canada Guaranty. This is insurance is mandatory for those who purchase a home with less than 20% down. Default insurance is then added to your mortgage and increases your overall mortgage amount. Even though this is an added cost to buying a home, it's still a great way to get into the market when you don't have a 20% down payment. Default insurance is meant to protect your lender, in the event you stop making your mortgage payments & the lender has to foreclose on you.
-
How long do I have to be at my job before buying a home?
The general rule of thumb is 3 months and you are ideally not on probation. This can vary greatly from lender to lender, so always be sure to speak to a Mortgage Professional first. If you're in the same industry and just changed companies for personal or financial benefits, your Mortgage Broker/Agent may have more options for you!
-
Is it hard to get a mortgage when your self-employed?
The answer is yes & no... Your mortgage professional can help guide you through this process. Mortgage Brokers and Agents have access to more lenders, programs and policies, giving them an advantage over the bank to find you the best self-employed mortgage solution. So just because you don't fit the banker's box, don't put your homeownership goals on hold - Speak to a Mortgage Professional today!
-
Can I still get a mortgage if I have bad credit?
Depending on your situation, we have access to lenders that will consider poor credit. This includes recent consumer proposals, bankruptcies and/or missed/late payments. Reach out to a Mortgage Professional today to go over your application details & story around why your credit is brused so that they can help find you a solution or work towards your goals of homeownership.
-
Can I use my home equity to buy another home?
In most cases, yes! You need to have enough equity in your home and qualify for both your new mortgage amount + your new home. Speak to your Mortgage Professional today to come up with a game plan & start building your real estate portfolio!
-
Can I use rental income to help me qualify for a home?
This depends on the type of rental income. If you're buying a home with a conforming basement suite, we have some lenders that will consider adding the majority of that lender back to your income. If you're purchasing a rental, we can usually add a percentage of this income to your total income as well. Likewise, we are offsetting some of your existing rental properties if you are purchasing another property. It's best to ask your Mortgage Professional how this will work with your specific purchase & application details.
-
What will my penalty be if I break my mrotgage?
This depends on what type of mortgage you have. There are 2 ways to calculate mortgage penalties. One would be 3 months of simple interest, this is common for variable-rate mortgages or fixed mortgages in a rising rate environment. The most expensive penalty is called an IRD penalty (Interest Rate differential). This typically only applies to fixed rate mortgage contracts and will the difference between your contract rate (or posted rate) and the rate when you break your term, times how many months you have left. This one is a little tricky to calculate, so it's always best to ask your lender for a "Balance & Penalty Quote"".
