Q. How much are your fees for setting up my mortgage?
In most cases we do not have a fee as the lender reimburses us.
Q. How long does the process take to set up a mortgage?
A comfortable amount of time for a mortgage is three weeks, however in certain circumstances we can do it sooner than that. A large part of the mortgage process is for you, as our client, to collect the necessary supporting documents for the lender. The sooner you can get that together, the sooner the mortgage can close.
Q. Why are most mortgages closed instead of open?
Closed mortgages offer the lowest interest rate while still giving you the opportunity to pay extra towards your principle. An open mortgage has a much higher interest rate and unless you expect to win the lottery or plan to sell your home within a short period of time, the benefit is outweighed by the higher rate.
Q. When is a co-signer needed?
A co-signer is needed in the event that you do not qualify for the mortgage on your own. This could be because of poor credit or not enough income.
Q. What is the difference between a co-signer and a guarantor?
A co-signer is added on title to the property and if that property is sold, they are equally liable for capital gains. A guarantor is added to the mortgage to provide additional stability to the deal. Because a co-signer is added to the title of the property, they bring the most strength to your mortgage. Depending on the application, the lender will determine if a guarantor is enough or if a co-signer is required.
Q. When is an appraisal required?
During the mortgage process, an appraisal is needed in most cases where your house has a mortgage of 80% or less on it. In cases over 80%, the insurer (CMHC or Genworth) will typically conduct an appraisal themselves, either through their database or physically sending an appraiser to the property. In unique circumstances, appraisals are needed when the insurer has not given a fair value for the property.
Q. What is the minimum down payment required to purchase?
The minimum down payment on an owner occupied home is 5% down. The minimum down payment to avoid mortgage default insurance is 20% down. For investment properties, the minimum down payment is 20% down.
Q. How much are legal fees?
A lawyer’s fee can range from $800 to $1500. Further to that, on a purchase of a new property there is land transfer tax which is an additional percentage added on top of the lawyer’s fees.
Q. What kind of supporting documentation will the lender require from me?
Supporting documentation is determined with each mortgage as each one is unique. In most cases, a letter of employment and a recent pay stub or two years Notices of Assessments are required for income verification. For self-employed people, the lender will often require two years T1 Generals as well. Further to these items, down payment confirmation is needed for purchases. Additional items may be required in unique situations.
Q. What is the insurance premium if I have less than 20% down?
The insurance premium is determined based on amortization, type of mortgage and whether or not you are self-employed. Because of these factors, give us a call and we can outline for you what the premium would be in your situation.
Q. I’m looking to purchase a house in the coming months. Do I need a pre-approval?
Any time you are purchasing, a pre-approval is not a requirement. Often realtors will ask if you’ve been pre-approved wanting to ensure you can afford the houses you are looking at. While it is not essential, it is a very good idea to give us a call, set up an application with us and we can at the very least determine whether or not you can afford the properties you are looking at. Once that has been determined, we can secure a rate hold for you or get a pre-approval that will hold the current interest rate for 120 days.
Q. What is the difference between a pre-approval and a rate hold?
A pre-approval is sent to the lender who briefly looks at the mortgage ratios and ensures that you would qualify for this mortgage barring any unforeseen circumstances. Once they have agreed to that, the lender will send a pre-approval certificate that grants you a 120 day rate guarantee, protecting you from any increases in the interest rates. A rate hold is a certificate that, regardless of whether or not you qualify for the mortgage, you will be able to receive this rate when you have decided to move forward within 120 days.
Q. What are mortgage ratios?
Mortgage ratios compare your income to the mortgage payments and your debts. Based on these details, lenders have guidelines that detail what they will and will not approve. In having these numbers available to us on our applications, we are able to determine whether or not you will be approved for the mortgage you are looking to get.
