Mortgage and Approval Process

Fixed rate mortgages appeal to people who prefer a conservative mortgage approach, manage tight monthly budgets, or want stability in their payments.

Variable rate mortgages, however, allow the borrower to take advantage of lower rates, which are calculated on an ongoing basis at a lender’s prime rate plus or minus a set percentage.

For example, if the current prime rate is 3.0%, the holder of a prime minus 0.5% mortgage would pay an interest rate of 2.5%. Owners of a variable rate mortgage can sometimes expect a financial benefit, but this will vary depending on the current economy.

If accumulating a down payment is challenging, consider looking into down payment assistance programs offered by local or federal governments. These programs often provide grants or low-interest loans to help first-time homebuyers secure their initial down payment. It’s also worth exploring employer-assisted housing benefits, if available.

In some cases, you may be allowed to borrow your down payment through a personal loan or line of credit. Speak with a mortgage advisor to understand how borrowing could affect your mortgage approval.

Costs paid to your lawyer for document preparation and record filing.

Insurance that protects you and the lender from any property ownership disputes.

Tax paid when a property changes hands, varying by location.

Costs for professional services to assess the home’s condition and value.

When it comes to mortgages, there can be a lot to know. Do you go with a fixed-rate mortgage or a variable-rate? What are the terms? What are the penalties? What is the best payment frequency? With so many questions and so many lender options, it can be hard to find the best solution for you. That is where a qualified mortgage professional can help. Rate is only one of many factors in choosing the best mortgage product. Our Collin Bruce Mortgage Team brokers are familiar with a variety of mortgage products and our goal is to match you with the best product to meet your individual needs. Ultimately we want to do what we can to help you achieve your goals of home ownership, and get you into a home that you love!

From the first consultation to the signing of your mortgage, our services are free. Based on the large volume of business we send to our lenders, we’re able to negotiate very competitive rates for our clients. We are paid by the lender, based on the volume we send them and the length of your term, not on the interest rate offered. We don’t get paid until your mortgage funds. Our goal is to get you the best product and the best rate possible.

There are generally two ways to get a mortgage in Canada: from a bank, or from a licensed mortgage professional. While a bank only offers the products from their particular institution, The Collin Bruce Mortgage Team sends hundreds of millions of dollars in mortgage business each year to Canada’s largest banks, credit unions, trust companies and financial institutions. This allows us to offer our clients more choices and access to hundreds of mortgage products. As a result, clients benefit from the trust, confidence, and security of knowing they are getting the best mortgage for their needs. Whether you are purchasing a home for the first time, taking out equity from your home for investment or pleasure, or renewing your mortgage, it’s important that you are making an educated decision with unbiased professional advice.

No you don’t. There are mortgages available for almost every credit situation out there. Better credit and higher credit scores will allow for lower mortgage interest rates and lower down payments. Poor credit will require you to have a larger down payment and will be subject to higher interest rates.

A 5% down payment is required, at minimum, to purchase a home in Canada. Some lenders will allow you to borrow the 5% down payment.

The mortgage stress test is a set of rules put in place to help determine how much you can qualify for, for a mortgage. The Canadian government sets a minimum qualifying rate to ensure you’ll still be able to afford your payments should interest rates increase.

Thanks to the federal government first-time home owners are able to leverage up to $35,000 of their RRSP savings ($70,000 for a couple) to help finance the down payment.

1. Credit. Your credit score – meeting payment obligations (and timeliness), length of time managing credit, how much debt you carry.

2. Capital. This is your net worth – assets minus liabilities.

3.  Capacity. Your income to debt-ratio. This determines whether or not you can afford the loan.

4. Character. How long you’ve been employed and lived at your present address, ability to meet past payment responsibilities. Past behaviours predict future tendencies!

5. Collateral. The condition of the property, location and history – essentially the characteristics of the real-estate that will secure the mortgage.

Getting pre-qualified for a mortgage will allow you to have a general idea of how much you qualify for, what your mortgage payments would look like and more. However, to be considered pre-approved, you will need to submit all the supporting documentation needed for finalizing a mortgage application. This can include income verification, down payment verification, existing property documentation, etc. A pre-approval is good for 120 days and during this time you can lock in an interest rate that will protect you from possible increasing rates while you are out shopping for a home. If mortgage rates increase, you are locked in at the secured rate, and if mortgage rates decrease, you will get the lower rate. Win win!

You should budget to have a few extra thousand dollars over and above the funds you set aside for the down payment. These are your ‘closing costs’. There will be legal fees associated with your mortgage to close the transaction, register the title, and all the back end legal work. Most buyers like to get a property inspection done, and depending on your transaction, an appraisal possibly as well.

Your income dictates how much you’ll qualify for. Adding a mortgage helper, such as an income suite, will add income to your application and increases your mortgage qualifying amount.

Yes, you can! However, when self-employed you will need to submit additional documentation including:

• Two years notice of assessment

• Two years of T1 Generals

• Proof of being in business for yourself for two years (i.e.: business license)

•  If you don’t have all the required documents, or your personal claimed income is lower, we still have options. Please contact us for more details!

A fixed rate means you are locked-in for a term. The benefit is that you know your monthly mortgage payment and it will stay the same. With variable rates, they are often lower than a fixed rate but they can fluctuate with the Bank of Canada posted rate.

An open mortgage means that you can break the term with no penalty. A closed mortgage means that there is a penalty to break the term before maturity. The penalty can be either Interest Rate Differential (IRD) or 3 months interest.

IRD stands for Interest Rate Differential. This is a type of penalty that can be charged on a closed fixed rate mortgage term. It can be a very complicated calculation depending on the lender, however in simplest terms, the difference between your current rate and the rate at the time you break the term, multiplied by your remaining mortgage balance and multiplied by the time remaining in your existing term.

We do not recommend it! A lender can pull credit 30 days prior to closing if the original information on the approval changes. Making big financial commitments such as a car or financing furniture, before closing on your home may result in the deal going sideways.

Call us! Your existing lender will not always give you the most competitive renewal rates. It is best to give our team a call so we can present you with our best renewal rate options. Other lenders are willing to take care of the legal costs to switch your mortgage over, so why not take advantage and see if you can save some money!