Purchases
Pre-Approvals
New to Canada
Refinances
Equity Take-Out
Renewals
Construction Financing
Cottage and Vacation Property Financing
Rentals Financing
Business for Self
Credit Challenges
Even if you have obtained a mortgage pre-approval from your home branch or a broker, it is in your best interest to get a second opinion from an expert. Buying a house might be one of the biggest investments you will ever make and for that reason it is important that you get as much professional advice as possible.
Should you decide to obtain mortgage financing through me, I can reassure you that I work together with a group of reliable industry professionals who will ensure the purchase of your home is an enjoyable and stress-free experience.
If you are thinking of purchasing a home, it is highly advisable that you obtain a mortgage pre-approval before you start shopping for your home, for several reasons.
First, the pre-approval will typically guarantee your mortgage interest rate for up to 120 days. Should interest rates go up during that time period, you would be guaranteed the rate you got pre-approved at. If, on another note, the rates decrease, you will obtain the lower rate.
Second, obtaining a pre-approval will enable you to shop for your new home with the comfort of knowing exactly how much you can afford. Typically, the pre-approval is done for the maximum amount of a mortgage that you are able to afford, based on your unique circumstances. This will allow you to narrow your search to the properties within your budget.
Third, by going through the pre-approval process you will have the opportunity to learn about the many additional requirements applicable when purchasing a home. For example, many first time home buyers are not aware that the banks typically require 1.5% of the purchasing price to be in place for closing costs (legal fees, land transfer tax, etc.). Similarly, many buyers are not aware that a provincial sales tax is to be paid on the mortgage insurance premium, should one be needed.
Finally, many reputable real estate agents don't even want to start showing you properties unless you have a pre-approval in place. By having a pre-approval done, you will show them that you are serious about buying and they will take a much better care of you.
Are you new to Canada? Now qualified homebuyers who have immigrated or relocated to Canada can qualify for home purchases with as little as 5% down payment.
Typically, two major requirements are that you have a full time job and that you are past probation. This will ensure the bank or lender that you have a stable job and that you will be able to generate the income necessary to make your mortgage payments.
The banks would also like to see that you have at least some type of a credit established. Usually, they will be satisfied if you have a couple of credit cards in place and if you are making payments as agreed.
Finally, you will have to prove in some way that you are indeed a newcomer to Canada. Usually, the programs that banks offer to newcomers require that you have been in Canada for no longer than two years.
If you are interested in refinancing your existing mortgage because you are paying too high of an interest rate, or would simply like to consolidate some of the debt you currently have, it is in your best interest to check the available options.
In many cases refinancing your existing mortgage could save you money even after potential costs related to refinancing your mortgage. For example, if by transferring the high interest debt on your credit cards to your low interest mortgage you can save few thousand dollars, and the cost of refinancing your mortgage is only a couple of thousand dollars, it only makes sense for you to look into this option further. Your mortgage advisor is there to help you with these types of scenarios - you should use their expertise to your benefit.
On another hand, it might not always be about the interest rate. You might prefer to have one monthly payment that takes care of all of your debt obligations. Refinancing your mortgage will allow you to consolidate your debt so that you can have one payment around which you can more easily plan your lifestyle.
If you are thinking of using the equity in your home in order to renovate your property, or as a down payment on an investment property, or for any other purpose, several options are available to you. Financial institutions offer mortgage products and solutions that can help you with these needs.
If you are planning to do renovations in your home or around the house, think about the benefits of a home equity line of credit. By obtaining a line of credit against your home you will only pay the interest on the amount that you use, when you use it, and all that at very competitive interest rates. Home equity lines of credits have rates that are lower than the unsecured personal lines of credits, and the set-up cost is usually equivalent to few hundred dollars for legal fees and the appraisal.
Alternatively, you might be thinking of buying an investment property, whether as your own retirement investment or for the benefit of your loved ones. You could obtain a home equity line of credit or a second mortgage and use those funds towards the down payment on the investment property. If managed properly, the rental income would in many cases be sufficient to cover all property expenses, such as mortgage payments, property taxes and maintenance fees.
If your mortgage is coming up for a renewal you could switch it to another financial institution at no cost to you. You could initiate the switching process as early as 120 days prior to renewal date, which is usually how long the rate at the new institution will be held for.
In many cases, even if you are not thinking of switching your mortgage to another bank, it is highly recommended that you obtain a rate hold at another bank. Most of the banks will hold the rate for you up to 120 days, if you obtain a pre-approval with them. By doing this you will be guaranteed a lower rate should the rates in the market increase or should your bank decide not to renew your mortgage at a competitive rate.
It might be in your best interest to use the renewal of your mortgage as the opportunity to refinance your mortgage even if you don't need extra money, provided there is a reasonable cost associated with it. Since mortgage products are changing on a regular basis, you might be interested in refinancing your mortgage into a product that more closely matches your needs. For example, many people have a hard time deciding whether to go into a variable or a fixed rate mortgage. The most innovative mortgage products allow you to split your mortgage into variable and fixed component, so that you have the best of both worlds.
If you would like to build a new home from scratch, whether by using a builder or by managing the construction process yourself, several institutions offer progress-draw financing options that can meet your needs.
Although the construction financing is a relatively complicated process and varies between financial institutions, certain steps in the process are standard to all lenders.
The bank would typically assess the value of the land on which the property will be built, the cost of building according to the construction contract or estimated costs, and would come up with the value of the property upon completion. Based on the expected value of the property, the bank would approve you for a mortgage that will become active once the property is built.
During the construction phase the bank would usually advance the funds to you in segments (also know as "draws"), which will enable you to finance the construction. The cost associated with a construction mortgage is usually in the neighbourhood of prime (prime + 1%, prime + 2%) where you are required to make the interest payments only. Once the property is completed, your construction mortgage would roll into the regular mortgage at the ongoing or pre-arranged mortgage rate.
Although the majority of financial institutions will require you to have your own funds to start construction, certain lenders will allow the first draw to be advanced against the value of the land. For example, if you own a piece of land that is worth $300,000, you might be allowed to draw up to 50% of the land's value, i.e. $150,000, to start the construction.
The mortgage industry has recognized that people's lifestyles have changed in recent years. As a result, programs that allow the financing of cottages and vacation properties with minimal or no down payment have been introduced.
Eligible properties typically have to meet minimum requirements related to foundation, zoning, year-round road access and similar.
You are advised to look further into the available programs as they still significantly vary between the financial institutions that offer them.
Buying a rental property with minimum down payment has never been easier. Certain financial institutions will allow you to put as little as 5% down payment, or provide you with extended up to 35 years.
Furthermore, if you currently own or plan to own three or more rental properties, there are mortgage solutions that will allow you to avoid the process of using your own income for qualification purposes, if the rental properties meet certain conditions.
For example, when you apply for a mortgage on a rental property, you are usually required to provide your income confirmation to ensure you will be able to carry the expenses on all of your properties. If, however, you own three or more properties, there are programs that will waive the income requirement as long as all rental properties have income that is at least 10% higher than all the expenses (mortgage payments, property taxes and maintenance fees) against them.
Under these innovative programs, you technically have the opportunity to own a limitless number of properties without ever having to use your income in qualifying.
If you are self-employed and cannot prove your income following standard income confirmation guidelines, and are interested in purchasing a property with as little as 5% down payment, there are mortgage solutions that can meet your needs, subject to certain conditions.
In order to have your mortgage approved through major banks you would usually have to meet minimum guidelines related to your credit score, the years in business, and offer satisfactory proof that your business is indeed active and operating. The mortgage will be insured by one of the three insurance companies at somewhat higher insurance premiums than is the case when providing standard income confirmation.
If you do not meet minimum guidelines, you always have the option of obtaining a combination of a first and a second mortgage. In certain cases, it might be more beneficial for you to take this avenue. Even though you will pay a higher rate on a second mortgage over a particular period of time, the overall cost of borrowing may be less given the relatively high insurance premiums associated with one mortgage only.
Whatever the case may be, I would usually compare all the available options and suggest the one that costs you the least.
Refinancing options are also available for self-employed individuals, under similar conditions.
If you are an individual with past or current credit issues, there are several options that will enable you to get approved for a mortgage. In addition, I will be able to provide you with advice on how to improve your credit history.
If the past or present issue is minor and/or caused by your lack of better knowledge, I am very often able to make a strong business case with the lender and grant an exception to your application. For example, if you had a small collection item, I might be able to obtain an approval at competitive mortgage rates provided you pay off the outstanding collection.
As a Mortgage Broker, I also have access to non-traditional lenders who offer financing solutions to individuals with larger credit issues. If you have a previous bankruptcy claim, have gone through a divorce or significant financial difficulties, I will be able to find you a lender that will look at your scenario and offer a solution to your challenge. Non-traditional lenders vary significantly in the products and rates they offer. Therefore, it is important for us to take a look at your unique circumstances and take the approach that will make the most financial sense for you.
Finally, based on my broad banking experience, I will be able to assist you in the process of improving your credit history going forward. I will take a close look at your credit bureau and advise you of the necessary steps that you should take in order to improve your credit. It is my goal to help you out with issues like these so that when the time comes to renew your mortgage, you can do so at a better rate.
