Let me count the ways… 1. The biggest reason: The broker works for you. The bank doesn’t. 2. The right mortgage is a critical factor in determining long-term savings. The value of a professional mortgage broker comes from having someone who objectively works for you and is not limited to mortgage product offerings from one source, like a bank. 3. Mortgage brokers can give great advice on choosing the right mortgage option taking into consideration interest rate, payment privileges, payment penalties, long-term savings, and much more. 4. Mortgage brokers provide expertise and choice at no cost to you as we are paid by the…

There are a number of factors (such as your income, credit score, your down payment, your debt, etc.) that can change what you can spend and how large of a mortgage you can afford to take on. Mortgage affordability and your down payment There is a minimum down payment rules in place. The amount of money you have saved for a down payment can limit your maximum mortgage affordability. The minimum down payments in Canada are:  5% of the purchase price up to $500,000, plus 10% of any part of the price between $500,000 and $1 million, or 20% of the total purchase price for…

Mortgage Loan Insurance is insurance coverage provided to a lender against default on mortgage installments when the down payment amount is less than 20% of the value of the home. Like any other insurance, mortgage loan insurance requires a premium. The premium amount can vary depending on how much of the purchase price is financed by the mortgage; the greater the down payment, the lesser will be the premium. Mortgage Loan Insurance is distinct from Mortgage Life Insurance as the latter guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.

Before you start the house-hunting process, there is an important step you can take that will both save you time and make the process easier: getting pre-approved for a mortgage. A pre-approval helps you understand the home price you can afford, allowing you to budget for your home purchase and focus your home search. Also, with a pre-approval you will be able to secure a great mortgage rate offer ahead of time and protect yourself from a rate increase during your home search.

A pre-approval is a commitment from a mortgage provider to lend you a certain size mortgage at a particular rate subject to the approval of the property. When you get pre-approved for a mortgage, you’ll find out the maximum amount you can afford to spend on a home, the monthly mortgage payment associated with your maximum purchase price, and what your mortgage rate will be for your first mortgage term. Applying for a mortgage pre-approval is free and does not commit you to a lender. However, getting pre-approved does hold the mortgage rate you are offered for 60 to 90 days.…

Getting pre-approved for a mortgage helps you in several ways. It saves time in your home search because you will only look at homes in your price range. Getting pre-approved is also a signal to your real estate agent that you are serious about buying, and you will receive faster more targeted service. Finally, when it comes time to make an offer on a home, the fact that you are pre-approved signals to the seller that you should have no problem financing the purchase, which will improve your chances in a competitive offer situation. Do not forget that if interest…

To get pre-approved, you must meet with either a mortgage broker or a lender. To determine how much you can afford to borrow to purchase a home, they will ask you a series of questions, and you will need to provide some supporting documentation.  

The following four factors play a role in determining how large a mortgage, and at what rate, you will be pre-approved. 1. Credit Score Your credit score is a measure of your financial health and shows lenders how risky it may be to lend you money. If your credit score is between 680 and 900, you will qualify for a mortgage with an “A” level lender, such as a major bank or other financial institution. If your credit score is below 680 and above 600, lenders will look at the other details of your finances to determine if you can qualify with an…

Once you have been pre-approved, you will know the maximum amount you can afford to borrow, as well as the mortgage rate lenders are willing to offer you. Your pre-approval keeps you protected from future interest rate increases for the next 60 to 90 days while you search for a home. You can then take the maximum mortgage amount and use it as a guide during your house-hunt, so you only view homes you know you can afford to buy.

One thing to keep in mind is that getting pre-approved for a mortgage does not guarantee that your final mortgage application will be approved. When you apply for a mortgage after your Offer to Purchase has been accepted, your lender will look at the details of the property to make sure it is suitable. If the property does not meet their qualification criteria, you will not qualify for a mortgage. For example, if the home has asbestos, knob and tube wiring, is a heritage home, or its appraised value is below the purchase price, the lender may not find it…

One of the things lenders consider when deciding whether or not you are a good candidate for a mortgage loan is your credit score. Your credit score is a measure of your financial health and shows lenders their level of risk if they lend you money. Your credit score is a number between 300 and 900. A credit score above 700 proves you manage your credit well, meaning a lender should feel comfortable letting you borrow money. A lower credit score shows that you have mismanaged your credit, making you more of a risk to the lender, which means you may…

Each credit-reporting agency uses its own proprietary formula to calculate credit scores. Your credit score is calculated based on the following factors: Past Payment History – Late or missed payments, overdue accounts, bankruptcies, and any written off debts will all lower your credit score   Credit Utilization – How much debt you have as a percentage of your available credit will also affect your credit score (You should try to use less than 35% of your available credit) Credit History – How long you have had accounts open (the longer, the better)  New Credit Requests – How recently and how often you have applied for…

Your credit score is important because it affects which lender you can get your mortgage from, and what your interest rate on that mortgage will be. Prime lenders, such as major banks, will definitely give you a mortgage if your credit score is above 700, and they will consider applications with credit scores between 600 and 700. If your score is between 600 and 700, the rest of your application will need to be strong in order to get approved. The lower your score the greater risk you pose to the lender. To compensate for that risk, some lenders will charge…

If you have a bruised credit score, or you have recently moved to Canada and would like to establish credit, here is a list of things you can do to improve your credit score: Make sure to have a least two credit facilities in use at all times. Use each credit facility every month and pay off the balance.  Always make your payments on time, and always pay at least the minimum payment. If you cannot make the minimum payment, let your lender know right away, as they may be able to accommodate you by extending your payment due date.  Do not use…

A conventional mortgage is one in which the down payment amount is equal to or more than 20% of the purchase price. Such a mortgage normally does not require mortgage loan insurance.

A mortgage which is greater than 80% of the purchase price or the appraised value, whichever is less, is known as a High-Ratio mortgage. A High-Ratio Mortgage requires mortgage loan insurance. Premiums for a mortgage loan insurance can vary depending on the value of the mortgage.

In a fixed-rate mortgage, the interest rate is pre-determined at the beginning of the mortgage term. The advantage of this type of mortgage is that it offers the security of knowing your monthly payments beforehand and allows you to plan accordingly. In a variable or floating rate mortgage, the payments can be fixed or variable depending on the lender however, the interest rate can fluctuate depending on the market conditions. If the interest rates drop, more of the payment goes towards reducing the principal; if the rates go up, a larger portion of the monthly payment goes towards covering the interest.…

A home inspection is a visual examination of a house by a qualified professional to determine the overall condition and value of the home. When conducting a proper inspection, an authorized home inspector should check all the major components of the house such as the roof, ceilings, walls, and floors along with other systems such as heating, plumbing, drainage, and electrical. The inspector usually provides the results of the inspection in writing to the prospective homeowner. It is always advisable to get a home inspection done before making a purchase decision. A thorough inspection is likely to give you peace of…

If you are paying child support and alimony to another person, generally the amount paid out is deducted from your total income before determining the mortgage amount that you would qualify for approval. If you are receiving child support and alimony from another person, the amount paid to you will be added to your total income before determining the mortgage that you will qualify for approval.

Some lenders may consider you eligible for a mortgage even though you have faced bankruptcy. However, this decision may vary from lender to lender and will greatly depend on the circumstances surrounding the bankruptcy. Certain measures can be taken by the prospective borrowers to improve their credit rating. For more details discuss this with your mortgage professional.