Frequently Asked Questions

 

What is a Mortgage Agent or Mortgage Planner?

In order to be a Mortgage Agent, in most provinces, one must first go through vigorous educational training and requirements. Once licensed, depending on the province, you are deemed to be a mortgage agent or other titles (a Mortgage Sub-Broker is the term used in BC). Unfortunately the industry has not settled on a title that is uniform across Canada at this time. You will encounter terms such as Mortgage Agent, Mortgage Sub-broker, Mortgage Planner and various others.

I prefer the title “Mortgage Planner” as fundamentally this is what I do. I help you plan your Mortgage so that it suits your goals and needs.Unlike the banks mortgage specialists, I don’t work for any particular lender; I work for you the home buyer. There are over 50 different lenders out there including the major banks, that offer a range of different mortgage products and rates. An independent mortgage broker has access to these options and can shop, compare, and recommend the product that’s right for you and your situation.

Why use a Mortgage Broker

Why should you choose a Mortgage Broker over your bank for your next real estate purchase or refinance? After all, you’ve probably been with your bank for years – you’ve been a loyal customer – You do all of your banking and make bill payments with them, so they’ll definitely give you a great deal right?

1. Independent advice. As independent mortgage brokers, we have a range of lenders and products available to us to suit your unique situation. My goal is to successfully finance your home by providing you with recommendations on available mortgage products that suit your needs and explain them in terms that you understand.

2. One stop shopping. Having access to an assortment of over 50 different lenders allows us to save you valuable time and money. I can even let you know what’s being offered by credit unions and other sources. Based on your situation I can narrow down a list of lenders that best suits your needs. I work to meet your schedule so I’m available when you are.

3. I negotiate for you. With my market and product knowledge, I will secure a competitive rate and term that is right for you, not the lender.

4. Best rate. If you have been pre-approved or quoted a rate by your bank, you’re not obligated to take it. Let me search and see if there is a better alternative out there for you. I also monitor rates right up to your completion date, saving you money.

5. Continued support. Even after your mortgage has closed I’m still available to answer your questions or even for referral needs.

What areas do you service?

I am licensed in British Columbia and Ontario. Due to provincial legislation in certain provinces and with the help of some of my colleagues, I can also facilitate your mortgage in other provinces across Canada.

I am available to assist you “in-person” in the Greater Vancouver area including Bowen Island, the Sunshine Coast and Squamish. I’m happy to assist you “virtually” via phone/internet/fax in all other areas across Canada.

Do I have to pay you?

Generally speaking, no. We are paid by the bank or Credit Union for completing your transaction. If you are looking for private financing or commercial financing then fees may apply and would always be disclosed to you up front.

Pre-approved versus pre-qualified?

Getting pre-qualified is fairly simple. You provide an overall financial picture of your debts, income and assets and the lender or broker can give you an idea of the mortgage you would qualify for. At this point no credit report has been pulled. When it comes time to be approved, the options presented previously may not be available to you.

Getting pre-approved is the next formal step to obtaining financing. An official mortgage application would be completed and supporting documents to your financial background and credit rating would be provided. Based on the documents supplied a lender can tell you more specifically the amount, terms and conditions you would be approved for. You may be able to lock in this rate for when you find that perfect home at or below that price level.

Once you find that perfect home your pre-approval can turn into an approval and you would fulfill the conditions like ‘confirmation of down payment’ and ‘written employment and income confirmation’.

For this reason, most successful Realtors will want to ensure you have a pre-approval in place before showing you homes that are not within your price range.

What are the costs associated with buying a home?

Buying a home? There are many expenses to consider when purchasing a home. Below is a list of the most common home purchase expenses:

Downpayment – First and foremost you have to have enough money for a down payment. This is the first step. First time home buyers can put down as little as 5% of the purchase price, (this will not apply to all).

Closing Costs – You will require money for closing costs. Closing costs include, but are not limited to, legal fees, title insurance, land transfer tax, other fees and disbursements. A general rule of thumb is 1.5% of the purchase price to account for this. More details below.

TItle Costs – If you are selling your property a lawyer or notary will clear your name off title. For the purchaser your legal representative will register the mortgage on title, prepare statement of adjustments and any other conveyance fees. Fees for lawyers and notaries vary, so shop around before making your decision on who you are going to use.

Title Insurance – Title insurance is in place to protect the lenders interest in the mortgaged property in the event there is a discrepancy on title that would create a legal problem. Title insurance is often less expensive and an acceptable alternative to getting a property survey. There are different tiltle insurance companies available at different rates. Check with your solicitor to see which one they use.

Property Transfer Tax – Property transfer tax is a provincial tax charged every time a property changes hands. For first time home buyers, many provinces have a program to provide full or partial relief on properties. (Certain conditions apply).

Property Taxes – Property taxes are generally paid at the beginning of July for the calendar year. If you purchase before July 1st, you would be responsible for any days after completion day. If you purchase after July 1st, you would owe the seller from completion day to Dec 31st. For high ratio deals it is common for the lender to collect a portion every month that is placed in a tax account in order for the lender to pay property taxes when due. Depending on when you purchase, you may be charged a tax holdback so that there is not a deficiency on July 1st.

Appraisal – If you have more than 20% as a down payment or under certain circumstances with less than that, you may be required to pay for an appraisal. Appraisal fees vary by area.

Home Inspection – For a purchase, it is highly recommended that you obtain a professional home inspector to evaluate the condition of the home. A detailed report can highlight areas that may require maintenance or repair.

Mortgage Insurance – Mortgage insurance can be understood to be life/disability insurance or default insurance. Life/disability insurance is often optional, but is designed to ensure that you are able to make your mortgage payments should you become disabled or die during the term of your mortgage. Rates and coverage vary widely as well as when the policy takes affect should something happen to you.

Default Insurance – This is usually required on loans where the loan to value is greater than 80%. Genworth, CMHC and Canada Guaranty provide this insurance. The cost varies dependent on the amount borrowed and the insurance product program.

Interest Adjustments – This is interest that you will pay for receiving mortgage funds outside of your regular payment periods. For example, if you closed your mortgage on a Wednesday and you would like your accelerated bi-weekly payments on Fridays, you owe 3 days of interest.

Property Insurance – This is required before your loan will be disbursed. The lender will want to make sure that the property is adequately insured for the loss should a fire or flood occur. The insurance must be for the full property value rather than the mortgage amount. In the event of a loss, generally the financial intuition is listed as the payee. What is referred to as a ‘binder’ is the confirmation of the insurance company confirming coverage.

Moving Costs and Incidentals – You will also have moving costs and any other little extras you’ll have to purchase early on – appliances, garden tools, cleaning materials etc. So factor these expenses into your initial costs.

What is the difference between a fixed rate and a variable rate mortgage?

With a fixed rate mortgage the interest rate is set for the entire length of the term, whereas a variable rate mortgage may change with market conditions, which is based on prime rate. A variable rate mortgage is sometimes referred to as a floating rate or adjustable rate mortgage. The Bank of Canada meets about 8 times per year to evaluate and dictate what the Prime rate should be.

 

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