- Mortgage Pre-Approval
- Purchasing a Home
- Building a Home
- Buying an Investment Property
- Renew Your Mortgage
- Refinance Your Mortgage
What is a Pre-Approval?
Getting pre-approved is an important first step whether you are considering your first purchase, transitioning into a new home, or even renewing an existing mortgage.
A pre-approval means that a lender has stated in writing that you qualify for a mortgage based on your current income and credit history. It will specify a term, interest rate, and mortgage amount that you qualify for in advance of your home shopping. Pre-approvals are good for up to 120 days and will protect you from any interest rate increases that may occur at that time.
Trust us when I say that getting a pre-approval in place will make your whole buying experience much smoother.
Why Get a Pre-Approval?
A pre-approval will help you to answer the question “how much house can I afford” and will eliminate a lot of stress when you find the right home.
Before you meet with your Realtor and start house shopping, it is recommended that you have a realistic price range in mind. A pre-approval gives you a firm idea of exactly how much purchasing power you have and lets the seller know that you are serious about buying, giving you a little extra leverage while negotiating.
How to Get Pre-Approved
The amount of purchasing power you have is dependent on several factors. My mortgage professionals will ask you a series of questions relating to your specific financial situation, and you will need to provide some supporting documentation.
The key areas that I will look at for a pre-approval are credit score, down payment, income, and liabilities:
Credit
Credit scores in Canada range from 300 – 900. The higher the score, the better.
There is a credit score range that is required to qualify for a mortgage; however, it is dependent on your liabilities, down payment, and income.
Down Payment
How much money you are putting towards the purchase of a home and where those funds are coming from.
The minimum down payment required for a home purchase in Canada is 5% of the purchase price.
Income
This value should be the total of the household income if you are buying the property with a partner.
Additional sources of income may be included depending on the lender. This may include bonuses, tips, investments, rental income, support payments, child tax benefit etc.
Liabilities
What are your monthly expenses?
This could include rent, utilities, phone bills, credit card debt, auto loans, student loans, etc.
Applying for a mortgage pre-approval is quick, free, and does not commit you to one single lender. It does, however, prepare you for your new purchase and protect you from rising interest rates for up to 120 days, giving you lots of time to shop for that perfect home.
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Let me guide you through the pre-approval process! Apply Now
What is a mortgage?
A mortgage refers to the loan that is secured to real estate. It’s comprised of two parts: the principal, which refers to the amount initially borrowed; and the interest, which is what you pay the lender in exchange for the loan.
Mortgage term and amortization
Amortization refers to the total number of years it’ll take to pay off your mortgage. The term is the length of time you are entering into a specific agreement with a lender. The most common term length is 5 years, but many options are available.
Conventional vs high-ratio mortgages
When your down payment is 20% or more of the purchase price, you have a conventional mortgage, and you don’t need to pay for mortgage default insurance. Any down payment less than 20% of the purchase results in a high-ratio-mortgage and mortgage default insurance is required.
Mortgage default insurance
This protects the lender if you can’t make your mortgage payments. Sometimes known as “CMHC Insurance”, it’s actually available from 3 insurers: Canada Guaranty, Genworth Canada, and Canada and Mortgage House Corporation (CMHC). The premium is added to the total mortgage amount and is determined by how much down payment you have to put towards the purchase.
How much can I afford?
When you work with an agent at Mortgage Design Group, they will determine how much you qualify for by comparing your income against your total monthly debts.
Both your future housing costs (mortgage payment, property taxes, and heating) and other liabilities (credit cards, car loans, child support, alimony, student debts, etc.) must be taken into consideration.
It is best to determine this amount early in the process.
Down payment
The minimum down payment required in purchasing a home in Canada is 5% of the purchase price up to $500,000, and 10% on any funds over and above that amount up to $1 Million.
There are three forms of down payment:
Personal savings
These are funds that you have personally accumulated from employment, investments, inheritance, etc.
They can be held in a savings account, RRSP, TFSA, GIC, etc. and must be accompanied by bank statements showing the funds have been in your name for a minimum of 90 days.
Registered retirement savings plan (RRSP)
Although this is a form of personal savings, there is a government incentive that affects RRSPs. The Home Buyer’s Plan allows you to withdraw up to $35,000 from your RRSPs to purchase your first home tax-free. You have up to 15 years to repay the amount back into your RRSP account.
Borrowed funds
In some scenarios, you may be able to borrow funds from a personal line of credit to put towards your down payment. The borrowed amount will have to be factored into your monthly liabilities, and you need a minimum credit score to qualify.
Gifted funds from family
A gifted down payment can only be given by an immediate family member. A signed letter must be provided by the individual(s) providing the gift, stating that the funds being given are not expected to be repaid.
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Contact Darrell Alexander - Mortgage Broker today to get started on your mortgage application! Apply Now
If you are building a new home, it is important to speak with your builder to determine the type of financing that is required. It will generally be one of the following two options:
Completion Mortgage
This type of mortgage is approved with a lender before the construction of your home is complete. You will pay a deposit upfront to your builder; however, you will not make any mortgage payments until you take possession.
As with any new home purchase, you will need to avoid doing anything that could change your financial position or your credit score prior to taking possession, such as financing a large purchase or changing jobs.
Draw Mortgage
This is a mortgage that is arranged before the construction of your home begins, and the amount that you need to complete your construction is given to the builder in stages, known as “draws”.
Depending on the lender, there are generally three to four stages where funds will be due to the builder. At each interval, an appraiser is required to ensure enough progress has been met, and the New Home Warranty policies are being followed.
Interest-only payments are charged to you throughout the various stages, and once the house has been completed, your mortgage term commences with regular monthly mortgage payments.
Each builder is unique in which type of mortgage they require.
Regardless of whether you require a completion or a draw mortgage, I will continually watch rates as your home is being built to ensure you are getting the lowest rate upon possession.
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Talk to me today to get your new build started! Apply Now
Buying an investment property is rapidly becoming a preferred investing method. Real estate values usually rise as time passes and is considered a secure option. With a low risk – high return value, you and your family may be considering it as an additional source of income and a great way to build equity.
When purchasing an investment property, there are several questions you need to ask yourself. Are you purchasing a fixer-upper as an investment? The condition of the property you want to finance matters, if it is in poor condition it could be hard to arrange mortgage financing.
Are you purchasing an additional property that you intend to rent out to get immediate returns? Rental properties have different mortgage rules depending on whether it is owner-occupied or not.
Owner-Occupied vs Non-Owner Occupied Rental Properties
If you are considering purchasing a home to live in that also includes a secondary or basement suite that is available to rent, this would be considered an owner-occupied plus rental and uses standard mortgage rules. This means you are only required to have the minimum 5% down payment. Some of the projected income generated from the rental suite can be used towards qualifying for a larger mortgage amount.
Properties that are to be used strictly as rentals, non-owner occupied, will have different mortgage rules. In this case, a 20% down payment is required for the purchase; however, rental income from all units can still be used towards qualifying. If you own other properties, you may be able to access equity to assist with the larger down payment through a refinance.
How property value affects mortgage approval.
If you want to purchase a fixer-upper as an investment, you may have a more difficult time arranging mortgage financing. The property matters as it is the collateral the lender holds if you default on your mortgage. Lenders make every effort to ensure that a property they’re financing is without defect. They want to see a property that is considered “prime and marketable”. This means that if you default on your payments, they can quickly sell the home and recoup their money.
What if you’re looking to purchase a property that isn’t in the greatest condition?
This is where a purchase plus improvement mortgage is a great option! This type of mortgage allows you to purchase the property and include some of the renovation costs in the mortgage.
This is only one of many options, contact Mortgage Design Group today to guide you to find the best return on your investment!
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Let my mortgage brokers assess your potential investment portfolio today! Apply Now
As you approach the end of your mortgage term, be sure to contact me first before signing your lender’s renewal offer. There are no costs to switch your mortgage at renewal, so why not take the opportunity to find the best product for your needs.
With my expert advise and access to many different lending options, I can compare the best products on the market to ensure your new mortgage fits with your financial goals.
Start Planning Early
Contact me up to six months before your mortgage maturity date.
My agents will meet with you to review your maturing mortgage and offer complimentary advice on how to secure the best mortgage moving forward.
Start Planning Early
There are many factors to consider when choosing a mortgage product and a lot can happen in a few years.
Talking to your mortgage broker about the future can ensure you get a mortgage that best suits you and your financial goals.
Unbiased Advice
Now that I have compared all your options, I will provide unbiased advice and guidance to make your renewal as seamless as possible.
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Every mortgage is as unique as you are and it’s my job to design the perfect mortgage for you.
Contact Darrell Alexander - Mortgage Broker today to get started! Apply Now
What is it?
Refinancing a mortgage replaces your current mortgage with a new one, this includes a new term and interest rate. You can also renegotiate a longer amortization and access additional funds. This allows you as a homeowner to access as much as 80% of the appraised value of your home.
Mortgage Design Group is here to guide you through the entire process.
Some reasons you may consider a refinance are
Reducing your interest rate to lower monthly payments.
Access your home’s equity to help finance large projects or purchases.
Increase the amortization to reduce payments.
Consolidate high-interest credit cards or other consumer debt.
What to consider
When refinancing a mortgage during a term, there are generally some costs involved: an appraisal, pay-out penalties, title search, and application fees are all possible additional costs. My agents will explain in detail the costs you may incur and advise you on the best products that may help mitigate some of these fees.
Above all else, I pride myself on ensuring that my clients have access to the best products and save thousands of dollars in interest.
See Me in action
One of my clients recently approached me to refinance her mortgage so she could lower her monthly debt load. By accessing the equity available in her home, she was able to pay out a car loan, eliminate all credit cards and lines of credit, and still had some funds remaining to put towards a roof.
By refinancing her home up to the maximum 80% of the appraised value and increasing the amortization to 30 years, she was able to make her monthly payments much more manageable. Here’s how the new mortgage funds were dispersed:
Appraised Value of the Home – $280,000
New Mortgage Amount – $224,000
Payout Current Mortgage and Penalties – $132,000
Lawyer and Legal Fees – $2,000
Car Loan – $30,000
Credit Cards and Line of Credit – $30,000
Total Paid Out – $194,000
The remaining amount of the mortgage, $30,000, was transferred to the client, who was able to replace the roof and invest additional money into a retirement plan. Most important to my client was that she was able to reduce her monthly payments from $1,450 to $950 by eliminating her high-interest credit card and large monthly car payment.
That’s one happy client!
Mortgage Pre-Approval = Want to learn more about getting Pre-Approved for a Mortgage?
Purchasing A Home = Want to learn more about Purchasing a home?
Building A Home = Want to learn more about Building A Home?
Buying An Investment Property = Want to learn more about Buying An Investment Property?
Renew Your Mortgage = Want to learn more about Renewing Your Mortgage?
Refinance Your Mortgage = Want to learn more about Refinancing Your Mortgage? +
Contact Darrell Alexander - Mortgage Broker to get started today! Apply Now