FAQs

In most cases mortgage brokers are paid directly from the lender they place the mortgage with, so it actually doesn’t cost the client anything. The only time you may run into having to pay a fee is if the mortgage broker is getting a mortgage through a private lender, as they do not pay brokers.

Getting pre approved allows you to know what the max purchase price you qualify for, so you don’t make an offer on a home that you cannot afford. It also avoids any last minute surprises due to credit bureau blips! In a market with rates on the rise people will also get a rate hold for a certain period of time, so they know their payments and what they qualify for won’t change if rates go up.

There are mortgage calculators online that you can use to determine how much you might qualify for based on income, but these are only a rough estimate and are typically very conservative. Sitting down with a mortgage broker is the best way to find out how much you truly qualify for and what fits your budget.

Basic costs involved with getting a mortgage include the following:

• Down payment
• Property Transfer Tax (which may be exempt if you are a 1st time home buyer) – This tax is based on the purchase price and is calculated by 1% on the first 200,000 and 2% on the remainder of the purchase price
• Home Inspection – Approx $400-$500
• Appraisal (may or may not be required depending on the property and how much you put as a down payment) – Approx $300 – $400
• Legal Fees – Approx $900 – $1500
• Property Taxes – Varies depending on property and eligibility for home owners grants
• Property Tax Adjustment – Depends on when in the year the house is purchased and whether or not property taxes have been paid yet by the seller
• Home insurance
• GST 5% – Typically applies to new properties and a possible rebate may be available depending on the purchase price and occupancy status of the home
• Possible lenders fees if you are dealing with an alternative lender
• Mortgage Insurance

• GST can be included, and if there is a rebate sometimes the lender will only finance the net GST
• Property transfer tax cannot be included in the mortgage
• Property taxes can be taken from the lender and come out along with your mortgage payment
• Property tax adjustment cannot be included in the mortgage

Typically the process goes like this:

1. Speak to a mortgage broker to book a meeting and get a list of what documentation they need to do a pre approval
2. During the meeting you will find out what you qualify for based on your supporting paperwork and a credit check
3. If credit needs improvement, follow suggestions from a mortgage broker who has experience in credit counseling
4. Once you know how much you qualify for, you can talk to a Real Estate Agent to get an idea for what is available in your price range
5. Once you have a few listings for properties you are interested in, have your Realtor take you for a viewing
6. If you like a property, make an offer on it and give your mortgage broker a heads up so they can prep you if they need any updated paperwork
7. If the offer gets accepted, your Realtor will submit offer details to your mortgage broker and your mortgage broker can then submit for your mortgage
8. During the time your mortgage broker is getting your mortgage approved, you will be possibly getting a home inspection and appraisal done on the home. You will also be looking into getting home insurance.
9. When your mortgage broker gets your mortgage approved, you will meet in person to review/sign paperwork. Shortly after you will get confirmation from your mortgage broker to remove your financing condition and pass along a good faith deposit to the Realtor. This deposit goes towards your down payment.
10. About a week or so before the deal funds, your lawyer will call you book an appointment to sign your paperwork. After that, you wait for the deal to close and get your keys from your Realtor!

Yes, you can refinance early however paying out your mortgage before it matures may incur a penalty. In order to make sure it is worth while, you would want your mortgage broker to determine does the savings from the lower rate make up for paying the penalty.

If you have a penalty, that is one cost. Then paying out your mortgage in BC cost $75 for discharge, and there may be a cost for an appraisal and legal fees, however some lenders cover these costs.

It may be a good idea to pay the penalty and refinance early so you can lock in a new term. Renewing when rates are higher means a higher mortgage payment, so you might save in the long run if you lock into a new term while rates are lower.

If you want to move to a new lender, a portion or the entire penalty may be allowed to be added into the new mortgage. You will have to re qualify with that lender.

If you payout your mortgage early, the maximum amortization you can have is a 25 year for an insured mortgage with less than 20% equity, and a 30 year for a mortgage with 20% or more equity.

Yes, best thing to do is talk to a mortgage broker, because they have access to more lenders and therefore more options for you.

Do not ever sign the mortgage renewal your bank gives you. Most of the time the renewal letter you receive in the mail does not offer the best rate your bank can offer. They do this just to see if you will sign without asking. Best thing is to bring your renewal letter to a mortgage broker and have them shop around with all lenders for the best deal.

Yes, but you may have to qualify with the new lender. If you stay with your current lender, no re qualifying is typically required.

If you are not requesting any new mortgage funds at renewal, most of the time the switch is free!

Yes, typically your current lender will not make you re qualify at renewal.

Talk to your mortgage broker to find out what might be the best option for you. It would depend on the spread between the fixed and variable, and how much you can afford to pay monthly.

Yes you can, however this will trigger a re qualification on the mortgage and some legal fees for changing title.

Your lender has the right to renew you into what ever product they see fit. Typically it is a 1 year fixed term.

If you are planning to pay out your mortgage sometime after renewal, you will want to make sure you renew into a mortgage that avoids a penalty. Ask for an open mortgage (no penalty) or a variable rate mortgage (only 3 months interest only penalty).

Yes, if you speak to a mortgage broker they can have you sign a broker consent form allowing them to deal with your lender on your behalf.

This is a line of credit which is secured to your home. Due to the home being security, the rates are typically better than what you can get as an unsecured line of credit

There are several reasons why people like these mortgages such as:

1. The minimum payment is smaller as it is an interest only payment
2. The mortgage is typically open, so you can pay it out at anytime without a penalty
3. As you pay down the balance, you can access the available funds again in the future without having to re qualify

Because the minimum payment is an interest only payment, sometimes people get comfortable paying just that, and they never end up paying down their mortgage balance.

Some lenders have maximum limits they allow based on either a dollar amount or a percentage of the value of the home, which ever is less.

Yes, typically you are only allowed these on your primary residence.

There are several differences, but some of the major ones are:

• Mortgage brokers have several lenders and products to shop to vs a bank only has their own
• Mortgage brokers deal with lenders who do not have posted rates (posted rates can cost you money down the road if you make changes to your mortgage)
• Mortgage brokers most of the time have access to better rates than the banks do
• Mortgage brokers are paid from the lender they place the business with and are not able to dictate rates, so their interest is very much aligned with the clients. Banks make more money for charging you higher interest, so their interest is more aligned with the bank than the clients
• Mortgage brokers are independent contractors vs bank specialists are employees

Posted rates are a higher tier of rates that banks offer. Some banks use these rates when calculating mortgage penalties or blended interest rates, which cost the client more money than lenders who only have 1 tier being their best rates only.

No, the banks are required by a regulatory body to qualify based on a certain set of guidelines. The fact you have been a long time customer does not matter.

It depends on the Bank you have, as some deal with mortgage brokers and some only have in house agents. It is best to call your mortgage broker and ask.

It many cases mortgage brokers have access to better rates than the banks do.

No, anyone is allowed to put 5% down as long as they plan to occupy the home as their primary/secondary residence.

• In BC, 1st time home buyers are exempt from property transfer tax up to a purchase price of $475,000. From $475,000 – $500,000 rebates work on a sliding scale.
• 1st time home buyers are allowed to use up to $25,000 of RRSPs tax-free for the purchase of their primary residence. However, they have to pay the RRSPs back over 15 years.
• 1st time home buyers receive a credit towards their taxable income for year they purchase their 1st home
• FHSA (First Home Savings Account) for savings for down payments for 1st time home buyers
• Government down payment assistance program, also known as First Time Home Buyer Incentive

• First-time home buyers in BC – Eligibility.
• To check your eligibility for 1st time buyers under the RRSP program just click on the link.

There are ways to take advantage of the full exemption of property transfer tax, but talk to your mortgage broker to advice on this.

There are ways to take advantage of most of the exemption of property transfer tax, but talk to your mortgage broker to advice on this.

Your credit score with Equifax is a number in a range from 300 – 900 that depicts whether your overall credit history is poor, average, good, or excellent

A good credit score would be a score over 680

There are several ways to improve your score, but a few quick tips would be:

• Always keep your balances under 50% of your available credit limits
• Always pay your bills on time
• Try to have 1 – 3 different types of credit reporting on the bureau (ie. Credit card, loan, line of credit)

You can view your own credit score by purchasing your credit score report on Equifax website http://www.consumer.equifax.ca/home/en_ca

Not if it is once in a while, however if you get your credit report pulled several times a month for multiple reasons, it will start to reduce your credit score.

In order to qualify for a mortgage we like to see credit scores over 600, however preferably at a 650 and over.

With Equifax a 900 is the highest score you can get.

Equifax has a form you can complete and a procedure on their website https://help-en.equifax.ca/app/answers/detail/a_id/297/related/1

Fixed rates are locked in and remain the same for the duration of the mortgage term, meaning your payment does not change for the duration of the term.

Variable rates are rates that can change, because they are based on the lenders prime rate. If the lender decided to change their prime rate, so you would your mortgage rate and your mortgage payment.

The benchmark rate is a rate some lenders use to qualify applicants who are applying for variable rate mortgage or a fixed mortgage for a term of 1- 4 years.

A rate hold is when a client requests a specific term and rate to be held for 90-120 days (depending on the lender), so they can shop for a home knowing if rates go up, they are able to get that rate being held for them.

Posted rates are a second tier of rates some banks have which are higher than their lowest offered rates.

It really depends on the applicants situation, but to give you a general idea:

• pay stubs
• job letter
• tax returns
• tax notice of assessments
• T4s
• corporate financial statements
• bank statements
• photo ID
• mortgage statements, property tax bills and rental agreements for other owned properties

The do not have to be original documents, scanned or faxed is just fine.

Your job letter should be on letter head paper and state your start date, position, and guaranteed wage. It should also have contact info for the personal who wrote it and their signature.