First-time Mortgage FAQ's To avoid adding unwanted stress in obtaining your very first mortgage, read the following frequently asked questions. This valuable information will not only answer some question you may have about mortgage brokers, but may also make your first home purchase a money-saving experience. What is required to obtain a first mortgage? What can I use for a down payment? What costs are involved in obtaining a mortgage? How long does it take to complete a mortgage transaction? Can I get pre-approved before I find the home I want to purchase? How much can I qualify for? What is CMHC? Who does The Mortgage Centre work for? What is the purpose of a mortgage broker? How can a mortgage broker get a better rate than my own bank? Are there extra costs or hidden fees when using a mortgage broker? What if I have had poor credit or have been discharged from bankruptcy within the last 3 years? Can I apply for a mortgage? What is required to obtain a first Mortgage? In most cases: Full-time employment or stable income Proof of income Good credit rating Verifiable down-payment Filling out a Mortgage Pre-Approval Application What can I use for a down payment? In most cases: Registered Retirement Savings Plan RRSP's may be used as a down payment up to a maximum amount of 20,000 and is not subject to income tax if repaid within a specific time period. Repayment Schedule Link Gift from immediate family Accumulated savings Sale of existing home Sweat equity - define What costs are involved in obtaining a mortgage? Costs incurred are: Legal costs (Usually between $600 - $1000) Insurance on the property and mortgage applicant In some cases an appraisal is requested How long does it take to complete a mortgage transaction? If all information requested by the lender (i.e. Income verification, down payment verification and property details) is given to the broker in a timely matter than the transaction can be completed in as little as 2 weeks   Can I get pre-approved before I find the home I want to purchase? Yes. Our lenders offer preapprovals from 60 days to 120 days. When it comes to new construction many lenders will extend that preapproval time to fit the construction schedule. This will allow you to hold a great interest rate while you shop for or build a new home.   How much can I qualify for? Qualifying guidelines vary depending on the lenders criteria and products available. To find out exactly what you can qualify for, please submit your application for a pre-approval.   What is CMHC? Canada Mortgage and Housing Corporation is a federally owned and operated institution that evaluates the client and property to allow the borrower to purchase a home with a lower down payment requirement. This corporation insures the mortgage on behalf of the bank, through a premium added to your mortgage. This way the banks are obligated to provide a mortgage for those with less than a 25% down payment.   Who does The Mortgage Centre work for? We only work for you. We are not affiliated with any one single bank or lender; thus allowing us to shop around for the best mortgage rates in Canada.   What is the purpose of a mortgage broker? We specialize in mortgages and only deal with lenders who can compete against the local branches for better rates, terms and service. Our only job is to find our clients the absolute best mortgage product to fit their needs.   How can a mortgage broker get a better rate than my own bank? The mortgage lenders that we use do not have local branches in each city or town, they have no large overhead and are in the business of lending money for mortgages only. This, combined with their large volumes, allows them to discount the rates far better than your own bank can provide.   Are there any extra costs or hidden fees when I use a mortgage broker? There are absolutely no hidden fees. Any costs related to a The Mortgage Centre mortgage are fully disclosed. Any costs incurred would be the same as if you went through a bank and in most cases LESS with The Mortgage Centre. We are here to earn your business today and in the future!   What if I have had poor credit or have been discharged from bankruptcy within the last 3 years? Can I apply for a mortgage? Yes you can! Most conventional banking institutions put restrictions on who they lend money to for a mortgage, but The Mortgage Centre has the resources to shop for financing regardless of any credit situation. Selecting the Right Mortgage The basic choices to look at in selecting a mortgage include: Conventional or high ratio mortgages Term length Closed or open mortgages Fixed rate vs. variable rate A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. A high ratio mortgage is usually for more than 75% of the appraised value or purchase price. This type of mortgage is often referred to as an NHA mortgage because it is granted under the provisions of the National Housing Act and must, by law, be insured through CMHC for which the borrower pays the insurance premium, application, legal and property appraisal fees. The term you select is important. Short term mortgages can be appropriate if you believe interest rates will drop come renewal time, but in many of these circumstances, they are inferior to a variable rate mortgage. Long term mortgages are suitable if you feel current rates are reasonable and you want the security of budgeting for the future. This can be especially important for first time homebuyers. The key is to feel comfortable with your mortgage payments. A closed mortgage usually offers a lower interest rate than an open one of the same term, but the open mortgage lets you pay off as much as you want, any time, without penalty. You can choose a fixed or variable interest rate. A fixed rate mortgage allows you to budget precisely for whatever term you select anywhere from six months to occasionally 25 years. A variable rate fluctuates with the market and gives you the lowest possible mortgage rate at all times. For Further Information Any one of our representatives would be more than happy to assist you or answer any questions you may have about purchasing your first home or your next mortgage. Contact us anytime and we will reply to your inquiry by telephone or by email as promptly as possible. Our number is 416-937-8463. You may be required to leave a message. Please note that we usually return calls within the hour or at your suggested time of convenience. Selecting the Right Mortgage The basic choices to look at in selecting a mortgage include: Conventional or high ratio mortgages Term length Closed or open mortgages Fixed rate vs. variable rate A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. A high ratio mortgage is usually for more than 75% of the appraised value or purchase price. This type of mortgage is often referred to as an NHA mortgage because it is granted under the provisions of the National Housing Act and must, by law, be insured through CMHC for which the borrower pays the insurance premium, application, legal and property appraisal fees. The term you select is important. Short term mortgages can be appropriate if you believe interest rates will drop come renewal time, but in many of these circumstances, they are inferior to a variable rate mortgage. Long term mortgages