Some of the most popular questions about mortgages in Alberta:
Q. What is a Mortgage Broker?
Mortgage Brokers are independent, trained professionals licensed to represent and provide you with the best advice for your mortgage needs.
Mortgage Brokers primary expertise is locating funding for mortgage financing. They know where the best rates can be found. What’s more, they have the knowledge required to present a proposal for financing to lenders in the best way possible to successfully obtain mortgage financing.
Q. Why deal with a Mortgage Broker?
Mortgage Brokers represent you, the customer, not the lender. Because they are not employees of a lending institution, Brokers are not limited in the product they can offer you. Brokers seek out the best lender package to suit your specific situation, whether it’s with a Chartered Bank, Trust or Insurance Company, or Private Funds.
There is a wide assortment of options and features available to home buyers today. Shopping around takes a lot of time and effort. Many Canadians are intimidated by the mortgage process In today’s very competitive marketplace. It pays to work with a mortgage professional who will represent you and ensure the mortgage you get is the one best suited to your needs.
Choosing the wrong mortgage can cost you thousands of extra dollars. Mortgage Brokers are the trained professional who can help you save on your mortgage dollar.
Q. When should I obtain a pre-approval?
You should obtain a pre-approval if you plan on buying in the near future in order to secure an interest rate guarantee from the lender. The interest rate can usually be held for 60 to 90 days. The pre-approval is based on the information you provide to us in your application and is subject to verification of conditions such as employment and down payment verification.
Q. Can I use money gifted to me for a down payment?
Yes, most lenders will accept down payment that is gifted from a family member. A gift letter is usually required to be signed by the donor to confirm it is not a loan.
Q. What is the minimum down payment required to purchase a home?
The minimum down payment is 5% to purchase a home, subject to maximum price restrictions. In addition to the 5% you must be able to confirm that you can cover costs incurred to close your mortgage. These costs may include legal fees, appraisal fees, survey certificates etc. Regardless of the amount of down payment, at least 5% cannot be borrowed and must be confirmed from your cash resources or a gift from a family member.
Q. If I have a declared bankruptcy can I still qualify for a mortgage?
Some lenders will consider your mortgage application depending on the circumstances surrounding your bankruptcy and your credit history since the bankruptcy has been discharged. The best way to determine if you can qualify for a mortgage after being discharged from bankruptcy is to call a mortgage consultant.
Q. What is required to obtain a first Mortgage?
In most cases:
- Full time employment/proof of income
- Good credit rating
- Verifiable down payment
- Online Approval Application
Q. 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)
- Gift from immediate family
- Accumulated savings
- Sale of existing home
- Sweat equity
Q. 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
Q. 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) are given to the broker in a timely matter than the transaction can be completed in as little as 2 weeks.
Q. Can I get pre-approved before I find the home I want to purchase?
Yes. Our lenders offer pre-approvals from 60 days to 120 days. When it comes to new construction many lenders will extend that pre-approval 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.
Q. 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 quick approval.
Q. 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.
Q. What is the purpose of a mortgage broker?
Our only job is to find our clients the absolute best mortgage product to fit their needs. We specialize in mortgage lending and only deal with lenders who can compete against the local branches for better rates, terms and service.
Q. 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.
Q. Other than rates, why should I use a Mortgage Broker?
In addition to rates, because mortgage-based financing is the broker’s primary business, he or she has developed expertise in what type of mortgage financing each lender prefers to pursue. This kind of knowledge not only results in the most favourable rates for each project, but often whether a project is funded at all.
Q. How do Mortgage Brokers Find Superior Rates?
Interest rates are a concern to borrowers. Because of their daily contact with lenders, brokers know which project or home attracts a favorable interest rate from one institution, but a higher rate at another. Some institutions, in fact, will only accept mortgage submissions from mortgage brokers.
These rates, and preferences for types of mortgages, can change daily, depending on economic circumstances or based on the size of an institution’s portfolio in a particular type of mortgage. Your Mortgage Broker keeps current and knows which lender to approach first. As a result, mortgage rates obtained by Brokers are among the best available at the time of placement.
Q. What are the costs to dealing with a Mortgage Broker?
Mortgage Brokers do not always charge a fee for their services, but if a fee is warranted, it is negotiated up front and documented.
Fees are based on the complexity, strength and type of project. They are a one-time only charge, and are quoted once the details of the deal have been examined.
Your investment in the professional services of a mortgage broker is generally returned very quickly, not only in time saved, but also in the caliber of the financing received.
Q. Why should I go to a Mortgage Broker first?
A professional presentation to a lender on the first application will get the best response and save you valuable time and money. Secondary applications with previous credit bureau inquiries may be more costly.
Often the success of obtaining mortgage approval depends on the way a proposal is presented and to whom it is sent. Your Mortgage Broker is trained to present your mortgage proposal where and how it will get the most immediate, positive result.
You don’t call an insurance company for insurance – you use an insurance broker, because of their expertise, product knowledge and rates. So remember, call your mortgage broker first!
Q. Do Brokers only do Residential Mortgage?
Brokers can place all types of loans provided they are backed by mortgage collateral. All sizes of loans, from small loans backed by a residential property to commercial properties in the millions of dollars, are readily available. Mortgage-backed loans in the millions are not uncommon with private pension funds and private lenders.
In addition to handling straight mortgages, mortgage brokers are often called on to assemble financing (based on mortgage collateral) for businesses. Mortgage brokers excel in this type of financing package because of their expertise in looking at loans from a mortgaging perspective, as well as their knowledge of financial institutions’ interests and desires for a particular product at specific times.
Q. How do Brokers get better deals than many Banks?
The lenders who work with mortgage brokers include traditional sources, such as chartered banks, trust companies, as well as corporate and private pension funds. In addition to these sources, brokers often develop professional relationships with private sources of funds, termed private lenders. These lenders can provide many various mortgage products not available at conventional sources.
For best results call your Broker first.
Q. Can I still go through my bank with my Broker?
Yes, letting a Mortgage Broker represent you to your own financial institution can often result in a better rate than you could get on your own.