What are the sources for mortgage financing?
There are a wide range of
financial institutions that are involved in the mortgage industry in Canada.
Some of these include:
Chartered Banks, Loan Corporations
Trust
Companies, Credit Unions
Finance Companies, Pension Funds
Life Insurance
Companies, Private Individuals
Your Mortgage Consultant will select the
mortgage lender who’s right for you!
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Will I need mortgage insurance?
A mortgage is a large debt and should be life insured, for your family's peace
of mind. Some lenders include life insurance as part of their cost; others will
let you insure the mortgage yourself. But we always recommends mortgage
insurance in some form.
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Are you Mortgage Brokers?
In the Province of Ontario, Mortgage Consultant
is the correct term for a Mortgage Broker.
How much will it cost me to
have a Mortgage Consultant?
For most people the Mortgage Consultant
provides a free service. They receive their fee from the lender providing your
mortgage.
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How much will it cost me to have a Mortgage Consultant?
For most people
the Mortgage Consultant provides a free service. They receive their fee from the
lender providing your mortgage.
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Will this fee increase the cost of the mortgage?
No because the lender
either has to pay its own sales staff to originate mortgages or it can pay a
broker – it’s all the same.
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What is the best term to consider?
Usually the shorter the term the lower
the rate. However many people prefer the comfort of a longer-term mortgage and
as an example we have provided a historical tracking of the five-year rates.
This is another area where your Mortgage Consultant can help.
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How does my amortization affect the amount of interest I pay?
The
amortization period has a dramatic effect on the amount of interest paid over
the length of the mortgage. Consider the example of a $150,000 mortgage with an
interest rate of 6.20%.
With a 25 year amortization the monthly payments
are $977.61.
With a 20 year amortization payments are only increased by
$107.57 to $1085.18.
The savings in interest would be $32,843.40.
With a
15 year amortization payments are increased by only $298.03 to $1,275.64.
The
savings in interest would be $63,669.38.
The example assumes the interest
rate will remain constant through the whole amortization period.
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Is my Mortgage Consultant like a Mortgage Broker?
Your Mortgage
Consultant is like a Mortgage Broker. But the correct legal term in Ontario is
Mortage Consultant.
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How does the 5% Down Payment Program Work?
Under the 5% Down Payment
Program, the minimum down payment of 5% of the purchase price or appraised
value, whichever is less. The down payment must be from customer’s own resources
or an outright financial gift from immediate relatives. If the minimum equity
requirement is being met by way of a financial gift, the funds must be in the
possession of the borrower at the time of application. Borrowers are also
required to demonstrate at time of application the ability to cover a closing
cost equal to at least 1.5% of the purchase price.
Maximum purchase price
can range from $125,000 to $250,000. Your Mortgage Consultant will confirm the
maximum in your market area.
Maximum GDSR ~ 32% (Principal + Interest +
Property Taxes + Heating Costs must not exceed 32% of Gross Income).
Maximum
TDSR ~ 40% (Principal + Interest + Property Taxes + Heating Costs + Monthly
Obligations including Credit Cards & Loans must not exceed 40% of Gross
Income). Minimum loan term for CMHC is 6 months with loan qualification based on
the current 5 year rate. GENCOR (GE Capital) currently has no minimum term
requirement. The mortgage loan insurance premium is 3.75% of the mortgage
amount. (Premium can be added to the mortgage or paid separately).
Credit
history must be in good standing.
How does the Home Buyers’ Plan (HBP) work?
Each purchaser may borrow
up to $20,000 from their RRSP under the Home Buyers’ Plan. (The funds must have
been in the RRSP for at least 90 days prior to withdrawal to be eligible under
the program). Provided you buy or build a qualifying home and meet all of the
conditions for making a withdrawal under the Home Buyers’ Plan, you can use the
particular funds you withdrew under the Home Buyers’ Plan for other purposes.
(Not only down payment and closing cost, but for any other purpose you
choose.)
This program is available to the first time home buyer only.
(You are considered a first time home buyer if, at any time during the period
beginning January 1, 1995 and ending 31 days prior to your withdrawal in 1998,
you did not own a home while you occupied it as your principal place of
residence).
This information is current throughout 1999. And the program has
been extended indefinitely. Repayment of the funds back to your RRSP can be made
over 15 years. (The repayment period starts in 2001 and ends in 2015)
If the
amount is not repaid in a year, that year’s repayment amount will be added to
your income and taxed. In order for the home to qualify it must be located in
Canada and intended to be used as your principal residence. This program may be
used in connection with the 5% down program.
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What information is required to be Preapproved for a Mortgage?
If you
are applying for a preapproved mortgage, have following information ready to
give to your Mortgage Consultant:
Have your employer give you a letter on
company letterhead outlining your name, position, gross annual income, and
number of years employed with the company.
If you are self-employed, you will
need three years financial statements, and tax returns (together with official
assessment from Revenue Canada).
Social Insurance Numbers.
At least 3
years history of residences and employers.
Know your banking information
(i.e. institutions name, address, type of accounts, account numbers).
Know
your assets and their value (i.e. cash amounts, stocks, bonds, RRSPs,
car).
Know your liabilities (i.e. car loan, credit card balances).
Also,
be sure and advise your Mortgage Intelligence Consultant about any past credit
problems you may have had.
Finally, write down a list of questions you
would like to have answered.
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Do you act as my Mortgage Broker?
Your Mortgage Consultant acts on your
behalf, in the same way as a Mortgage Broker. In Ontario, the correct legal term
is Mortgage Consultant.
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Why is verifying my Down Payment important?
If there is ‘one’ thing that
causes problems which may delay the closing of your house it’s verification of
the Down Payment. Here’s why:
To meet the Requirements of Canada Mortgage
and Housing Corporation, GENCOR (GE Capital) and the Major Lending
Institutions
On or before the issuance of a lending commitment you will be
asked to provide "Confirmation of Down Payment" from Non-borrowed funds in one
or more of the following forms.
Down Payment from the Sale of an Existing
Property You will be required to provide a copy of the unconditional "Purchase
and Sale Agreement" on your existing property. This needs to be accompanied by a
copy of the statement of "Mortgage Balance" on any mortgages presently held
against the property. The difference between the sale price and the mortgages
owing will substantiate the funds available for your down payment.
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How do I know if I qualify for a LTT refund?
You must be at least 18
years old.
The refund applies to any newly-built home where the sale closes
after May 7, 1996.
The agreement of purchase and sale have to be completed on
or before March 31, 1999, the purchaser must take occupancy on or before
December 31, 1999 and the deed must be registered on or before December 31,
2000.
You cannot have previously owned a home, or an interest in a home,
anywhere.
If you have a spouse, he or she cannot have owned a home, or an
interest in a home, anywhere. You cannot have received an OHOSP-based refund of
land transfer tax.
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How do I get the LTT refund?
You can receive a same-day refund of the land
transfer tax by filing an affidavit for refund at the land registry office at
the time of registration. If you do not apply for a refund at the time of
registration or require more information on the LTT Rebate program, contact the
Ministry of Finance’s toll-free information line:
All areas of Ontario:
1-800-263-7965
French language inquiries: 1-800-668-5821
Teletypewriter
(TTY): 1-800-263-7776
How much will the Land Transfer Tax be?
Here are
some examples of LTT Payable.
Purchase
Price LTT Purchase
Price LTT
Purchase
Price LTT
100,000 725 105,000 775 110,000 825
115,000 875
120,000 925 125,000 975
130,000 1025 135,000 1075 140,000 1125
145,000
1175 150,000 1225 155,000 1275
165,000 1375 170,000 1425 175,000
1475
190,000 1625 200,000 1725 220,000 1925
235,000 2075 240,000 2125
250,000 2225
260,000 2375 265,000 2450 280,000 2675
300,000 2975 320,000
3275 340,000 3575
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I need a Mortgage Broker. Can you help?
For most people, a Mortgage
Consultant acts like a Mortgage Broker. Mortgage Consulting is the correct title
for what most people think of as a Mortgage Broker.
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What is the Purchase Plus Plan?
The Purchase Plus Plan lets you add the
cost of upgrades to your mortgage before you move in! Eligible upgrades include
– a new electrical service, a new roof, central air, a new furnace, new siding,
eaves, soffits, facia, doors, windows, a new kitchen, carpeting... or any other
renovation that would increase the value of the home. The way it works is like
this... Let’s assume that you are a first time buyer and have 5% down payment.
Before the mortgage financing is arranged, written quotes are obtained from
licensed contractors for the repairs and or the improvements to be done to the
home. When the application for mortgage financing is made, the request is made
for 95% of the purchase price PLUS 95% of the cost to complete the
improvements.
Note: The lender will “hold-back” on closing the
“improvement” portion of the mortgage until the work has been completed,
normally within 30 to 60 days of closing. Once the work has been completed, the
lender will advance the balance of the funds and the contractor can be paid.
What does this mean? . . let me give you an example. . .
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The material provided in the pages of
this website is for informational purposes only. Although the site owner and
creators assume the information to be correct, and attempt to keep information
in the pages of this website as current as possible, they do not warrant the
accuracy or completeness of any information included in or linked to this
page.
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