Why use a mortgage broker over a bank?
Mortgage brokers are a one stop shop. Since brokers are independent and don’t work for individual lenders, they can offer advice on a broad range of lenders. They can also advise you on which mortgage products are best for you, and tell you how much mortgage you can afford.
Typically brokers get paid by the lenders, so it is free for you to work with them.
Brokers also have access to better products and lower rates than regular banks.
What does a lender look at when considering a mortgage application?
Credit - Past and present history
Capital - How much you have in assets
Liabilities - Current Loans, Credit Cards, Mortgages, etc.
Collateral - condition of the property, location and history
What is a "Pre-Approval"?
A pre-approval helps verify your budget and allows your real estate agent to find the best home in your price range. They also allow you to secure a rate for up to 120 days. Keep in mind however, nothing is fully approved until the property is presented to the lender and signed off, and many. lenders will not underwrite a deal until they have a firm purchase contract in place.
What is the difference between contract rate and qualifying rate ("Stress Test")
A contract rate is the rate offered by the lender on the homebuyer’s actual mortgage payment. Whereas the qualifying rate is the Bank of Canada's conventional 5 year posted rate. Most mortgage will need to qualify at today's Bank of Canada's qualifying rate, also known as the "Stress Test". As of June 1st, 2021 the qualifying rate is 5.25%.
Should I get a fixed or variable rate loan?
The choice is yours! A fixed rate Mortgage means you are locked-in for a term, usually 5 years. The benefit to a fixed rate is that your monthly payment will not change throughout the term. Comparatively, variable rates mortgage are subject to change, depending on Bank of Canada posted rates. Variable rate mortgage payments are often lower than a fixed rate.
Are there any additonal costs or fees I should be made aware of?
Unless we need to put you into a private mortgage, you will typically not incur any fees to the broker. However, you should expect to pay the following costs when refinancing or purchasing a new home:
Property transfer tax
Land transfer fee
Lawyer or notary fees