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Frequently Asked Questions

I do not have a down payment saved up what can I do?
depending on your credit rating you can use one of the following for a minimum 5% down payment:

1. Gifted from a family member
2. borrowed down payment (from any source that is not part of the property purchase)
3. Cash back and no down payment offers 

what is amortization?
the amortization of a mortgage is the number of years it will take to pay down the principal balance. the maximum amortization currently is 35 years.

why should I use a mortgage broker?
A mortgage broker deals with large numbers of lenders and can find you the best rate and terms for your mortgage. A bank lender only has a duty of care to you when a mortgage broker has to put your interests before their own. Most times you do not pay for this service as a mortgage broker is compensated by the lender.

How do I get the best interest rate?
Interest rates will go up and down with the amount of risk the lender is willing to take. The lender will look at the whole deal (borrower, property, current market conditions etc...) to asses the amount of risk involved. If your credit rating is lower you could pay a higher rate because there is a greater chance of default. On the other hand if your credit is good you will most likely enjoy a lower or best interest rate available.

Will multiple credit checks hurt your credit rating?
The answer depends on how many, and the time between credit checks. Try to have your credit checks done within a week or two because credit reporting companies should take this as you shopping around. Applying consistently through out the year could mean you are searching for credit and that will raise concern. Limit yourself to 3 checks per year, pick the credit lines you are feel comfortable and stick with them.  

Will a private mortgage report to credit reporting companies?
Most private mortgage lenders will not report to credit reporting companies but can provide information on your payment history with them. This could be helpful depending on who you are considering as a new lender. it is best to talk with a mortgage professional regarding this situation.

what is a variable rate mortgage?
A variable rate mortgage moves up and down with a lenders prime rate. Prime rates usually follow the Bank of Canada interest rate movements.

what is a fixed rate mortgage?
A fixed rate mortgage has the interest rate fixed for a certain period of time, generally the length of the mortgage term.

what are closing costs on a property purchase and how much should I prepare for?
Closing costs are associated with completing the mortgage and property purchase transaction. These can be: Lawyer fees, title insurance, property tax adjustments and BC property transfer tax. Most lenders require borrowers to provide proof of 1.5% of the purchase price for closing costs.  

Closing costs on refinance, equity take out and private mortgages vary and should be discussed before signing any mortgage documents.

My mortgage is up for renewal. Should I just sign the renewal form and send it back to my lender?

If you are sure you are getting the best rate from your lender and are happy with the service, then yes. But; if you wonder about the interest rate your lender is offering you or don't know the best rates, it would be wise for you to check with an Accredited Mortgage Professional to ensure you are in fact getting the best mortgage for your situation. A good rule of thumb is to never sign any renewal until you are sure and to start checking about 3 to 4 months before your mortgage renewal.

How long does a collection account stay on your credit rating?
A collection will stay on your credit rating for 6 years from the last update. If you have an unpaid collection most lenders will request that you pay it before they lend you any money. As time goes by that paid collection will hold less weight with lenders and your credit rating and eventually be removed.  A paid collection will not be removed, the status will only change from unpaid to paid and again.  Learn about your credit rating

What does a co-signer do for my mortgage application?
If a lender has asked you to provide a co-signer to secure a mortgage you may be lacking enough credit (history or amount) or your income is near or over debt service ratios. The lender is feeling a co-signer will strengthen your application enough to be approved. Some lenders will re-look at the mortgage in a year just for the purpose of removing the co-signer.

A co-signer will be liable for the mortgage and also must be able to pay the payments along with their monthly commitments if you default on the loan.  Learn more about co-signers

what is a high ratio mortgage?
A mortgage amount that is greater than 80% of the value of the property is considered high ratio and is normally insured with default insurance through either CMHC or Genworth. These insurance premiums are a percentage of the mortgage and should be discussed before closing.

How can I pay off my mortgage faster?
Always take advantage of your prepayment options and pay your mortgage bi-weekly (accelerated). Basically you will be making one extra payment per year with an accelerated bi-weekly payment which will reduce the amortization greatly. To lean more information on how to pay off your mortgage faster talk with your Accredited Mortgage Professional.

what is a good credit history?
A good credit history is a minimum of 1 year with credit line over $1,000 but this also depends on the lender. A well rounded credit profile is experience with revolving credit (credit cards) and installment loans (a loan that has repayment terms and declining balance). Because lenders differ, if you have a short history or none at all you may still qualify for a mortgage and it is best to talk to a mortgage professional about your situation.  Learn about your credit rating.

What are prepayment penalties?
When you break your mortgage contract you are paying it off early. Usually the penalty is the greater of 3 months interest or an interest rate differential (IRD). The IRD is the difference in interest rate for your remaining mortgage term and what the lender would receive for the same term currently.