What is a Mortgage Broker?
A Mortgage Broker is an independent professional that works with multiple lenders to find you a mortgage that will suit your needs. They will find a lender with the best rates and terms for your situation. There is usually no fee to work with a mortgage broker if you qualify under standard lending guidelines. We get paid a commission or finders fee from the lender. If there is a fee, this will be disclosed and documented up front.
What is the difference between an insured mortgage and a conventional mortgage?
An insured mortgage is when you have less than 20% to put as a down payment on your purchase. By law, banks cannot lend more than 80% of the value of the home unless CMHC, Genworth or Canada Guaranty insures it. These insurers protect the lender against default. An insurance premium is charged and is added to your mortgage amount.
A conventional mortgage is when you have 20% or more to put as a down payment on your purchase. In most cases, there is no insurance premium charged. Occasionally, the lender may still need to have the mortgage insured through CMHC, Genworth or Canada Guaranty depending on the location of the property or type of property being purchased.
What are the costs in obtaining a mortgage?
Some of the costs associated with obtaining a mortgage are legal fees, appraisal, home inspection and utility hook ups. We usually recommend that you have approximately $2,500 set aside to complete your property purchase.
What are the costs of the CMHC, Genworth, Canada Guaranty premiums?
The amount that would be added to your mortgage will depend on the amount you have put as a down payment. The premium is a percentage of the mortgage amount. Below is a chart of the premium you would pay on an insured mortgage.
|
Down Payment |
Premium
(25 year amortization) |
Premium (30 year amortization) |
|
5% |
2.75% |
2.95% |
|
10% |
2.00% |
2.20% |
|
15% |
1.75% |
1.95% |
|
20% |
1.00% |
1.20% |
What is the Home Buyers Plan?
The Home Buyers Plan is a federal government program that allows each borrower to use up to $25,000 from your RRSP's, without paying income tax when you withdraw it when you purchase a home.
- You must not have owned a principal residence within the last 5 years.
- You must intend to occupy your home as a principal residence.
- Minimum repayment is 15 equal annual installments, this schedule can be accelerated.
- The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.
- You must complete a form T1036.
- Above information is a rough guideline. The office information and forms are available at http://www.servicecanada.gc.ca/eng/goc/home_buyers_plan.shtml
Why is getting a preapproval so important?
Purchasing a home can be stressful. There is a narrow window to ensure financing of the home. Getting a preapproval takes pressure off to make this a stress free, enjoyable and exciting process.
It is important to know what purchase price you are qualified for before you go shopping for a home so that you are looking at houses in the right price range.
You need to ensure that you can comfortably afford not only your mortgage payments but also all of the other costs of owning a home, such as property taxes and utility bills. If you have not owned a home before, these amounts may be a bit surprising. We will help you take a look at the entire picture so that there are no surprises.
You need to ensure that you will qualify for a mortgage based on the lenders criteria. If there are issues, it is better to discover them at the pre-approval stage so that we can work on fixing issues prior to your search for a home. If you are not able to qualify for a mortgage at this time, we can assist you in taking the steps necessary to qualify for a mortgage in the future.
Once I am pre-approved for a mortgage, I will have no problem obtaining a mortgage, right?
It is important to note that a pre-approval qualifies you as the applicant. We will have confirmed your income, credit and down payment at this stage. However, we are not able to pre-approve the property you will be purchasing. This is still subject to lender/insurer approval. Therefore, it is important that you always put a "subject to financingâ condition on your offer to purchase. Your real estate agent will assist you in writing the offer to purchase. Also, a pre-approval is only valid if there is no material change in your financial situation. If something has changed since you received your pre-approval (e.g. change of job, acquire new debts) be sure to contact us, so that we can review your file.
What happens when I find a home?
Once you find a home, you and your real estate agent will write an offer to purchase. Once the negotiations have been completed, a copy of the offer to purchase and property highlight sheet is forwarded to us. We then submit the mortgage for final approval to the lender. Once the lender/insurer approval has been obtained, the lender will send a mortgage commitment to us outlining the details of the approval along with any paperwork that may still be required. Once the paperwork has been received and approved by the lender, your mortgage will be complete and you can remove your "subject to financingâ condition on your offer to purchase.
What type of income proof do I have to provide?
The following is a summary of what lenders require depending on what type of job you have, keep in mind, we could need more information depending on your circumstance:
Salaried Employees
- Job Letter - Confirmation of your employment needs to be on company letterhead, signed by the appropriate individual confirming the position being held and your wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
- Paystubs - most recent paystub that shows your year-to-date earnings.
Hourly Employees
- Job Letter - Verification is made on company letterhead, signed by the appropriate individual confirming the position being held and wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
- Paystubs - most recent paystub that shows your year-to-date earnings.
- T4's
Commission Income
- T4's and/or Personal Tax Returns (T1 Generals) from the current year and the previous year.
- Job Letter - Verification is made on company letterhead, signed by the appropriate individual confirming the position being held and wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
- Notice of Assessment (NOA) - to confirm no taxes owing.
Self Employed
- Financial Statements
- Notice of Assessments (NOA) - to confirm no taxes owing.
- Personal Tax Returns (T1 Generals) from the current year and the previous year.
To obtain a copy of your Notice of Assessment please see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/ssmnt-eng.html
Why should I choose a Mortgage Broker at iSask Mortgage Brokers instead of a bank?
Most banks focus on such a wide variety of projects and cross selling opportunities that their staff training is diluted and not focused.
At iSask Mortgage Brokers, we provide excellent mortgage services for purchases, refinances, renewals and the list goes on. We know mortgages inside and out, and best of all we do all of the legwork!
iSask Mortgage Brokers is a free service and has access to over 20 lenders.
What makes iSask Mortgage Brokers unique to other Mortgage Brokers?
The brokers at iSask Mortgage Brokers provide a higher level of service and see value in know our clients. We take the time to present you in the best way to the lenders. We are your mortgage advisors. We provide the lowest rates we can find for all of our clients.
How do I qualify for a mortgage through iSask Mortgage Brokers?
There are 4 main factors to qualify for a mortgage; stable income, a good credit history, making a sound choice on the property you are purchasing and how much (if any) of a down payment you have.
Stable Income: most lenders will require a Letter of Employment confirmation as well as 2 recent paystubs. They may also need the last 2 years of NOA's (Notice of Assessments). Please see what type of income proof do I need for a more detailed list.
Credit History: is a piece of information that is always reviewed by the lenders. We always pull a credit history when you apply for a mortgage or seek a preapproval so that we can determine which programs will best suit your situation. Please see your credit score and how your credit score is calculated for more information.
Property: choices also impact the mortgage qualifying process, as the real estate is the lender's security - if for some reason - you are unable to repay the mortgage.
Down payment: are not always required as there are mortgage programs that provide cash back incentives for qualified purchasers. If you have no down payment, you generally will still need to have some cash to put down for your real estate purchase deposit and for closing costs.
What is a credit score?
A credit score is a statistical formula that translates personal information from your credit report and other sources into a three-digit score. For example, when you fill out a loan application, pieces of information from the application along with information from your credit report will be used to compute a score that indicates to the lender the statistical probability that you will pay back the loan.
What is used to calculate my credit score?
- Payment history - indicates whether you have made your credit card and other payments on time.
- Amounts owed - compares how much you owe to your credit limits
- Length of time in file - Indicates how long you have had credit accounts.
- New credit - Shows how often you are looking for new credit and how you handle accounts.
- Type of credit - considers the type of loans you have - car loans, lines of credit, credit card balances.
- Amount of credit - considers how many credit products you have.
What can I do to improve my credit score?
- Pay all of your bills on time - even if it's just the minimum payment. Paying late, or having your account sent to a collection agency has a negative impact on your credit score.
- Try not to run your balances up to your credit limit. Keeping your account â¨balances below 75% of your available credit may also help your score.
- Avoid applying for credit unless you have a genuine need for a new account. Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are getting into difficulty.
- A good balance. 2-4 credit accounts is considered ideal.
Why do you need to pull my credit?
No matter what bank, financial institution or credit union you approach to apply for a mortgage, a credit check will always be required in order to determine what offers are available.
In order to protect your credit from damage, iSask Mortgage Brokers works together with Equifax/Transunion and the lenders to provide you with expert mortgage advice, and the ability to shop your mortgage loan around, all with only one credit check!
What should the length of my mortgage term be?
The length of mortgage terms varies widely - from 6 months right up to 10+ years. As a rule of thumb the shorter the term, the lower the interest rate and the longer the term, the higher the interest rate.
How can I pay off my mortgage quicker?
There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by:
- Increasing your payment frequency (e.g. change from monthly payments to bi-weekly or weekly payments)
- Make 1 or more lump sum payments
- Selecting a shorter amortization at renewal
- Increase/round up your payment
What are the monthly costs of owning a home?
- Mortgage Payment
- Property Taxes which includes School taxes
- Utilities
- Maintenance and Upkeep
How can I save money on my mortgage?
The simplest way to accomplish this is to decrease your principal; thus, decreasing your interest obligation. The options are as follows:
- Increase Payment Frequency - instead of paying monthly, consider paying bi-weekly or weekly. It can cut your mortgage amortization by up to five years and can save you tens of thousands of dollars.
- Prepay - Use every advantage that the term of your mortgage offers you to prepay your mortgage. Most mortgages allow certain prepayment privileges such as an annual prepayment of a certain percentage of the mortgage amount or an annual increase in the mortgage payment (e.g. lump sum payment).
- Increase payments - Round up your monthly or bi-weekly or weekly payments. (e.g. if you have a bi-weekly payment of $531.59, round your payment to an even $550.00. This will have a profound effect on the interest paid and the amortization of the mortgage).
Do you sell our information to anyone else?
At iSask Mortgage Brokers and our partners we will not sell your information under any circumstances. Your information is keep confidential. We only share information with our partners necessary to get your mortgage approved.
What is the Purchase Plus Improvements Plan?
This 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, 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.
Example:
| The purchase price is: | $15,000 x 95% = $142,500 |
| The quote for the improvements is: | $11,00 x 95% = $10,450 |
| Total Mortgage is: | $161,000 x 95% = $152,950 |
Therefore, an application is made for a mortgage in the amount of $152,950 that is 95% of the purchase price plus 95% of the improvements.
What documents do I need when I am looking at buying a condominium?
If you are buying a Saskatchewan condominium, the vendor must be provided with copies of the condominium corporation's financial statements, bylaws, budget, and and an estoppel certificate. You should review the bylaws to make sure that there are no provisions that are a problem for you. The financial statements and budget are to ensure that the condominium corporation is financially sound and has adequate reserves for repairs. The estoppel certificate is a document from the condominium corporation providing assurances about the condominium fees, any special assessments or any known problems.
How much mortgage can I afford?
The amount of a mortgage for which one can qualify is calculated using your Gross Debt Service ratio (GDS) and Total Debt Service ratio (TDS).
Lenders evaluate one's monthly income, as well as their monthly debt obligations, to determine a fair and feasible amount of mortgage available to the prospective borrower.
To calculate how much you can borrow, please refer to our calculator.
What is a down payment?
Very few homebuyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage. However, even with a mortgage, you will need to raise the money for a down payment.
The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment should be determined well before you start house hunting.
The larger the down payment, the less you home costs in the end. With a smaller mortgage, interest costs will be lower and over time, this will add up to significant savings.
What is the minimum down payment needed for a home?
According to the guidelines of the CMHC/Genworth/Canada Guaranty one must have a minimum down payment of at least 5% of the total cost of the prospective property. The down payment must be from your own cash resources or a gift from a family member. It cannot be borrowed.
What are my options for down payment?
Gifted Funds - most lenders will accept down payment funds that are gifted from family as an acceptable down payment. A gift letter signed by the donor is required to confirm that the funds are a true gift and not a loan that needs to be paid back.
Saved - money saved from our own resources.
RRSP - The Home Buyers Plan is a federal government program that allows homebuyers to use up to $25,000 for each purchaser from his/her RRSP.
Cash back incentives - a rebate on your mortgage at the time of closing. The rebate varies anywhere from 1% to 5% of the mortgage amount depending on the lender and the term chosen.
Borrowed Down - in some cases, if you have good well established credit, you can borrow your down payment.
What is a fixed mortgage?
A fixed mortgage offers you the security of locking in your interest rate for the term of your mortgage, so you know exactly how much principal and interest you will be paying on the mortgage during the term.
What is a variable mortgage?
The variable mortgage allows you to take advantage of today's low prime rate. The interest rate will fluctuate as the Bank Prime changes.
What is an open mortgage?
An open mortgage allows you the flexibility to pay off some or the entire mortgage at any time without penalty. Interest rates are usually higher than a closed mortgage.
What is a closed mortgage?
A mortgage agreement that cannot be fully prepaid renegotiated or refinanced before maturity without a cost to you. You can break this mortgage agreement but a penalty is charged.
What is a cash back mortgage?
A cash back mortgage is a rebate on your mortgage at the time of closing. The rebate varies anywhere from 1% to 5% of the mortgage amount depending on the lender and the term chosen.
The money from cash back is especially handy for the first time homebuyer who needs extra funds to purchase home improvement items such as blinds, appliances, etc.
Examples of why you would want cash back mortgage:
- You saved up enough money for a down payment to purchase your home, but may be a little short after the mortgage closes. The cash back acts as a buffer to get you through the first couple of months a new homeowner.
- You withdrew your down payment out of your RRSP's but now you need money for legal fees and moving expenses.
- You received a gift from your family to put towards your down payment but want some money in order to feel more comfortable taking on this new liability.
- If you don't have a down payment, but have some money for closing costs, this may be an option for you.
What are closing costs?
Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.
What is the difference between term and amortization?
The term of the mortgage should not be confused with the amortization. The amortization refers to the maximum length of time that you have for the mortgage to be paid and the house to be "free and clear". The term is the period for which your current payment obligations are valid. In other words, you may choose a five-year term and a 25 year amortization.
Should I wait for my mortgage to mature before renewing?
Lenders will often guarantee an interest rate to you as much as 120 days before your mortgage matures. Moreover, as long as you are not increasing your mortgage they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity rate, the new lender will usually adjust your interest rate lower as well.
Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always investigate the possibility of a lower interest rate with this lender or another lender. Contact iSask Mortgage Brokers to help you.
Who is iSask Mortgage Brokers?
The meaning of iSask is truly what we feel we want to represent in the Saskatoon mortgage market.
Independent Saskatchewan Mortgage Brokers. We want to promote ourselves as Independent (unbiased) Saskatchewan (local) Mortgage Brokers.
We want to show clients that we are more than a bank mortgage specialist with one product to offer, but mortgage brokers who can assess their exact needs without bias and get them the right mortgage at the right rate every time.
What is a home appraisal?
Appraisers are licensed by individual states and are held to strict ethical standards. Appraisers are the third party whose purpose is to give their opinion of the market value of a home. Ideally the appraiser should not be connected with anyone involved with the home transaction.
What is an appraiser?
Appraisers are licensed by individual states and are held to strict ethical standards. Appraisers are the third party whose purpose is to give their opinion of the market value of a home. Ideally the appraiser should not be connected with anyone involved with the home transaction.
What is a home inspection?
A home inspection is an overall analysis of the condition of the home at the time of inspection. This includes the different systems, such as plumbing, roofing, exterior, structural, electrical, the interior, heating/cooling, insulation and ventilation. The primary goal of a home inspector is to protect the buyers interests. It identifies and reports on the major deficiencies, unsafe or expensive problems that exist in the home. Once the inspection has been completed, the inspector communicates the findings through a written report. A home inspection costs approximately $300.
What does AMP mean?
AMP means Accredited Mortgage Professional. It is the only national designation for Canada's mortgage industry. Launched in 2004, the AMP designation was developed as part of CAAMP's ongoing commitment to increasing the level of professionalism in Canada's mortgage industry. Scott Tremblay, owner of iSask Mortgage Brokers has had an AMP designation since 2005.
http://caamp.org/info.php?pid=39
What does CAAMP mean?
CAAMP means Canadian Association of Accredited Mortgage Professionals. It was founded in 1994 formerly called CIMBL. CAAMP's objective is to ensure the Canadian mortgage industry evolves into full professional status supported by the highest standards of professional practice. All of the brokers at iSask Mortgage Brokers are members of CAAMP.
http://www.caamp.org/
What is the Saskatchewan Financial Commission?
Saskatchewan Financial Services Commission (SFSC) protects consumer and public interests and supports economic well-being through responsive financial marketplace regulation. SFSC enhances consumer protection through licensing, registration, audit, complaint handling and enforcement activities pursuant to various provincial statutes.
iSask Mortgage Brokers works closely with the SFSC to ensure we are upholding the highest level of compliance.
http://www.sfsc.gov.sk.ca/
Can my home be used as equity?
You can refinance your home up to 85% of your home's value. These funds can be used for a down payment on another home, or cabin, investments, schooling, home renovations, vacation, emergency funds, etc.
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