Welcome to our FAQ page! Here, we hope to answer some of the most common questions soon-to-be homeowners have for our mortgage specialists. While it’d be impossible to hit on every point, we do welcome your calls to have your specific questions answered. Have a question? Call us, today!
Can a non-resident qualify for a mortgage?
Yes, as a non-resident you are able to qualify for a mortgage. The maximum loan-to-value ratio is typically limited to 65%, but can go as high as 75% in special cases. A credit report from your country of origin, proof of income and down payment is also required to complete the non-resident mortgage application.
I’m retired with a pension income. Can I qualify for a mortgage?
Of course you can. Canadian financial institutions are not allowed to discriminate based on age. As such, you are entitled to the same mortgage term and qualification guidelines as non-retired persons. Furthermore, Canadian pension income qualifies the same as any other type of income.
Should I wait for my mortgage to mature before applying?
No, have Mortgage Alliance Front Gate Mortgages, Mortgage Brokerage begin shopping around for an interest rate at least 90 days before your mortgage matures. Lenders will often guarantee an interest rate for you as much as 120 days before your Canadian mortgage matures. Most lenders will cover or offset a majority of the costs of transferring your mortgage. This means a rate promised well in advance of your maturity date can eliminate your worries of higher rates. And, if rates drop before the actual 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.
Will child support or alimony affect my mortgage qualification?
Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for.
Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.
How does bankruptcy affect my ability to qualify for a mortgage?
Depending on the circumstances surrounding your bankruptcy, generally some Canadian lenders would consider providing mortgage financing. If you have a previously discharged bankruptcy, the best way to determine whether or not you qualify at this time is to fill out an application and have one of our professionals discuss your situation. Mortgage Alliance Front Gate Mortgages, Mortgage Brokerage has many lenders to approach based on your circumstances.
Can I use gift funds as a down payment?
Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. Where the mortgage requires mortgage loan Insurance, the gift money is required to be in the purchaser’s possession before the completion of the mortgage.
What documentation is required to confirm my down payment?
For funds derived from a bank account, lenders require a bank statement confirming the down payment. For funds derived from RRSP, GIC or stock portfolios, the most recent statement is required. For funds derived from the sale of property, a fully executed binding sale agreement is required.
What if my credit history is not the best?
While you may not be given immediate mortgage approval, Mortgage Alliance Front Gate Mortgages has access to many lenders and products which will probably work. The terms and interest rates will depend on the severity of your credit situation.
Can I qualify for a mortgage if I am unable to confirm my income?
There are a number of products available for applicants who, for whatever reason, have a solid down payment but are unable to provide standard income verification. Another normal requirement is that the applicant should have good credit. The amount of the mortgage advance will typically be 65% of the total property value, but mortgages of up to 75% of the total can also be arranged.
Can I get a mortgage to renovate my property or pay off credit cards?
Yes you can. Canadian mortgages can be obtained for a variety of purposes including home purchases, home renovations, or refinancing to pay off other high-interest debts. This is often a great way to increase your principal payments and reduce your interest payments.
What is the difference between floating rate and fixed rate mortgages?
Variable, or “floating rate,” mortgages provide that the interest rate will change on a periodic basis during the term of the loan according to a pre-determined formula. This formula is typically based on the prime-lending rate set by the Bank of Canada.
Fixed rate mortgages provide that the interest rate will not change throughout the term of the mortgage, but is set at a fixed rate at the beginning of the term.
What is the benefit of getting pre-approved?
A pre-approved mortgage is just like applying for a mortgage when you buy a home, but it is done ahead of time. Mortgage Alliance Front Gate Mortgages, Mortgage Brokerage will take all the information it requires from you to determine how much you can comfortably afford to pay each month and what price range of home you can look at purchasing. With a pre-approved mortgage you can shop with confidence, knowing that the biggest hurdle in home buying has been seen to ahead of time. Generally speaking, pre-approval terms and conditions are guaranteed by the financial institution for up to 120 days, giving you the protection of “locking in” a certain mortgage rate should rates climb higher while you look for a home to purchase. If interest rates go down, the banks will generally give you the lower rate.
What is a high ratio mortgage?
A high ratio mortgage is a mortgage which is greater than 80% of the purchase price or appraisal, whichever is less. High ratio mortgages require mortgage loan insurance provided by either Canada Mortgage and Housing Corporation (CMHC) or Genworth®, a private Insurer. Mortgage loan insurance protects the lender against loss. Mortgage Loan Insurance premiums range from .50% to 3.15% of the mortgage amount and are calculated based on the overall loan-to-value ratio.
For instance, borrowers with a 5% down payment and a loan-to-value ratio of 95% would pay a premium of 2.75%, while those with a 20% down payment and a loan-to-value ratio of 80% would pay an insurance premium of 1%, based upon an amortization rate of 25 years.*
What is a conventional mortgage?
A conventional mortgage is considered to be a mortgage where the down payment is equal to 20% or more of the purchase price. It is a mortgage that generally does not require mortgage loan insurance.
*Note: This rate would increase should you have a greater amortization. Mortgage loan insurance should not be confused with mortgage life insurance.