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FAQs

What is the maximum you can borrow?

What is the maximum you can borrow?

In order to determine the largest mortgage amount you are eligible to be approved for, we evaluate your total taxable income and compare it to the monthly payments of any outstanding debts. When purchasing a new primary residence, 35%-39% of your gross monthly income can be put towards a mortgage payment, property taxes, and heating costs. Also, add in half the expected monthly strata maintenance fee if applicable. Second, the sum of all of your monthly debt payments, such as vehicle loans, credit cards, lines of credit (calculated at 3% of the total balance), including your anticipated new monthly housing expenses, must equal less than 40% of your total gross monthly income. (This is industry standard Canada-wide) Always keep in mind that your Preferred Qualification should take precedent over your maximum approval. It is important that your new mortgage amount fits comfortably within your budget. You probably don’t want to be house-poor.

Will I need to hire a Home Inspector?

Will I need to hire a Home Inspector?

Yes, most likely. A professional home inspection is your insight into the real condition of a property. An excellent home inspector will also recommend efficient solutions to any outstanding issues.

This visual inspection of the home’s major systems and components (such as the roof, attics, interior structure, walls, floors, plumbing fixtures, electrical, foundations, etc.) will be accompanied by a detailed report generally within 24 hours, hopefully providing you with substantial peace of mind. This inspection should be completed only after your mortgage financing is secure, so you are not out-of-pocket any fees until you know you’re completely eligible to purchase the home.

What is a conventional mortgage?

What is a conventional mortgage?

A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price; a loan to value of or less than 80%, and does not normally require mortgage loan insurance.

How does bankruptcy affect mortgage qualifications?

How does bankruptcy affect mortgage qualifications?

Depending on the circumstances surrounding your bankruptcy, generally, some lenders will consider providing mortgage financing.

How does spousal support affect mortgage qualifications?

How does spousal support affect mortgage qualifications?

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 will child support affect mortgage qualification?

How will child support affect 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.

Can I get a mortgage to purchase a home?

Can I get a mortgage to purchase a home?

Yes; subject to qualification. In fact, even purchasers with 5% down may qualify to buy a home and make improvements to it. For high-ratio financing, CMHC, Genworth and Canada Guarantee, insured mortgages are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or improvements that the purchaser may wish to make to the property. This option eliminates the need to finance the renovations or improvements separately. Some conditions apply. Where the improvements are cosmetic, the mortgage loan insurance premium is unchanged from the standard schedule. Where the improvements are deemed to be structural, the mortgage loan insurance premium is increased by 0.50% over the standard schedule. For information on mortgage loan insurance premiums see highratio home mortgage financing.

Can I use gift funds as a down payment?

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, Canada Mortgage and Housing Corporation requires the gift money to be in the purchaser’s possession before the application is sent in to them for approval.

What is a pre-approved mortgage?

What is a pre-approved mortgage?

A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like ‘written employment and income confirmation’ and ‘down payment from your own resources’, for example. Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range. In summary, a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.

Why a fixed rate versus a variable rate mortgage?

Why a fixed rate versus a variable rate mortgage?

The interest rate on a fixed-rate mortgage is set for a pre-determined term – usually between 6 months to 10 years. This offers the security of knowing what you will be paying for the term selected.

A mortgage in which payments are fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest. For example, Scotia’s open variable rate mortgages allow prepayment of any amount (with certain minimums) on any payment date.