Questions on Mortgages
The following list contains some of the typical questions that clients ask Gloria.
Take a quick look and see if any of the questions with answers relate to your situation.
Remember that Gloria ensures you have the right financial solution to meet your goals!
What will my mortgage cost per month?
What types of Mortgages are available?
What are the terms of the Mortgages?
How does self employment affect my mortgage application?
Is the lowest rate the best mortgage for me?
Which mortgage is best for me?
How does the purchase of revenue property affect my mortgage application?
I want to purchase a vacation property, will you provide me with a mortgage?
Questions with detailed answers from Gloria
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Conventional -- "Low Ratio" -- Loan amounts which do not exceed 80% of the lesser of the appraised value or the purchase price of the property.
National Housing Act (NHA) -- Loan amounts of up to 95% of the value are normally available. Mortgages are insured by Canada Mortgage and Housing Corporation CMHC (Federal Government Corporation) or Genworth Financial (private insurer) or Canada Guaranty.
Conventional -- "Insured" -- Loan amounts of up to 95% are available. Mortgages are insured under special circumstance by CMHC, Genworth Financial or Canada Guaranty.
First Mortgages are available with a fixed rate of interest for various terms, ranging from 6 months to 10 years, with payments amortized over periods of up to 40 years.
Fixed rate Mortgages can be "closed" or "open". The "open" mortgage allows you to prepay some or all of your outstanding mortgage balance at any time without penalty. These "open" Mortgages are available for either a 6 month or 1 year term and generally have a slightly higher rate of interest than "closed" Mortgages for an equivalent term.
"Closed" Mortgages are available in a wide range of terms, from 6 months to 10 years. These "closed" Mortgages cannot be prepaid in full prior to maturity without being subject to an interest penalty. Certain prepayments, as provided for in the Lenders Mortgage Terms, can, however, be made. Allowable prepayments without penalty range from 10% to 30% of the original mortgage amount per year.
Self-employed individuals have the ability to write off their expenses, such as "office in the home" and depreciation. The net income figure can be low, making qualifying for a mortgage and other credit more difficult. In fact while the face of the working population has changed, lenders, for the most part, have remained steadfast in their approach to underwriting credit risks.
There are lenders, who have made the move to understanding that income should not be the single most important qualifying factor when determining credit risk. As Mortgage Brokers we have access to lenders who lend up to 75% of the value of a home without being about income. Typically, with interest rates at Bank Posted rates. At 65% of the value of a property discounted bank rates can apply. Now you can be an Entrepreneur and a Good Credit Risk at the same time.
The lowest rate usually has the strictest mortgage terms, which for some people can be unrealistic terms. Gloria finds that balance between the terms and rate for your best financial solution.
Nowadays, there are many mortgages to choose from, that's why you need a professional like Gloria sorting though the various alternatives on your behalf. Your needs are balanced against products offered for the Best mortgage that meets your individual needs. IE; long term goal, short term goal, use, prepayment requirements and future flexibility.
Lenders differ greatly on how they view revenue property. The underlying concern is that if times get rough, the mortgage on a revenue property is the first thing allowed to slide. CMHC uses a very restrictive formula when assessing a revenue property purchase. There are lenders who use this same formula. Fortunately there are other lenders who take a more favorable look at qualifying this type of purchase by using "the offset method." This method takes a portion of the potential revenue from the property and deducts it directly from the new mortgage payment, leaving the borrower to qualify for any shortfall. Again, lenders vary on how much of the property revenue they will use.
This type of purchase might leave a potential borrower feeling lonely. Most lenders are leery because in financially difficult times, the borrower may not make payments on this secondary property. Typically a lender will require 35% down payment on this type of purchase.