Below is a list of frequently asked questions related to mortgages and the mortgage process.
If you have a question that is not on the list, please call or text me at 204-995-5722 or visit the contact page for more ways to get in touch.
Does A Mortgage broker Charge Fees?
A Mortgage Brokerage receives a finders fee from a Lender when a mortgage transaction is completed. The Mortgage Specialist then receives a portion of that fee. The finder's fee is a cost of doing business for the Lender and is not built into the home buyer's mortgage, therefore, there is no cost to the Home Buyer for the Mortgage Specialist's service.
There are certain circumstances where the Mortgage Broker may need to charge a fee for service. If there are unique circumstances such as bad credit, difficult-to-prove income, unique properties, etc., then the Mortgage Specialist may have to source a mortgage through alternative Lending sources. Those Lenders may not pay a finders fee so, therefore, the Mortgage Broker will need to charge a fee for their service directly to the home buyer.
If there is a need to charge a fee, the fee amount will be fully disclosed prior to any commitment being made by the home buyer. Nothing is ever hidden when working with a Professional Mortgage Specialist.
Are Mortgage Specialists Only For People With Bad Credit?
Because Mortgage Professionals have access to dozens of different Lenders and therefore, hundreds of different mortgage products, we are able to provide financing solutions for almost any situation and often with better rates and terms than the Major Banks and Credit Unions.
What Is The Difference Between A Mortgage Specialist And A Mortgage Broker?
A Mortgage Specialist (a.k.a. Mortgage Professional) is a person who is licensed by their local Securities Commission to arrange mortgage financing for their clients by reviewing offers from dozens of different Mortgage Lenders to find the absolute best mortgage product for their clients needs at the lowest possible interest rate. A Mortgage Professional works for the client and with the client's best interests at heart. I am a Mortgage Specialist.
A Mortgage Broker (Brokerage) is a group of Mortgage Specialists. Castle Mortgage Group is my Brokerage.
A Banker is the term I use to describe the person you get your mortgage from at the Bank or Credit Union. They work for the Bank or Credit Union and are not licensed by their local Securities Commission.
Here’s where things get confusing. Bank personnel who sell mortgages also refer to themselves as Mortgage Specialists although the role is very different from that of a Mortgage Specialist who is part of a Mortgage Brokerage.
How Can A Mortgage Specialist Get Me A Better Deal On My Mortgage Than I Can Get At My Bank Or Credit Union?
The quick answer is because of selection. A Mortgage Specialist has access to dozens of different Lenders who each offer dozens of different mortgage products. Your Bank or Credit Union can only offer their own, small handful of products.
Mortgage Specialists also have access to Lenders known as Monoline Lenders. These Lenders only lend out mortgage money and nothing else. Because of the way these companies are structured, they are able to lend out mortgages at lower rates and with better terms and conditions than most Banks and Credit Unions can offer. You can only access a mortgage with a Monoline Lender by using a licensed Mortgage Specialist.
If I Get My Mortgage Elsewhere, Do I Have To Change My Bank?
Absolutely not! No matter which Lender your Mortgage Specialist places your new mortgage with, you will not need to change any of your banking. You simply provide your Mortgage Specialist with a VOID cheque for the account you want your payment to come out of and your payments will magically come out of that account when it's supposed to.
What Kind Of Paperwork Is Needed For A Mortgage Approval?
The paperwork needed will be different for everybody.
The types of paperwork needed will depend on a number of things such as:
How you earn income
Where your down payment will be coming from
What your credit bureau shows
Whether you own any properties
What your marital status is
The amount of paperwork can seem tedious sometimes but you have to understand the Lender's side of the deal. Mortgage Lenders get audited on a regular basis. If any of the Lender's files don't have a full paper trail justifying why they decided to lend money to that person, they get in big trouble.
Also, there are a lot of dishonest people out there committing fraud which forces the Lenders and regulatory bodies to enforce stricter rules around mortgage lending. The bad people are making more work for the rest of us.
All the information needed for a mortgage approval must be proven on paper. Gone are the days where anyone can take someone's word for anything.
Please visit my Mortgage Documents page for more useful information on the documents commonly needed for an approval.
Why Didn't My Bank Need This Many Documents When I Got My Mortgage There Last Time?
Many of the documents that I, as your Mortgage Professional, will require are related to your bank/investment accounts and possibly some of your debts.
All Mortgage Lenders require basically the same information and documentation in order to approve a mortgage...but your Bank already has access to a lot of the information in their computer system, which is why they don't ask you for it.
What is a finance condition and why do I need to include one in my offer?
There are 2 parts to every mortgage approval; the buyer(s) and the property.
If you're fully pre-approved for a mortgage, then you can feel confident that you will be approved for a mortgage once you find the perfect home to purchase as long as the price is within your preapproval limit.
But being pre-approved doesn't mean that you can purchase absolutely any property you wish as long as it's within your price range. The Lender needs to approve of the property as well. They want to be sure that the property is worth the money you're offering to pay for it. They do this in case you decide not to make your mortgage payments and they have to turn around and sell this property. They want to make sure that they will be able to recover their investment.
Because there is a small chance that Lenders may not want to give you a mortgage on the property you want to buy, you need to include a finance condition on your offer.
The finance condition allows for a certain time period (usually about a week) for you to secure suitable financing. If you cannot do so within that time frame, you are able to back out of the deal and get your deposit back.
If you did not include a finance condition, and you were not able to secure financing, you would have to back out of the deal and forfeit your deposit.
If you've got a proper preapproval in place, it's rare that you'd have any issues, but it's good to have that finance condition as a safety net just in case.
if rates go lower than what i'm paying, can i switch my mortgage to get a better rate?
Some mortgages are known as "sale only" mortgages which means that the only way you can break your current mortgage contract and switch to a different lender is if you sell your home.
If your mortgage is not a "sale only" mortgage, then you might be able to move your mortgage to a different Lender to get a better interest rate...we'll have to crunch the numbers first though to see if it makes sense to do so.
When you break a mortgage contract with a Lender, unless you're in an open mortgage or your mortgage is actually a Home Equity Line of Credit, you'll have to pay a penalty. (See my mortgage penalties page for more info on that.)
So we'll need to figure out how much the penalty would be if you were to break the contract and then we'll have to calculate how much you'd save on the new mortgage at the lower interest rate to see if the savings outweigh the penalty.
We'll also need to figure out what, if any, costs will be involved in switching the mortgage and factor those costs into our calculation.
If the numbers make sense to switch Lenders, then you'll need to re-qualify for the new mortgage...but the savings will be well worth the little bit of paperwork!
what is bridge financing?
Bridge financing is a short term loan that allows a home buyer to access the equity in the home they are selling prior to the funds actually being available.
In Manitoba, it can take anywhere from a few days to a few weeks after the day you give up possession before you receive the money from the sale of your home. However, most people want to take possession of the new home they've purchased either the same day as they give up possession of their previous home...or even a little earlier than that.
If you are using the equity from the sale of your home for the down payment and closing costs on the purchase of your new home, and you're taking possession of the new home right around the same time as you are giving up possession of your former home, you'll need bridge financing (a.k.a. a bridge loan).
Most Lenders offer bridge financing but the terms of the bridge loans vary from Lender to Lender. Most Lenders charge a set up fee and then a daily interest rate. The fees and rates vary between Lenders.
You must have a bona fide sale on your previous home in order to qualify for bridge financing. A bona fide sale means that your house is sold and there are no outstanding conditions on the sale.
The bridge loan is registered against the home you're selling so that it must be paid out once the proceeds of the sale of the home are available. Your lawyer handles all of this stuff for you.
Bridge loans are only available if you are arranging financing on the new home. If the sale of your former home will provide you with enough money to purchase the new home outright, and therefore you will not be arranging a mortgage on it, bridge financing is not available. If this is your situation, I can help you find other forms of assistance.
Can I include the cost of renovations / improvements into my mortgage?
Yes you can!
The improvements must be something that adds value to the property such as new windows, kitchen, bathroom, roof, etc. It cannot be used to buy furnishings, appliances, or anything that isn't attached to the home.
The cost of the renovations/improvements will be added to the purchase price of the home to determine the final purchase price. This final purchase price must fall within your preapproval limit in order for you to get approved for the mortgage. So if you are preapproved to purchase a home for $300,000, then the purchase price of the home plus the cost of any improvements that you want to include cannot exceed $300,000.
Also note that the minimum down payment required for your purchase will be based on the property's purchase price PLUS the improvement costs.
How it works:
-Once your offer has been accepted, you'll need to supply me with a formal quote for the improvements that you want done and I will get the mortgage approved with the improvements included.
-You do not need to get the work done using the vendor that you got the quote from, but the final amount for the improvement cannot exceed the original quote otherwise you will have to pay the excess out of pocket.
-You can do the work yourself, but you will only be reimbursed for the cost of the supplies and not your labor.
-Once the work is complete, ideally you will pay the vendor yourself and submit the paid receipt to me which I will forward to the lender for reimbursement.
-If you don't have the means to pay the vendor, and the vendor is willing to wait a few days for payment once the job is complete, the unpaid invoice can be sent to me to start the reimbursement process.
-The Lender may choose to inspect the improvements to ensure that the work quoted was in fact the work done. There may be a small fee for this inspection ($100).
-Generally the Lender requires the improvements to be done within 120 days from possession day. They may be flexible if there are seasonal delays.
The Purchase Plus Improvements program is a great option to allow you to turn an average home into your perfect home!
What is the best type of mortgage?
The best type of mortgage is different for everyone.
In my opinion, the best mortgage is the one that saves you the most money possible and the mortgage that saves you the most money will depend on your needs, financial goals and your future plans for the property.
There are a lot of little details within a mortgage contract that can affect the overall cost of the mortgage over time. The lowest rate doesn't always save you the most money.
For example, if your goal is to pay off your mortgage as quickly as possible, then it's important that your mortgage has features to allow you to do that.
There might be a mortgage out there that has a lower rate than every other mortgage, but if it doesn't allow you to pay down the mortgage as quickly as you'd like, then it's not the best deal for you even though the interest rate is lower.
There are many examples like this that must be considered when searching for the "best mortgage."
My job as your Mortgage Specialist is to match you up with the best mortgage for your needs at the lowest rate possible!
How Long of a mortgage can i get in canada?
This question can mean two different things;
The length of the term or the overall length of the mortgage (a.k.a. amortization period)
The term is the period of time that the borrower is committed to that specific mortgage contract with that Lender. For example, if the mortgage is a 5 year fixed rate mortgage, that means that the borrower is committed to that Mortgage Lender for 5 years at a specific interest rate.
The amortization period refers to the total amount of time it will take to pay off the entire mortgage balance. If someone purchases a property in Canada with a down payment of less than 20% of the purchase price, the amortization can be as long as 25 years. If the down payment is greater than 20%, then the amortization period can be stretched out to 30 years (based on current regulations at the time of writing this).
The amortization is used to calculate mortgage payments. The longer the amortization period, the lower the mortgage payments will be.
More information on this can be found on my "All About Mortgages" page.
should i shop around for mortgage brokers?
All Mortgage Brokers/Specialists have access to similar types and amounts of lending options but not all provide their services the same way.
It's important that you work with a Mortgage Broker/Specialist that you feel comfortable with and that you feel is truly looking out for your best interests.
For most people, purchasing a home is the largest investment they will ever make. If you've read my home page then you know that there is a lot more to a great deal on a mortgage than just a low interest rate.
The Mortgage Specialist you work with should listen to your needs and work with you to find the best mortgage option.
The easiest way to "shop around" for a Mortgage Broker is to ask friends, family and your Realtor for recommendations.
You could also check online reviews. You can read my testimonials here.
If you start working with a Mortgage Specialist and don't feel comfortable continuing, just tell them that you'd feel more comfortable working with someone else. Mortgage financing is a serious topic so you should feel comfortable with the person you're getting advice from.
how do property tax adjustments work?
Property taxes are a part of home ownership.
As soon as you take ownership of a property, the property taxes on that property become your responsibility.
Property taxes can be paid in a number of different ways;
They can be paid in a lump sum annually.
They can be paid monthly by automatic withdrawal from your bank account (known as the TIPP program) if your City or Municipality offers such a program.
Or, the Lender you have your mortgage with may offer (and sometimes insist) on collecting an amount for property taxes along with your mortgage payment and paying the property taxes on your behalf.
Property tax payments can be a little confusing when you first take possession of a new property depending on how you'll be making your payments going forward.
Here's a scenario to help explain what I'm referring to:
Let's say you're buying a property in the City of Winnipeg and you're taking possession of your new property on September 1st. Property taxes are due June 30th if you're paying by annual lump sum payments. So if you pay the full amount by June 30th, that means that you have paid the full property tax amount for that current calendar year...Jan-Dec.
If you're planning on (and your Lender allows) paying the property taxes annually as a lump sum then you will have to pay 4 months worth of property taxes (Sept through Dec) to your lawyer as part of the closing costs when you complete your purchase. If the previous owner of the property had paid the full year's worth of taxes already, then your lawyer will forward the amount you paid on to the previous owner's lawyer to reimburse them for the months that they had already paid but will no longer be in possession of the house. If the previous owner had not paid the full year's amount, then your lawyer will pay the money directly to the City.
If you're planning on (and your Lender allows) going on the TIPP program, then your lawyer will enroll you in the program and the City will automatically withdraw funds from your bank account each month. If the previous owner of the property had paid the full year's property tax amount already, you will need to reimburse them for the 4 months that you will own the property and this money will be collected as part of your closing costs. The automatic withdrawals from the TIPP program will then begin in January of the following year. If the previous owner had not already paid the full year's worth of property taxes, then the withdrawals from the TIPP program will start immediately.
If your Lender is insisting on collecting property taxes from you and then paying the property taxes to the City on your behalf, then this process can be a little confusing...
Lenders pay the City as an annual lump sum payment on June 30th. Therefore, they need to collect enough funds from you between the time you take possession (Sept 1st in our example) and June 30th of the following year. To do this they will divide the annual property tax amount by 10 (Sept -Jun) and collect that amount from you in order to ensure they have enough funds to pay the full annual amount come June 30th. Then starting July of the following year, the amount your Lender collects each month will be reduced as they now have the full 12 months to collect all the funds...so the annual amount will be split among 12 payments.
Here's where this method gets a little more confusing:
Once you take possession, your Lender will immediately start collecting property taxes from you in order to accumulate the necessary funds for the following year...but...because you are taking possession of the property September 1st, you are still responsible for the property taxes from Sept through Dec of the current year.
If the previous owner had already paid the full year's property tax amount, the you will need to pay a lump sum to your lawyer as part of the closing costs in order to reimburse them.
If the previous owner hasn't paid the full year's tax amount, then the remaining amount will either be collected as a lump sum amount as part of your closing costs or you may be able to sign up on the TIPP program just for the remainder of the calendar year in order to pay the remaining property tax amount for the 4 remaining months (Sept through Dec).
If you sign up for the TIPP program, you will essentially be making 2 property tax payments per month until the end of that calendar year...one to the Lender to accrue the funds for the following year's property taxes and then another payment through the TIPP program to pay the remaining taxes for the current year.