FAQ’s – Frequently Asked Mortgage Questions

Yes, however we reimburse the appraisal cost after closing.

Yes and no, it depends on several factors such as: Credit score, down payment, property type and how many properties you already own. Big or small financial institution shouldn’t matter, it’s the pre-payment privileges and penalties that matter. We strive to look for the best possible deal for you regardless of lender as we know it’s not an important factor when saving money, which is everyone’s bottomline. With every quote, we will give you 2-3 options to pick from based on your requirements, so you don’t have to pick the smaller financial institution if you don’t want to.

Banks: Firstly, banks are a type of financial institution. They perform a specific function of:

a. Accepting Deposits: of individuals, non-individuals (partnerships, companies, trusts etc.). They pay an interest on your deposits.

b. Lending: They give loans and other credit facilities to individuals & non-individuals for their business/personal requirements.

Financial Institution: There are several types of financial institutions. They are:

a. Banks (Retail & Wholesale)

b. Non-Banking Financial Companies (NBFCs)

c. Insurance companies

d. Pension funds

e. Others

This depends on the type of mortgage you have. If you have a Variable Rate Mortgage your penalty will be 3 months interest. If you have a Fixed Rate Mortgage you will be charged the Interest Rate Differential often referred to as IRD. The bank will charge you a penalty in the amount of interest for the life of the loan you are breaking. A general rule of thumb is fixed mortgage always have a higher penalty than variable mortgages.

Most lenders have a 20/20 pre payment privilege, this means you can pay up to 20% of your mortgage balance and have it applied directly to your principle. Also, you can increase your mortgage payments by 20% each year to pay off your mortgage faster.

If you plan on selling the home within your 5 year term, yes absolutely variable is better than fixed. However, if you plan on not breaking and do not want to worry about rates increasing, fixed is your best option!

Yes, Variable rate mortgage whether broken in year 1 or year 5 the penalty will be the same. Whereas fixed rate penalty’s will always be heavier due to being charged interest rate differential.

Absolutely, there are hundreds of Mortgage Lenders that solely provide mortgages and have much less advertising then the 5 big banks. Therefore, there cost of savings are directly projected onto the borrower: you!

A mortgage broker is an individual that successfully provides all mortgage needs to their client whether it be renewal, refinance, purchase and transfers! A mortgage broke is the negotiater between the borrower and the lender.

A mortgage broker is usually compensated by the lender and their service is pro-bono. Trickier files often come along with a charge from the broker as much more time and attention to detail is required to secure you the best rate!

Brokers are often compensated by the lender so $0.00 is your cost. However if the file needs special attention a 1% fee is charged on the mortgage amount.

The current prime rate is 2.7%

1 year through to 10 year terms!

View our rates here.

Ideally 1-2 business days.

There are two major companies who hold your credit reports are Equifax and TransUnion.

Credit scores range from 300-900 (you need at least a 680 to qualify for mortgage “A-Lending” as these are CMHC and Genworth’s criteria).

Payment History is worth 35% of your total score. Be sure to make payments on time, the longer past due, the lower the score. Frequency is also a factor, the number of times you are late. This also applies to bankruptcies, liens, mortgages, and judgments.

Amounts Owed is worth 30% of your score. Are you maxed out on all your credit cards? If you don’t want to have this affecting you then be sure to use only 75% of your credit limit. If your limit is $5000 don’t use more than $3750 or it will affect your mortgage credit score.

Length of Credit History is worth 15% of your score. How long have you had your loan/credit card for? Have you been using your credit cards recently prior to getting a mortgage?

New Credit is worth 10% of your score. Make sure you do not apply for credit too often. Newly activated accounts may lower your score. Also, make sure you do NOT have your credit checked too many times when applying for a mortgage. This will lower your score. They want to make sure you are not living beyond your means.

Types of Credit you use are worth 10% of your score. Watch out if you have several credit cards with high limits. This could mean that at anytime you can max these out and have a financial hardship because unlike installment loans, you do not need re-approval to reach the maximum limit. NOTE: If you are the person who likes paying with cash, make sure you use your credit card at least once a month to boost your credit score to get the ideal mortgage rate.

We can still help and give advice on how to repair the bruised credit.

We deal with all credit scores!

You can come into sign your approval or we can email it out to you if you don’t reside in the GTA.

That’s OK! We can still guarantee financing.

Non Canadian Residence – 50%
New to Canada – 35%
Salaried/Hourly – 5-20%
Self Employed – 20%

Gross Debt Servicing where your income and monthly liabilities are calculated. Most lender thresholds allow a maximum of 39% GDS.

Total Debt Servicing where the new subject property is included in your liabilities. Most lender thresholds allow a maximum of 44% TDS.

The main difference between all 4 types of lending is interest rates and fee’s. A lending provides the best rate and fee’s and as you trickle down the line to Alt-A, B and Private lending rate’s and fee’s increase.

Accelerated bi-weekly payments are when there are 26 payments made per year rather than the standard 24.

When making 26 bi-weekly payments in one year, an extra monthly payment is made which in turn reduces your principle and shortens your amortization.

This effect can save you thousands in interest and take years off of your mortgage.

Note: Scotia Bank is the only lender that labels their Accelerated Bi-Weekly payments as regular bi-weekly payments, they do not offer a traditional bi-weekly option.

The accelerated weekly payment is calculated by dividing your monthly payment by four. You then make 52 weekly payments.

For example let’s say your mortgage balance is $50,000. $50,000/52 *weekly* payments = $961.54

Let’s use the same mortgage balance of $50,000. $50,000/12 *monthly* payments = $4,166.67/4 *for accelerated weekly payments* = $1,041.67.

Therefore you are paying an extra $80.13 a week ($4,166.84 more a year) which will shave down that amortization and principle.