Frequently Asked Questions (FAQs)
1. Why Use A Mortgage Broker?
- Choice – A Mortgage Broker works for YOU, not the lender, and provides you with a choice of lenders, rates and products. Choosing the wrong mortgage can end up costing you thousands of extra dollars in penalties, fees and rate. Let us do the work and find you the best product for your specific situation.
- Expertise – Mortgage Brokers are focused on mortgages – not on trying to sell you 15 other different banking products. Our focus is on researching almost 30 lenders’ products, special offers, and fine print so that we can ensure you get a mortgage that you understand, with no hidden fees or shocking penalties.
- Relationship – We are relationship-focused, not transactional. Our brokers have been with The Mortgage Professionals an average of 10 years! That means that when you call us / text us / email us YOUR broker is available to answer your questions, not a 1-800 number and not someone who has never met you. Many of our clients have dealt with us for more than 20 years.
- Looking beyond the mortgage – are you looking to buy a future investment property? Do you have children approaching university? Want to finish your basement as a rental suite? Going back to school? Mortgage brokers tailor your mortgage to your long-term and short-term financial goals, taking into account mortgage products that maximize your financial savings and flexibility.
At The Mortgage Professionals, our goal is to provide you with options and advice to save you the most money on your mortgage – this is how our reputation as Kingston’s top mortgage brokerage has been built.
2. Why Should I Choose The Mortgage Professionals?
The Mortgage Professionals are not only Eastern Ontario’s largest mortgage brokerage but also Kingston’s oldest locally-owned independent mortgage brokerage, with more than 30 staff across 3 offices. The Mortgage Professionals have been recognized multiple times as a top brokerage in the country, nationally as Mortgage Brokerage of the Year (Canadian Mortgage Awards) and locally as Kingston’s Best Mortgage Brokerage (Kingston This Week). We have helped Canadians with over $1bn in mortgages, effectively saving our clients millions in interest, penalties and fees. Many of our agents have won national and local awards.We love living and working in Kingston and supporting the local community. We have participated in the Breast Cancer Action Walk in Kingston for almost 25 years, raising more than $75,000 for the cause. We are the title sponsor of the Down Syndrome Association of Kingston’s annual golf tournament and help them raise more than $10,000 per year to fund their amazing programs. We continue to participate annually in events such as Pitch-In Kingston, the Santa Claus Parade and are continually looking for community events to support.
3. Is there a fee to use The Mortgage Professionals’ services?
When you work with The Mortgage Professionals, our services are completely FREE for the vast majority of homeowners. Situations, where a broker fee may be warranted, include Private Mortgages, Commercial Mortgages, Small Loans / Second Mortgages or Significantly Distressed Credit.
4. What costs are involved in obtaining a mortgage?
Costs depend on whether or not you are purchasing, refinancing (increasing your mortgage) or switching (transferring your mortgage from one lender to another with no increase in mortgage amount). With a switch, the majority of your costs will likely be covered. With a purchase or refinance, you are likely to experience the following costs:
- Legal costs (Typically between $800 – $1,500)
- Taxes (e.g. Land Transfer Tax or HST on the CMHC insurance premium)
- Appraisal if requested (at times this may be covered by the lender)
- Title Insurance (Title insurance is an insurance policy that protects you against challenges to the ownership of your home or from problems related to the title to your home.)
Request one of our homeowners guides here for a more detailed outline of costs.
5. What is the minimum down payment required to purchase a home?
A minimum down payment of 5% is needed to purchase a home. In addition to the down-payment, you should also be able to show that you have closing costs of 1.5% of the purchase price. The closing costs are to cover legal fees and disbursements, appraisal fees and land transfer taxes, where applicable. Any Mortgage that has less than 20% downpayment must have mortgage loan insurance from either CMHC, Canada Guaranty or Genworth.
6. What can I use for a downpayment?
In a purchase, borrowers must prove they have funds for down-payment. Some lenders also require proof of funds for closing costs (1.5% of the purchase price). Source of funds can be:
- Accumulated savings
- Existing equity from a house they are selling
- Gift from an immediate family member
- Registered Retirement Savings Plan (first-time homebuyers may ‘borrow’ RRSP’s for downpayment up to a maximum of 25,000)
- Borrowed down payment – in limited cases, you may be able to borrow funds for downpayment. Speak to one of our agents to find out more.
7. When should I get a mortgage pre-approval?
Mortgage pre-approvals are critical if you are planning on buying a home in the next 4-6 months – not only will it give you an idea of what you can qualify for, but your Mortgage Professional will also review your full situation to ensure you can shop with confidence that there will be no hiccups in your purchase. A pre-approval is based on the information you provide in your application such as employment, credit and down payment verification. Your Mortgage Professional can lock-in a rate for you up to 4 months before your purchase to protect you in the situation where interest rates are rising.
8. If I have had a bankruptcy can I still get a mortgage?
Most lenders want to see a clean credit history two years after the bankruptcy has been discharged. The best way to determine if you could qualify for a mortgage post-bankruptcy is to call a Mortgage Professional as early as you can. We can guide you to what you need to do over time to requalify for a mortgage. Some lenders may consider your application earlier than 2 years depending on the conditions of your bankruptcy and your credit history after the bankruptcy was discharged.
9. How early can I lock-in a rate before my mortgage renews?
Lenders will often lock-in an interest rate for you as much as 120 days prior to your mortgage maturing. If you are not increasing the mortgage amount, many lenders will cover the costs of transferring your mortgage as well. This will allow you to secure a competitive rate well in advance of your maturity date, giving you peace of mind without any worries of higher rates. If the rates drop before the actual closing date, the new lender will usually adjust to the lower rate. When your mortgage lender sends you a renewal notice, check with your Mortgage Professional – they can tell you if the rate is competitive versus current market rates.
10. How can you pay off your mortgage sooner?
There are ways you can pay your loan off much sooner. Taking advantage of pre-payment privileges can greatly reduce your mortgage principal as well and take years off your mortgage. You’ll enjoy significant savings by:
- Selecting a non-monthly or accelerated payment schedule
- Increasing your payment frequency schedule
- Making principal prepayments
- Doubling-Up Payments
- Choosing a shorter amortization at renewal
11. What is a fixed rate mortgage?
A fixed rate mortgage is a product that has a set rate that will not change for a pre-determined term. The terms typically range from 6 months to 10 years. This offers you the peace of mind knowing what you will be paying for the term you selected.
12. What is a variable rate mortgage?
A mortgage in which the rate and payment could fluctuate from month to month, depending on Bank of Canada Prime Rate. If prime goes up, so does your payment. It can be a bit riskier than a fixed rate mortgage, but in certain situations variable rate mortgages can also save clients a lot of money.
13. How long does the mortgage approval process normally take?
In our initial meeting with you, we will request you provide as much documentation upfront as possible. This is to save you time so that when we submit your mortgage approval we can get a response as quickly as possible. Depending on the lender and your situation, we may be able to get an approval within 24 hours. However, in times of higher market demand, it can take up to 48-72 hours. Keep in mind that the longer it takes to collect all the required documentation, the longer your fully reviewed approval will take us to secure. Talk to a Mortgage Professional who can help you determine what documentation you will require starting the mortgage process.
14. Is an appraisal necessary?
Depending on the type of property you are purchasing, some purchases and refinances may require an appraisal. This can be more common if it is a private purchase or if your property is unique (e.g. island property or log home) or if you are doing a refinance. In certain circumstances the cost of the appraisal may be covered – speak to your Mortgage Professional to find out more.
15. Does paying bi-weekly actually save me money or shorten my amortization time?
If you pay accelerated biweekly, then yes it does! When you set up a monthly payment schedule, you will make 12 regular mortgage payments within a year. When you make accelerated bi-weekly payments, you make 26 payments of half the monthly mortgage amount, which amounts to 13 ‘monthly’ mortgage payments annually. To give you an example:
- Monthly mortgage payment = $1,000
- Total annual mortgage payments = $12000 ($1,000 x 12)
- Accelerated Biweekly payment = $500 ($1,000 / 2)
- Total annual mortgage payments = $13,000 ($500 x 26)
In this scenario you would have saved yourself almost 3 years of mortgage payments, reducing your amortization from 25 years to 22 years.
16. Can I transfer my mortgage if I buy another home?
The majority of our mortgage lenders have portable mortgage options – however, this is another good reason to use a mortgage broker – we will ensure that we explain all terms and conditions clearly to you. In most cases, you will not have to pay additional fees as long the period of possession between your old and new home is within 60 days or less.
17. Is it important to ensure my mortgage with life insurance and disability insurance?
While it’s always a good idea to have extra protection to cover yourself in the event of an emergency, we can appreciate the cost can be a factor. It is best to speak with a professional life insurance consultant who can properly assess and advise you on the appropriate amount of coverage you will require for given your age, family profile and lifestyle. It is also very important to have a current last will and testament.