Ontario Mortgage FAQ
Frequently Asked Mortgage Questions
Q. When should I obtain a mortgage pre-approval for an Ontario mortgage?
A. You should obtain a mortgage pre-approval if you plan on buying in the near future in order to secure an interest rate guarantee from the lender. The interest rate can usually be held for 120 to 180 days. A pre-approved mortgage in Canada is based on the information you provide to us in your application and is subject to verification of conditions such as employment and down payment verification.
Q. Can I get a pre-approved mortgage before I find the home I want to purchase?
A. Yes. Our lenders offer pre approvals from 120 days to 180 days days. When it comes to new construction many lenders will extend that pre approval time to fit the construction schedule. Having a pre-approved mortgage will allow you to hold a great interest rate while you shop for or build a new home.
Q. How much can I qualify for?
A. Qualifying guidelines vary depending on the lenders criteria and products available. To find out exactly what you can qualify for, please submit your contact information.
Q. Can I use money gifted to me for a down payment?
A. Yes, most lenders will accept down payment that is gifted from a family member. A gift letter is usually required to be signed by the donor to confirm it is not a loan.
Q. What is the minimum down payment required to purchase a home in Ontario?
A. The minimum down payment is 5% to purchase a home in Ontario, subject to maximum price restrictions. In addition to the 5% you must be able to confirm that you can cover costs incurred to close your mortgage. These costs may include legal fees, appraisal fees, survey certificates etc. Subject to qualify, the 5% down payment can be borrowed with an additional default insurance premium added to the mortgage (an extra 0.15% if you are using a cash-back mortgage or borrowing the funds (from credit card, line of credit etc) as your down payment.
Q. If I have a declared bankruptcy can I still qualify for a mortgage?
A. Some lenders will consider your mortgage application depending on the circumstances surrounding your bankruptcy and your credit history since the bankruptcy has been discharged. The best way to determine if you can qualify for a mortgage after being discharged from bankruptcy is to call a mortgage consultant.
Q. What is required to obtain a first Ontario mortgage?
A. In most cases:
* Full time employment/proof of income
* Good credit rating
* Verifiable down payment
* Online Approval Application
Q. What can I use for a down payment?
A. In most cases:
* Registered Retirement Savings Plan (RRSP's may be used as a down payment up to a maximum amount of 20,000 and is not subject to income tax if repaid within a specific time period)
* Gift from immediate family
* Accumulated savings
* Sale of existing home
* Sweat equity
Q. What costs are involved in obtaining a mortgage?
A. Costs incurred are:
* Legal costs (usually between $600 - $1000)
* Insurance on the property and mortgage applicant
* In some cases an appraisal is requested
Q. How long does it take to complete a mortgage transaction?
A. If all information requested by the lender (i.e. Income verification, down payment verification and property details) are given to the broker in a timely matter than the transaction can be completed in as little as 2 weeks.
Q. What is CMHC or Genworth Insurance?
A. Canada Mortgage and Housing Corporation is a federally owned and operated institution that evaluates the client and property to allow the borrower to purchase a home with a lower down payment requirement. This corporation insures the mortgage on behalf of the bank, through a premium added to your mortgage. This way the banks are obligated to provide a mortgage for those with less than a 20% down payment.
Q. Why use a Mortgage Broker instead of a bank?
A. A Mortgage Broker works for you, not the lender. We have access to hundreds of mortgage products from many different lenders including banks, trust and financial companies. Discover more reasons why a Canada mortgage broker can save you thousands.
Q. What is the purpose of a mortgage broker?
A. Our only job is to find our clients the absolute best mortgage product to fit their needs. We specialize in mortgage lending and only deal with lenders who can compete against the local branches for better rates, terms and service.
Q. How can a mortgage broker get a better rate than my own bank?
A. The mortgage lenders that we use do not have local branches in each city or town, they have no large overhead and are in the business of lending money for mortgages only. This, combined with their large volumes, allows them to discount the rates far better than your own bank can provide.