Frequently Asked Questions
- Bridge Financing
A loan required by a builder so as to obtain funds during the period between
a permanent commitment and a construction loan.The lender will usually require
a permanent mortgage commitment to the full amount of the construction loan
plus a hold back provision that states that only the floor amount will be
funded at the completion of construction.
- Why use a mortgage broker?
YOUR lending institution will only advise you on their own product. You
could visit every institution out there, one by one if you had time......
Or, you can talk to talk to a mortgage broker who will shop for the best
mortgage for you from all available lenders including many you would not
usually think
of on your own.
- How do Brokers get better deals than many Banks?
The lenders who work with mortgage brokers include traditional sources,
such as chartered banks, trust companies, as well as corporate and private
pension
funds. In addition to these sources, brokers often develop professional
relationships with private sources of funds, termed private lenders.
These lenders can
provide many various mortgage products not available at conventional sources.
- Are there fees for your services?
There are no fees on conventional mortgages as we receive payment for placing the
mortgage from the financial institutionsm, however, in some circumstances
lender/broker
fees
may apply.
- How does a mortgage broker get paid?
MOST Financial Institutions pay a referral fee to the Broker for doing
all the legwork and credit research for them (the job of a loans officer).
Since
this service is valuable, a commission is paid by the lending institution
to the mortgage broker. In some rare circumstances, a client's financial
requirements, credit, or job situation
is more complicated
and in these cases fees payable
to the Mortgage Broker and/or the Lender may be charged.
- What is required to obtain a first Mortgage?
In order to get the best rate, terms and conditions, you'll need to provide
us with:
- Employment verification with proof of income
- A good credit rating
- Verification of source of down payment
- An online application
- Can I use gift money as a down payment?
Yes, most lenders will accept down payment funds that are a gift from family.
A gift letter signed by the donor is usually required to confirm that the
funds are a true gift and not a loan.
- Should I wait for my mortgage to mature?
No. You should contact us up to 120 days before your mortgage matures so
I can secure you the best rate available at that time. Doing this will
protect
you from any increases before your renewal date. You will also benefit
from decreases should they occur. Most lenders send out their mortgage
renewal
notices only a month prior to renewal, offering existing clients their
posted interest rates. The rate you are offered is usually not the best.
We will
investigate all of your options and find the solution that best suits your
needs.
- Should I go with a Fixed Rate or Variable Rate?
That's a difficult question......here are the differences:
- Fixed Rate Mortgage
The mortgage rate stays the same for the whole term and the mortgage payments
are consistent during the term of the mortgage.
- Variable Rate Mortgage
The mortgage rate varies with fluctuations in the bank prime rate.
As a result, mortgage payments may vary during the term of the mortgage.
A minimum term
commitment is often required (usually 3 years). You may have the option
to "lock-in" the
mortgage at a fixed rate during the term.
- What's the difference between a Closed Term and an Open Term?
- Closed Term Mortgage
The mortgage contract is typically written for terms of 1 to 10 years. Penalties
may be triggered if the borrower wishes to end the contract before the term
expires (early repayment).
- Open Term Mortgage
The mortgage contract is written for a short term (usually 6 months
or 1 year). No penalties are triggered if the borrower wishes to
end the
contract before
the term expires.
- Should I take a short term or a long term mortgage?
The options for mortgages available can be very confusing for most mortgage
shoppers. Terms for mortgages vary between variable and fixed rate, 6 month
terms to 10 year terms. Savings can be had by taking a variable or floating
rate mortgage. Typically the shorter the term or guarantee of the rate,
the lower the rate will be. The up side of variable rate is the strong
potential
for interest rate savings. The down side is the fact that you are accepting
the interest rate risk without a guarantee. If you are considering a variable
rate mortgage you need to look at your own risk tolerance, and your cash
flow available to deal with potential increased payment. Considering projections
of rates and where we see interest rates heading can also be important
in this decision.
- Cashbacks and gimmicks, do they save me money?
Be very careful! Some of the gimmicks used to entice you to take a mortgage
at an institution may seem very appealing but the long term effect
could be costly. A 3% cash back may seem great on closing, but a 1% discount
in your rate may save you considerable more over the 5 years. It
is important
to look at the numbers. We have the software available on our system
to compare
your options. Give us a call to do the math.
