Mortgage

Purchase of real estate is a very important step in any person’s life. In most cases, when buying real estate you will require assistance of four specialists. They are:

realtor – expert in purchasing and selling of real estate;
mortgage specialist – expert in credit registration;
lawyer – expert in drawing up the process of dwelling transfer;
insurance broker – expert in the sphere of insurance.

Realtor’s obligations are probably known to majority of us: full and all-around consultation during the real estate purchase, analysis of the market area, your possibilities, protection of your interests. Sometimes people do without the assistance of the realtor (purchase of new dwelling), however, I think even in this situation one can use the help of an expert, since at the purchase of the real estate we do not pay for the realtor services.

Going through the process without the help of other specialist is much more problematic.

You need a mortgage specialist when you request a mortgage to purchase real estate. The lawyer will satisfy all conditions of the bank that is lending the credit for the purchase of dwelling, thoroughly check correctness of filled out documents and validate the purchase. Insurance broker can save you money by acquiring mortgage insurance not from the bank, but from insurance company (to find out why it is advantageous for a family, please read in the section “Mortgage Insurance” located on your left.)

Since I have both, insurance and mortgage license, by contacting our office you will receive professional support on questions regarding registration of loans – mortgage, as well as the right decisions on mortgage insurance, whether through bank or insurance company.

Working with families, we most often begin with analysis of current financial situation (down payment, yearly income, etc.), possibility of acquiring a mortgage at existing income and explanation of various possibilities of obtaining mortgage. Besides that, we will make sure to figure out monthly payments on fixed and variable/adjustable rate mortgage, various down payments, discuss which variants are most beneficial at the present time, talk about concept of closing cost, discuss which amortization period is most favourable at the moment and, of course, talk about two possible ways of acquiring mortgage insurance – mandatory (if the payment is less than 20%) and not mandatory, but which will be offered to you at the moment of signing the contract.

I want to explain why it is advantageous to consult a mortgage specialist, rather than try to find the best offer yourself. One of the important elements in the process of purchasing real estate is bank’s analysis of borrower’s credit status. Banks very thoroughly study credit history of the person who is requesting the mortgage. You can read about credit history in more detail in the section “Credit history”. The main indicator of your solvency is the “score”. The higher the score, the better your credit history, the more banks trust you. Let’s say, you want to purchase a property and decided to go to your bank. In the bank they will tell you how good you are and will offer specific discount from the posted rate. You have accounts in different banks and a natural thought arises – why not go to another bank with the mortgage. And, finally, you decide to go across the road to an alien (one you are not registered with) bank. They, too, will accept you with open arms. However, the score of your credit history during these journeys will inevitably go down. Sometimes this can negatively affect your ability to acquire mortgage. The work of the mortgage specialist will eliminate unnecessary checks of your credit history. We will check your credit history once and the overwhelming majority of banks and insurance companies will accept this information from us. Your score will not go down. Besides that, in majority of cases we have the opportunity to pick out for you the best rates, because we work simultaneously with large number of financial institutions – those same banks and trust companies.

Moreover, we will help you understand in detail such concepts as: conventional and high ratio mortgage, closed and open mortgage, fixed and variable rate, we will also explain why today, variable rate is the most popular option. Mortgage at a variable rate depends on the economy and can change in the future. Size of the interest is worked out through a formula and depends on the Prime Rate. This formula is in turn worked out at the moment of signing the contract and equals Prime plus some amount, for example 0.6 or 0.7%. Many still enjoy fixed formula equated to Prime minus 0.75%. Unfortunately, this is not available any more – Prime plus is how the mortgage is done nowadays. To find out the best formula for variable rate as of today, you can call our office. You can always transfer at any moment from variable rate to fixed rate; you will not be penalized for this transfer as long as you stay with the same bank.

We can also help get a pre-approval on a mortgage. To find out why this might be beneficial, look in the section “The Process of Receiving a Mortgage”.

Even prior to your contact with the mortgage specialist, you have the opportunity to check the mortgage amount that the bank will likely approve and the kind of payments you will be required to pay in connection to this mortgage. For simplicity you can use a specially designed calculator – Mortgage Qualifier, with the help of which you can right away calculate what mortgage can be offered given your income, or what income you must earn in order to receive a specific mortgage amount. There, on the last line, you will see approximate amount of your monthly payments.

Don’t forget, when you buy real estate you can make use of a certain privilege – HBP (Home Buyer’s Plan). Making use of this opportunity helps you save on down payment up to 21-40% more than you planned and counted (in some cases up to 46% more). Those who wanted to open RRSP, but were not on time (because money must be kept in there a minimum of 90 days) can be helped in the following way: money does have to be there for a minimum of 90 days, but you can take it out within 30 days after you move in. This means that even if there are 61-89 days left till you move in, it’s still possible to use HBP and open RRSP.

By the way, prior to termination of the transaction a questions arises regarding property insurance. Often at the last second, the recommendation will be as such – first of all, check your car insurance company. Since the cost of insurance on the house is not that large, in comparison to the car insurance, the discount that car insurance companies offer (lets say, 5% on car insurance and 10% on house insurance) make the transaction between you and the lending company, most advantageous. If it will not turn out for you with your insurance company – call us and we will try to advise you on the best possible solution.