The good news is whether its your first home or your 20th you can qualify for 5% down up to $500,000.00, anything after that and you have to put 10% down.

For example:

Purchase: $600,000.00

Down payment: 5% of $500,000.00 – 10% of $100,000.00 = $35,000.00 minimum down payment.

If you have 20% down to put on your purchase this is referred to as a conventional mortgage.

If you have 20% down this allows you to avoid CMHC, Genworth, Or Canadian Guarantee, mortgage premiums. This also allows you to amortize your mortgage over 30 years as opposed to 25 years.

A commonly asked question is, “If I have 20% down then why do I have to pay for an appraisal?”

This is because if your mortgage is insured through one of the insurers I just mentioned then the value is either supported by the insurer and they protect the bank against any possible future discrepancies OR the insurer orders and pays for their own appraisal and the cost is covered by the insurance premium your charged. When we order an appraisal for a bank its because they need to see and keep on record the true market value, at the time of purchase of the property they are lending on.

If you have less than 20% down then this is referred to as a high ratio mortgage. You will have premiums based on the amount your borrowing and based on the percentage you are putting down. This percentage changes in increments of 5 percentiles.

% of Down Payment	Premium on Total Loan
15 – 19	1.80%
10 – 14	2.40%
10 – 14	2.40%
5 – 9	3.60%

**Regular Mortgage refers to a mortgage that is cut and dry, black and white with no exceptions for example borrowed down payment or the stated income program.Mortgage premiums based on a regular mortgage:

The above mentioned are insurers that allow the privilege of having less than 20% down to purchase a home. What they do is protect the lenders against high loan to values. If someone defaults on their mortgage and it leads to a foreclosure these insurers will cover the costs of any loss to the lender. SO if the bank has to sell fro less than they borrowed the insurers cover the difference.

Fixed mortgage is a fixed rate that doesn’t change for the entire term of the mortgage.

Variable rate is based on Canada prime rate which is a floating rate and can change and adjust through out the term of the mortgage. Which is better? Well that is up to you and your comfort level.

Variable rate is generally discounted off of prime rate and is generally lower than the fixed rate. It is statistically shown to pay off a mortgage faster over time. With this type of mortgage you have to qualify for a much higher rate in order to qualify for it and if rates go up to the point of discomfort and you decide to lock in, you are locking in at whatever rates are available at that time not the rates that were offered when you originally got your mortgage. In my opinion this is a good mortgage if there is a decent spread between the fixed and variable discounted rate and if you have the stomach to ride it out till the end of the term. Please ask if you have more questions or want more info on this product.

Fixed rate is generally higher than the discounted variable rate but it is set in stone for the term of the mortgage. Payments stay the same with no risk of fluctuation. Both are good products, its up to you which one suits your goals and your level of comfort.

Credit Unions: Credit Unions are a great option in a lot of cases for a variety of reasons and are a regular go to for me when choosing a lender for my clients.

PRO’s

• They are good for people who are not very “online banking” oriented as they have branchs
• They are familiar with local unique properties for example native lease land
• They can do deals that might need some exceptions and understanding to make work.
• They have some options that banks don’t
• Their pre-payment programs are generally better than banks
• Their IRD penalty isn’t calculated as low as a mortgage company but less than a bank.

CON’s

• Some of their criteria is less lenient as far as dealing with spouses not on a mortgage app
• They require you to open an account with them to pay your mortgage through.
• Once I do your mortgage with them I loose access to that mortgage and you have to deal with them directly and your experience going forward can depend on whoever is dealing with you at the time.
• You generally have to physically go into the branch when making changes to your mortgage.
• Bankers tend to change positions a lot so the person your dealing with one day might not be the same person your dealing with the next.

Banks: Banks still have their place and can be highly useful when it comes to doing a deal that doesn’t meet the mortgage company or credit union criteria.

PRO’s

• They can sometimes make exceptions on certain types of deals that a Mortgage Company or Credit Union cannot.
• They can sometimes lend in areas where Mortgage Companies and Credit Unions cannot.
• They have *HELOCS where mortgage companies don’t.

*Home equity line of credit, or simply “home equity line.” It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount.

CON’s

• They have high **IRD penalties and don’t make exceptions in charging them
• They are incredibly policy driven so even if you have been with them for a number of years if you don’t meet the criteria then its not possible.
• Bankers tend to change positions a lot so the person your dealing with one day might not be the same person your dealing with the next.
• Once I do your mortgage with them I loose access to that mortgage and you have to deal with them directly and your experience going forward can depend on whoever is dealing with you at the time.
• You generally have to physically go into the branch when making changes to your mortgage.
• Low flexibility when porting a mortgage and adding new money to it. they basically force you to take a second as opposed to blending it with a new mortgage to avoid a penalty and also limiting your qualification.

**Interest Rate differential or IRD penalty is calculated most aggressively by the banks, a bit less aggressively by the Credit Unions but much less aggressively by the mortgage companies. This calculation is based on the rate and term you have left versus the rate and term a lender may be offering. They decide how to calculate this penalty base on what they deem is acceptable and its up to the lenders discretion as this penalty is not regulated at this time.

Mortgage Companies, Credit Unions, and Banks.

Lenders willing to step out of bank guidelines but have somewhat higher rates and fees apply. Their rates are reasonable but higher than an A lender and there is generally a 2% fee (some brokers charge substantially more) which we get paid half to 1.5% of the fee. This is subject to change if mortgage is less than 100k.

These mortgages require 80% to 75% loan to value and are common when it comes to:

• Business for self clients who write most their income off.
• Low beacon score or troubles credit
• Income types A lenders don’t understand or can’t do based on policy.
• Other scenarios that don’t fit regular A lender criteria but make sense as far as cleints beign able to afford what they are doing.

This lender can be a good alternative but in every scenario and whenever I use them my goal is to find a strategy and game plan that allows my clients to get back to the A lender route and as long as they are prepared to listen I have a very high success rate.

Lenders willing to lend almost completely on equity but high rates and fees apply. Usually rates are anywhere from 8% give or take to 10% give or take. Fees are usually approximately 4% unless the mortgage is less than 100k and the Lender makes the call on what they want to charge and we get paid half the fee.

These lenders are necessary in some cases and have to make sense and have a game plan and a light at the end of the tunnel or I don’t do them.

This is when you sell your house and buy another but the house you are buying closes before the house you are selling. This is doable but higher rates for the time you borrow the extra funds and fees can apply. I don’t get paid from any extra fee they are charged by the lender and lenders have their own rates and fees for this product.

Every bridge finance loan is a case by case scenario.

Debt ratios are a BIG part of what qualifies you for a mortgage. Many times I try to talk people into keeping these as reasonable as possible unless there is extra income we can’t use in which case I don’t mind being on the higher side.

There are two things that come into play when debt ratios are mentioned in a mortgage.

GDS (gross debt ratios) max 34% or with exceptional credit and explanation 39% – This ratio is based on your:

• Mortgage payment
• Property tax payment (per month)
• Heating cost (usually calculated at approx. $100.00 per month)
• Monthly Strata fees (if applicable)

TDS (total debt ratio) max 42% or with exceptional credit and explanation 44% – This ratio is based on your:

• Mortgage payment
• Property tax payment (per month)
• Heating cost (usually calculated at approx. $100.00 per month)
• Monthly Strata fees (if applicable)
• Credit card payments (calculated at 3% of the balance with all lenders)
• Line of credit payments (calculated at 3% of the balance with all lenders)
• Loan payments

If you are buying a foreclosure, here are some points you need to know:

You need to go to court FULLY qualify. This means we have:

• Order and pay for an appraisal
• Order and pay for an inspection
• Getting all docs in and signed off on by the lender

Please note I order the appraisal. Your realtor may help you order an inspection, but you are responsible for all costs.

Once you go into court:

• You go in with an amount you have a solid approval that I’ve given you.
• You, along with others put a bid into an envelope
• The judge opens the envelopes and decides the winner.

Once a winner is announced:

• You give a NON-REFUNDABLE deposit of usually 10k or whatever was specified before going into court and we make sure we close the deal on the date the court announces as the final closing date.

There are different programs for people who are self employed but these programs are very limited with A lenders, and no matter what your business may gross lenders are now looking at your net income and working to some degree around that.

When calculating your income for your application:

In most cases we have to use a two year average of your line 150 on your NOA or T1 general, or the lesser of if the most recent years income is less than the previous year.

In some cases there are add backs we can use, or some lenders will allow some slight gross ups to your income. We prefer to start from the lesser of and work our way up. This is the most ideal if we can figure out a way to income qualify you.

If we can’t income qualify you due to a low claimed income, there are also other programs that we may be able to use. We have what’s called stated income programs, but these programs are not as flexible as they were a year or 2 ago and can come with higher costs like higher insurance premiums and sometimes rates.

I am finding in this economic and policy driven economy I am doing a lot more B lender deals for self employed than I usually do. That being said I ALWAYS look for the best deal for you and your situation and find Business for self clients are very much a case by case scenario.

You need a 2 year track record or we can use your base guaranteed wage if that meets the criteria you need to qualify. Otherwise when calculating your income for your application: in most cases we have to use a 2 year average of your line 150 or T4 income or the lesser of if the most recent years income is less than the previous year. In some cases there are add backs we can use, or some lenders will allow some slight gross ups to your income. This is the most ideal if we can figure out a way to income qualify you.

If we need to get more creative we can also look at B lender alternatives as long as you have 80% loan to value or at least 20% down.

To obtain a copy of your credit bureau report without affecting your beacon score, you can contact the credit bureau agencies directly:

Equifax Canada

www.equifax.ca
1-800-465-7166
consumer.relations@equifax.ca

Trans-Union Canada

www.transunion.ca
1-800-663-9980
marketing@tuc.ca