Should I Work With A Mortgage Broker?

working with a mortgage broker

To put it simply, yes, you should work with a mortgage broker. There are many benefits to working with one that we will highlight below, and we aren’t saying that just because we’re mortgage brokers. At the end of the day, we’re here to make your life easier. Below, you’ll find four reasons why you should work with a mortgage broker.

What Does A Mortgage Broker Do?

What exactly does a broker do? There are several services offered that go beyond mortgages. First, a broker does not lend you money. Instead, they help find you a lender at the best possible rate. Think of them as a middle person between you and potential lenders. On the flip side, a mortgage lender is the one who lends you money. These lenders include banks, credit unions, mortgage companies, or loan companies.

Some services offered include:

  • Mortgage Pre-Approval Assistance
  • Reverse Mortgages
  • HELOC (Home Equity Line of Credit)
  • Assisting Newcomers To Canada
  • Investment, Second Or Vacation Property Assistance
  • Helping Self-Employed & Business Owners

When Should I Work With One?

The most obvious time is when you’re applying for a mortgage. When applying for anything, you can expect a lot of mundane and confusing paperwork to follow. Doing all that prep work only to be denied or told it’s wrong can be extremely frustrating. 

 

Therefore, most people turn to a broker when applying for a mortgage. However, as we mentioned above, there are many other instances where a broker can be helpful. 

 

Everyone has a unique situation. The process for getting your first mortgage will look different than your second. Additionally, there are many opportunities to apply for incentives. For example, you could qualify for local or federally backed incentives. You don’t want to skim over any details when applying for a mortgage, and your broker can help you identify all the incentives you’re eligible for.

Questions To Ask

Just like finding the right lender, it’s important to find the right broker. Be sure they’re qualified and experienced. Don’t hesitate to ask questions before working with them. Ask what their application process looks like and which lenders they work with. A good broker wants to find you the best rate based on your situation. They will take the time to get to know you and your financial situation.

Save Time

Mortgage brokers can help you save time in more ways than one. First, you won’t need to shop around yourself. Second, they have connections with many different lenders, meaning you’ll get the best rate. Another way they will save you time is with the paperwork. Applying for a mortgage requires a lot of paperwork and verification, which your broker will help you with.

Some documents required for a pre-approval include:
• Income
• Signed Credit Consent form so that we can obtain your Credit Report
• A list of your assets
• Confirmation of Employment
• Confirmation of the Down Payment

For many, this list can look overwhelming. However, when you have a broker on your side, they’ll be sure to help keep you on the right track.

No Extra Costs

Mortgage brokers work with lenders, which means there is typically no fee charged to you. Depending on the situation, there could be a broker lender fee. Sometimes certain lenders charge a fee. If this is the case, you will be notified ahead of time.

Get A Lower Mortgage Rate

As mentioned earlier, brokers know what’s available. Therefore, they can find rates from lenders you otherwise wouldn’t. This can save a lot of time for you as well. Instead of researching and going to multiple lenders yourself, they can do it in a fraction of the time. When you can compare multiple lenders at once, the decision-making process will be much faster and easier.

Unbiased Advice

A good broker provides unbiased options and advice. They understand the difference a lower rate will be in the long run. Having a lower rate means lower payments. Therefore, you can confidently call yourself a homeowner and reach financial freedom sooner when you choose to work with a mortgage broker. 

 

They can also provide advice on the likelihood of approval. Mortgages have different rates and eligibility requirements. This is why getting a mortgage pre-approval is important. A mortgage pre-approval shows how much you could qualify for. You will then see the maximum mortgage amount you could get. We recommend doing this early so you know how much you can afford. When applying for pre-approval, be sure to ask how long you are guaranteed that rate. A trusted broker won’t waste your time with mortgages or lenders that aren’t right for you. 

Why Wait?

Applying for a mortgage takes time. As we mentioned above, a broker can save you time. You could also save a lot of money. You can compare multiple options at once rather than finding them yourself. Whether you’re a first-time homebuyer or looking at a vacation property, a mortgage broker can be there for you. Once you gather the necessary documents, they can get the ball rolling.

At The Mortgage Group Inc., we offer mortgage solutions. We help make the mortgage process easier by offering efficient and friendly service to all our clients. Contact us today to start your pre-approval application. 

What Is An FHA Loan & Should I Get One?

fha loan

Have you ever heard of an FHA loan? Perhaps while looking through various mortgage options, this term has come up. This article will explain everything you need to know about FHA loans. Furthermore, you’ll learn about similar incentives offered in Canada. Below, we highlight the Canadian equivalent to an FHA loan. Lastly, we go over some key points to help you decide whether it’s right for you.

FHA Loan

An FHA loan stands for the Federal Housing Administration loan. As the name suggests, this is a federally backed mortgage. They offer this loan to low-to-moderate income earners in the United States of America. 

 

There are a few key benefits to this loan. The first being a lower minimum down payment. Those who qualify can still get mortgage approval. The second benefit is a lower credit score. This is great news for those who may not have the best credit score. Many conventional loans will require an average credit score of 620. However, with an FHA loan, the score is 500. Compared to a conventional loan, an FHA loan offers a down payment assistance program.

FHA Loan Equivalent In Canada

With that said, what is the equivalent of the FHA loan in Canada? Luckily, there are options available to those who qualify. 

First-Time Home Buyer Incentive

Similar to the FHA loan, the First-Time Home Buyer Incentive is tied to the Government of Canada. By that, we mean the Government of Canada has a shared investment. You may wonder how or why that would be the case. Let’s take a further look at the incentive.  

Who Qualifies?

Above all, the borrower must be a first-time homebuyer. In addition, they must be a Canadian citizen. Permanent residents and those who can work in Canada also qualify.

Next, they must have a household income of less than $120,000. $150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria

Lastly, your borrowing has a maximum. It cannot exceed four times your household income. Therefore, it would be $480,000 in Alberta. That means the average price of the home would be between $500,000 and $600,000. However, this also depends on the down payment.

fha loans

Qualification Changes

Before we move onto the benefits, here’s another important note. Qualification changes depending on where you’re buying. Toronto, Vancouver, and Victoria have the most expensive housing markets in Canada. Therefore, the government has increased the maximum household income to $150,000. You can also borrow up to four and a half times your income instead. This qualification change makes it easier for more Canadians to buy a home. 

First-Time Home Buyer Incentive Benefits

There are three major benefits to this incentive. Because it’s a shared-equity mortgage, the Government of Canada offers five or ten percent for a newly constructed home. Second, the incentive offers five percent for a resale home. Lastly, there is a five percent for first-time buyers of a resale mobile home. 

 

So, what does this mean? As mentioned earlier, the Government of Canada shares the investment in the home. That means first-time buyers may not have to save as much. This makes it more affordable for those who may not have enough savings for a down payment. Further, it can help lessen future mortgage payments. 

Is It Right For Me?

Another factor to consider is repayment. You would therefore pay the incentive amount of either five or ten percent. They base payments on the property’s fair market value during that time. You must repay the incentive after 25 years or when you sell the property. 

 

During this time, you may repay the incentive in full without a pre-payment penalty. This can be convenient if your financial situation changes. You find yourself with extra money and want to put it towards your payment. You can repay without worrying about additional charges. 

 

Don’t worry if you don’t qualify for the First-Time Home Buyer Incentive. There are other incentives to consider. They offer these incentives on both a local and national level. Buying a home is one of life’s biggest purchases. Taking advantage of an incentive can lessen financial strain. 

Talk To A Mortgage Broker

We hope this article gives clarity to what an FHA loan is and the Canadian equivalent. When it comes to a mortgage, there are many hurdles to overcome. Terminology and the fine print can make it difficult to understand what’s best for you. Further, each incentive has a different list of qualifications. Working with a mortgage broker can help ease the pressure. 

 

To put it simply, mortgage brokers bring borrowers and lenders together. Based on your financial situation, they can find you the best interest rates. Mortgage brokers can provide more options because they work closely with lenders. Some of these could be ones you otherwise won’t have access to. Need a second opinion, advice, or guidance? Your broker will work with you to make sure you find a real financial solution.

At The Mortgage Group, our specialized team is ready to assist you with any of your mortgage needs. Find out how you can get the best rate by contacting us today. 

Terms Of A Mortgage, What They Are & What To Pay Attention To

terms of mortgage

In this article, we will give you the information you need on the terms of a mortgage. First, we explain what they are, then go over how this affects the cost. Lastly, we point out the key things to pay attention to when choosing a mortgage term. 

What Are The Terms Of A Mortgage?

So, what exactly is it? A mortgage term is the amount of time your mortgage contract is active. This period shows how long your financing will last. The terms of a mortgage will impact the overall cost, interest rate, and regular payment amount. 

 

Terms can vary from a few months to over five years. After each cycle, you will have the option to renew your mortgage if you cannot pay off the entire sum. However, you can finish paying off the whole sum of your mortgage during that period.

Mortgage Amortization

With that said, the mortgage amortization period is the time it takes for you to pay off all your mortgage. Mortgage amortization factors in interest rate to provide you with an estimate of what your mortgage cost will be. 

 

If you’re about to buy a new home, online calculators can help. They can give you an idea of various amortization scenarios. The calculator will do this by factoring in different mortgage rates.

 

To put it simply, the mortgage term period will have a set date to renew. On the other hand, the amortization period indicates how long it takes for you to pay off your home. 

 

Mortgage Term Types

The terms of a mortgage will affect your interest rate. By that, we mean that you will have different interest rate options based on the length of your mortgage. Below, we list the three kinds of mortgage terms. Each comes with benefits and considerations you should pay attention to.

What Kinds Are There?

Let’s discuss the terms of mortgage based on type. There are three kinds, each based on the interest rate. Many Canadians opt for a five-year mortgage term and amortize it over twenty-five years. In Canada, the current maximum amortization period, for an insured mortgage, is 25 years. It is 30 years for a conventional mortgage.

Shorter-Term Mortgage

These mortgages are less than five years. In other words, you will renew your mortgage every few months or up to every five years.

A shorter term mortgage means dedicating more time to signing a new mortgage. Interest rates could change, meaning there is less stability. You could score a better rate but prepare yourself for something higher.

Longer-Term Mortgage

A longer-term mortgage means having a term of over five years. Some choose this for the sake of ease. They know their current conditions will not change for many years. This type of stability makes it easier to budget because you know exactly what you’ll be paying for the years to come. 

 

However, there is less flexibility with this option. You could potentially continue paying a higher rate even if interest rates drop. Lastly, this option is not for someone who frequently moves because you may be subject to pay a considerable pre-payment penalty. There may be options to port and avoid a penalty so please speak to your mortgage advisor.

Convertible Term Mortgage

Lastly, we will mention the convertible term mortgage. Some shorter-term mortgages can be extended to a longer, fixed-rate loan. This can be beneficial if interest rates fall. 

How Does This Affect Cost?

As mentioned above, the terms of a mortgage affect the interest rate for a specific time. A fixed interest rate means your rate will stay the same throughout the term period. A variable interest rate means it could change during the term, should rates fluctuate.  

 

When making your decision, think about what your current life situation is like. Although we can’t predict the future, try to imagine what your life will be like in the next five or ten years. Do you plan on living in this home long-term? Does your current job frequently have you transferring cities? Are you planning on having children? Additionally, there are also many unexpected life costs. Try to consider and imagine various scenarios before choosing your mortgage term. 

 

Luckily, first-time homebuyers can qualify for incentives that can help reduce financial strain and fast-track you to being a homeowner. 

Penalties

Always read the fine print in your mortgage contract. Renegotiating could mean paying the penalty. Additionally, you could pay pre-payment penalties if you pay all your mortgage before the end of the term. Asking an expert like a mortgage broker can help you better understand your contract.  

Choosing A Mortgage Broker

While we hope this article provided some insight, you may have some looming questions. With that said, a mortgage broker is here for you. They can assess and provide further insight into the terms of a mortgage. Therefore, you will be better equipped to pick the best one for you.

As Calgary-based mortgage brokers, our team offers personalized mortgage solutions for you. Fill out our online application form today, and we’ll do the rest! 

Understanding The New Mortgage Stress Test Rules

new mortgage stress test rules

The new mortgage stress test rules are now in effect for Canada as of June 1, 2021. With the mortgage rates so low during the Covid-19 pandemic, the government thought it would be useful to reinforce the protocol for the stress test.

They want to ensure new homebuyers can handle payments with the increase in cost if the mortgage rates rose significantly during their next renewal. It is a way for preparing for the worst-case scenario to be sure that you won’t get caught off guard and end up losing your home and investment.

What Is A Stress Test?

A mortgage stress is used to determine whether you can actually afford your mortgage at a qualifying rate. When people sink their money into a huge investment such as a home, it can stretch budgets thin. Leaving little room for the unknown when it comes to their finances.

The stress test demonstrates a hypothetical bad scenario for the buyer before they make a considerable investment. It uses variables such as losing your job, income reduction, rising interest rates, etc. It’s a way to determine how much you could still afford to pay if any of these situations occurred.

The Stress Test Formula

understanding the stress test

It’s regardless of your down payment.  Lenders will now use the greater of, the Bank of Canada’s 5-year benchmark rate or the contract rate plus 2%.

Qualifying

In order to qualify for a mortgage in Canada, you will need to pass this stress test. However, private lenders, mortgage investment corporations, and other alternative lenders don’t need to abide by the stress test. Though, you’ll still need to prove your creditworthiness and have a stable income that shows you can afford what you’re looking to qualify for.

When & Why Was The Stress Test Implemented In Canada?

Canada implemented the stress test due to growing concerns that the mortgage industry was increasing too quickly. They didn’t want Canada’s overall economic stability to be at risk. So, in 2018 the mortgage stress test came into effect when the federal bank regulator, the Superintendent of Financial Institutions (OFSI), decided it would be wise to create regulations that would ensure Canadians would only spend within their means.

New Stress Test Rules

stress test qualifying rate

So, what are the new stress test rules, and how can you prepare for them as a new homebuyer at this time?

The stress test’s new guidelines are more challenging than before, but that is to ensure those applying for a mortgage will be able to continue making payments in this new hot market without struggle.

New Benchmark Minimum Qualifying Rate

The Bank of Canada’s new benchmark minimum qualifying rate for uninsured mortgages is at 5.25%, up from 4.79%. This means the increase in housing sales in Canada’s market will hopefully start to cool off. It takes the heat off cities in Canada where bidding wars, skyrocketing prices and a burst of sales were standard throughout the pandemic.

However, this new rate could make it much harder for new homebuyers to acquire a mortgage and get the ball rolling on a home investment. Still, they say it will help guarantee the Canadian economy stays stable.

Preparing For The Harder Rules & Your New Home Purchase

new home buyers

This increase in the qualifying rate isn’t enough to completely shut would-be homebuyers out of the market. It won’t increase costs but limit what some are allowed to borrow, which could be a strain on some folks.

For example, if the maximum mortgage you were approved for was calculated at $500,000, you’ll presently get approval for $480,000. Meaning, now you’ll need an extra $20,000 to make up the difference. So prepare to save a little more if you want to acquire the same loan.

Calculate your mortgage stress test here.

Don’t let the new rules stop you. There is still plenty you can do to get into a home of your own.

Other Things You Can Do:

  • Continue Saving & Work Hard
  • Opt for a smaller starter home that fits within the new guidelines
  • Work on increasing your credit score. The best mortgage rates go to those with the highest credit scores
  • Reach Out To One Of Our Professional Mortgage Brokers With Any Questions About Financing, Mortgages & Affordability

For any questions or concerns regarding the new mortgage stress test or anything mortgage and loan-related, contact us today at (403) 571-8142. We are ready to help you open the next chapter of your life. We will work with you to get you into a home, even with the more difficult stress test in place.

How To Take Advantage Of The Calgary Real Estate Boom With A New Mortgage

calgary real estate

If you regularly walk through your neighbourhood, you might notice a house listed for sale last week has already sold this week. With a booming Calgary real estate market, now might be the time for you to join in as a buyer. In this article, you will first read all about how the market got to where it is. Then we’ll go over a few key reasons single-family homes are in high demand. Lastly, we explain the mortgage pre-approval process so you may take advantage of the current market. 

How Did We Get Here?

So how did we get here? How and when exactly did the Calgary real estate market start booming again? Despite the pandemic, current trends show the market will remain strong throughout 2021. Three things factor in building the housing demand in Canada, including: 

 

• High Rates Of International Immigration (Excluding 2020)

• Low-Interest Rates 

• Growing Middle-Aged Millennial Population 

 

The Calgary real estate market has seen high demand for single-family homes. Many young families or couples want to take advantage of low mortgage rates. However, with demand much higher than supply, this can cause stress for potential homebuyers. Many feel the urgency to make decisions swiftly in fear of losing out on their new dream home. Moreover, the Canadian Real Estate Association states the number of newly listed properties rose by 7.5% from February to March. While the market remains hot, they forecast fewer sales for 2022.

Single Family Home Demand

Single-family homes are in high demand. Due to the Covid-19 pandemic, we are all spending a lot more time at home. With many working from home, the shift to investing in personal space has risen. This means single-family detached homes are in high demand. Many are also considering moving out of the downtown core. Instead, they’re looking for a more spacious, quiet neighbourhood. 

 

It’s no secret that financial strain has hit many individuals especially hard this past year. Those who are minimally affected may have found their overall spending has gone down. With no holidays abroad or other large expenses, this money may go towards a down payment.

calgary real estate

Other Ways To Enter The Market

There are other ways to take advantage of the market without having to move. For example, a second or vacation home. With low-interest rates, you could find your weekend getaway home. 

 

Buying a rental property is another way to create wealth. A minimum down payment of 20% of the purchase price is required. Our team has assisted many Calgarians with this investment strategy.

Qualifying For A Mortgage

As we mentioned, buyers are taking houses off the market at record speed. Being prepared before you go property hunting is important. Please make sure you get a mortgage pre-approval first. You’ll need to organize several documents. A pre-approval shows how much you may borrow. 

Why Get A Mortgage Pre-Approval?

Due to current Calgary real estate demand, you’ll want to do everything you can to be an attractive buyer. With low mortgage rates, competition for a home can be high. Showing you did your homework and proving you have been pre-approved for a mortgage will set you apart. 

 

Pre-approvals help to make the financing process go more efficiently and smoothly. It reduces the potential for any unnecessary stress as well.

 

A pre-approval could also make negotiations easier. When the sellers knows you’re pre-approved, they could be willing to compromise—advocate for yourself. You could get what you’re asking for with a better price and terms. 

calgary real estate

Working With A Mortgage Broker

Making the biggest financial decision of your life is no small task. The added pressure to move quickly can make things extra stressful. So why make it more stressful by trying to do it yourself? Work with a mortgage broker to secure the best mortgage rate for your situation.  

Why Choose A Mortgage Broker?

First, they have extensive insider knowledge of the fluctuating market Buyers are snatching up homes faster than before, meaning you need to come prepared.

 

They will help you through the process of qualifying for a mortgage. Our team will guide you through the process each step of the way. You don’t want to feel disappointed finding your dream home, only to be turned down. 

 

By filling out a simple online mortgage application, your broker can get right to work. This will also cut back the time you may spend trying to get everything together yourself. Meaning you can get out in the market faster. 

 

A mortgage broker also plays an important role in ensuring you get your loan. They can help negotiate with various lenders, so you don’t have to. Additionally, they can get you the rate that best fits your needs because they know the industry.

Ready to jump into Calgary’s real estate? At The Mortgage Group Calgary, we offer personal mortgage solutions. Contact us today to start working with one of our expert brokers.

Mortgage Payment Changes

mortgage changes

You’ve been making your regular mortgage payments, as always, with no real hiccups. However, one day, you notice your payments are changing. What’s causing that? Why did my mortgage payment go up? We understand this can be an alarming realization, but not to worry. Today, we will explain why and how mortgage changes happen. 

Property Tax Changes

A change in property tax could mean a change to your mortgage payment amount. Property taxes are fees that go toward funding essential services in your city. They calculate this tax depending on your home’s assessed value. Expect to see it fluctuate over the years. Property taxes are either paid directly to your municipality or through your mortgage. Check and see which option you are currently paying with. Some also prefer paying their property taxes monthly, while others prefer one yearly payment. 

First-time Homebuyer's Property Tax

Your lender may collect this tax amount through your monthly mortgage payment. For first-time homebuyers, your lender will want to do this on their behalf. This is to ensure you are making the correct payments. Another reason is that lenders often require you to have 20% equity or more. As a first-time homebuyer, your down payment will be less than 20%. 

 

The nice thing about this method is that you don’t have to think about it. They will estimate and withdraw the amount as your mortgage payment. With that said, because they make a generous estimate, the amount you pay will probably be higher than your actual taxes. This extra money will go toward future payments. Therefore, you may see fluctuations in payment amount based on property tax calculations. 

mortgage changes

Fixed Versus Variable Mortgage

The two standard mortgages are the fixed interest rate and variable interest rate. You know your interest rate or regular payment amount won’t change in a fixed interest rate mortgage. That’s because you’re locked into a fixed interest rate for the entire term of your loan. This option can be beneficial when interest rates are low. Some prefer the stability and ease this type of mortgage offers. Budgeting can be simpler because you always know how much to save for your monthly payment. 

Variable Interest Rate Mortgage

If you have a variable interest rate mortgage, you could see some mortgage changes. This type of mortgage is usually why you might notice fluctuations in the amount you owe. There are a few reasons people choose a variable rate mortgage. One being if you believe interest rates will stay the same or drop over the term. However, this may not always be the case, meaning it can be riskier than a fixed-rate mortgage. Variable-rate mortgages change based on the market interest rate. This is what’s called the “prime rate.” In other words, an increase to the prime rate could mean an increase in your monthly mortgage payment. However, in the long run, people generally pay less interest in a variable rate mortgage.

Mortgage Refinance

If you recently refinanced your mortgage or are considering doing so, expect to see mortgage changes. A mortgage refinance means that you stop your current mortgage in exchange for a new one. This could be either with your current lender or a new one. There are many reasons someone might choose to do so. For example, you might want a lower interest rate to save money. However, you will have to pay a penalty fee. Another benefit is the ability to access the equity in your home or changing interest rate type. As mentioned above, you may want to change your fixed rate to a variable rate mortgage or vice versa. 

 

While there are pros to refinancing, the cons may not be worth it. Make sure you do your research and think of the long-term as well. If you are considering refinancing your mortgage, contact a mortgage broker. They can provide advice and help you make a decision that is right for you. 

 

mortgage changes payment changes

Mortgage Deferral

When you cannot make your regular mortgage payments, a deferral can help. For catching up on these payments, you typically have two options. The first is a repayment plan. If you find mortgage changes, that is because they have added your missed payments to your current payment. 

 

Reinstatement and forbearance are other options. You and your lender or broker have agreed to suspend your payments temporarily. Usually, you will pay a lump-sum amount down the road to make up for it. 

Conclusion

Property tax changes, variable interest rate mortgages, mortgage deferral, and a mortgage refinance are four reasons for mortgage changes. Each come with their unique benefits and disadvantages. Whether you’ve recently made a change or are considering changing things up, know you don’t have to navigate it alone. Mortgage brokers are there to help you. From penalties to complex language, it can be difficult understanding your mortgage. Brokers know the field and have the prior experience to back it up. Let them take the stress off, so you can confidently make the best choices for you.

 

At Mortgage Group, we focus on mortgage solutions by factoring in your financial situation. Contact us today to get in touch with any of our expert brokers. Let us help you navigate your mortgage. 

Qualifying For A Mortgage

qualifying for a mortgage

Ready to open the next chapter of your life? The idea of buying a home is both exhilarating and full of unknowns. But before we get to the buying, let’s first talk about qualifying. If you have been considering applying for a mortgage, then you’re in the right place. Today we are going to give you the low-down on qualifying for a mortgage. This article will include tips and tricks to help you get it right the first time.

Where To Begin?

Let’s start by discussing where to begin. Qualifying for a mortgage depends on many factors, and the process can look different for everyone.

First, we will discuss some of the paperwork you will need to get. Next, we will outline the mortgage pre-approval process. We have also included some things you will want to avoid. Lastly, we discuss how and why a credit score is vital for qualifying for a mortgage.

Organize Those Documents

This is arguably one of the most important tips. When it comes time to apply, you will need several documents. Having this all organized in one file will make your life much easier. A mortgage broker can help make sure you have all the documents needed for qualifying for a mortgage.

First is proof of employment. A current pay stub is proof you have enough income that can go towards mortgage payments.

A letter of employment from your employer is another form of proof your lender will want. This letter is to ensure your job title, income and length of time employed are correct.

For those who are self-employed, you will need to show notices of assessment, T1 Generals and Business Financial Statements.

qualifying for a mortgage

Mortgage Pre-Approval

We recommend this step because it shows the greatest mortgage amount you could qualify for. A lender will look at the documents we mentioned above and review your credit report. This way, they can calculate the maximum amount to lend and at what interest rate. That is why we recommend organizing your documents early. Other documents you should gather include:

  • Identification
  • Proof Of Assets, For Example, Your Car
  • Information About Your Debt, Such As Student Loans Or Credit Debt

Before you shop around, getting the pre-approval will show you how much you can afford. Many realtors won’t want to show you houses without this pre-approval. Therefore, it is important to get this done early. Online mortgage qualifier calculators can help give you a general idea.

Things To Avoid

Once they have pre-approved you, avoid making any major purchases. You want your financial situation to stay the same until your loan is finalized. Changes could mean you risk loan rejection.

Another thing to avoid is changing or quitting your job. Documents on proof of employment are key to helping you attain mortgage approval. Now is not the time to change career paths.

When qualifying for a mortgage, you will also want to avoid applying for new forms of credit. You want your debt level and available credit to remain the same.

Essentially, anything to do with finances should stay the same during the mortgage pre-approval process. Once you have successfully moved into your new home, you can change things around.

Mortgage Lender Or Mortgage Broker?

For a mortgage pre-approval, you will either go to a mortgage lender or mortgage broker. Both have different steps and methods.

A mortgage lender will lend the money directly to you. Mortgage lenders commonly include banks, credit unions, loan companies, or mortgage companies.

Mortgage brokers will find a lender for you, they do not lend money to you. With so many options, brokers have access to more information than the average person. You will have more choices at more competitive rates. Not only that, but brokers can get special deals and add-ons at no cost to you. Overall, they help make the process much easier for you.

Improve Your Credit Score

Lastly, let’s talk about credit score and why it’s important. A credit score summarizes the credits you use and whether you make your payments on time. This includes credit cards, loans, and financing plans. Building good credit history means making your payments on time.

Bad credit history, or no credit history at all, means it’ll be harder to borrow money. You can see your credit score through Borrowell, or Credit Karma.

A lender will check your credit history through a credit-reporting agency. Another way a lender sees you have a good credit rating is by looking at your loans. Having different types of loans shows them you are reliable and responsible. For example, you may have credit cards, a car loan, and a student loan. Building a good credit score takes time. This is because you must build trust through regular payments.

To Sum It Up

Qualifying for a mortgage can be a relatively simple process when done correctly. Mortgage brokers have the expertise and experience to help get you there. They will work with you so that qualifying for a mortgage isn’t a daunting process. With an online mortgage application form, simply fill out the information and let a broker do the rest.

In conclusion, paperwork is key. After organizing your documents:

  • Get A Mortgage Pre-Approval
  • While Waiting For Approval, Avoid Any Changes To Your Job Or Financial Situation
  • Check Up On Your Credit Score To See Where You Stand

For expert advice on qualifying for a mortgage, our team at The Mortgage Group Inc. is here to help. We will be with you every step of the way and help get you the best rates in Calgary. Contact us today for a consultation.  

Lump-sum Mortgage Payments

lump-sum payment

As a homeowner, paying off your mortgage as quickly as possible might be one of your top priorities, and for a good reason. There are many benefits to paying off your mortgage faster. One way people achieve this is through lump-sum payments. However, there are a few things to think about before making a lump-sum mortgage payment.

What is it? Is it right for me? The following will provide a few factors to consider on whether it’s right for you.

What Does Lump-sum Mean?

As the word suggests, a lump-sum means a large amount of money. You pay this money in a single payment rather than in instalments. A lump-sum payment is often paid more than once. This means you could pay it once or twice a year. Everyone’s financial needs and situations are different. Thus, speaking to a mortgage broker will help you create a personal plan.

How To Pay In A Lump-sum

We understand that life is full of unexpected moments. This may include cash flow from an inheritance, selling property, or a salary increase. With this new money, you may want to consider putting it towards your mortgage in a lump-sum. Doing so will help you pay off your mortgage faster and reduce the total amount of interest.

lump-sum payments

Advantages

Next, we will highlight some advantages to paying off your mortgage sooner with a lump-sum. If you’re not sure where to start, ask yourself some questions. Start by asking:

  • Why Am I Interested In A Lump-sum Payment?
  • What Are My Priorities?
  • How Much Can I Afford?
  • How Much Can I Put Towards A Lump-sum?
  • Where Will This Money Come From?

Financial Freedom

This one is a prime concern for many. Paying off your mortgage sooner provides greater financial freedom. Once you pay off your mortgage, you can use that money towards other things. Financial independence also allows you to prioritize your money in new ways. Think retirement or other investments. If financial freedom is your main priority, then a lump-sum mortgage payment will help you get there sooner.

Pay Less In Interest

As mentioned above, lump-sum payments mean paying less interest. Unlike regular payments, where you pay the interest, this is one way to save big over time. Online mortgage calculators can help give you an idea of how much you can save in the long term based on lump-sums.

Things To Consider

Putting all your eggs in a basket can be risky. Make sure you aren’t dipping into other forms of savings. Even if you make a lump-sum payment, ensure you still have emergency funds. If you don’t have a clear idea of how much to pay, take time to first think about it. Each year will also look different, so don’t sweat it. You may have extra means to put towards a lump-sum some years, while others you might not. Remember that you can only put a limited amount of money toward your mortgage. You can find this total in your contract.

lump sum payments

Timing

Make sure you know when you can make lump-sum payments. Usually, they will be on certain dates during the term, and either before or at the end of your term. Unlike your current monthly or biweekly payments, lump-sum payments aren’t obligatory. Check your contract to see specific dates.

Lump-sum payments will look different depending on how far along you are. In other words, the amount may vary depending on how long you’ve had your mortgage. Some years you may want to put more money towards your payments, while other years it could be less.

Self-employed

Are you self-employed or run a home business? If that’s the case, you might want to consider otherwise. When you are self-employed, a part of your mortgage interest may become tax-deductible. To put it another way, you may be able to subtract part of your mortgage interest to help reduce your taxable income.

Mortgage Brokers Are Here For You

While nobody can predict the future, talking to a mortgage broker will help you navigate what to do. Paying in a lump-sum has many benefits and works for many. However, it might not be right for everyone. Everyone has a unique financial situation. If a lump-sum doesn’t sound right to you, but you still want to pay off your mortgage faster, they can provide options. Increasing monthly payments, for example, could be one place to start. If you are currently making monthly mortgage payments, switching to biweekly could also be an option. A personalized plan is a great way to see it all on paper. Instead of imagining it, having it in front of you will give you the confidence to navigate your mortgage.

Ready to take charge of your financial future? Our team at the Mortgage Group Calgary will help with all your housing and mortgage needs. Our brokers are experts in their field and are here to help you get on track. Contact us today for a consultation.  

First Time Home Buyer Incentives

buying your first home

There are many firsts in life that you will never forget, and buying a home is one of them. While you know the result will be rewarding, getting there can be scary. With the right plan, it doesn’t have to be. Whether you’re newly married or recently graduated, know what is available in terms of first time home buyer incentive programs. 

 

Those looking to make the leap from renting to buying should also pay attention to these incentives and take advantage of them. As a first-time home buyer in Alberta, many incentive programs are available. Knowing what is out there will help take off some financial stress and help you purchase your first home.

Creating A Plan

Saving for your future mortgage is one of the first steps in purchasing a home. But how much is enough? This is where a mortgage specialist comes in. They can make sure you are saving enough without throwing out your current lifestyle. Creating a savings plan is one of the first things you’ll want to do. For example, paying off credit card debt and changing bad spending habits are good places to start.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) is a program made by the Canada Revenue Agency for first time home buyers. It allows you to withdraw funds from your Registered Retirement Savings Plans (RRSP). In addition, you are given 15 years to pay back the funds.

 

Funds can come from over one RRSP as long as it does not exceed $35,000 in a calendar year. This means you and your partner could both contribute from your respective RRSPs. To be eligible for the HBP you must be a first-time homebuyer who is a resident of Canada. You must also have a written agreement to buy or build a qualifying home for either you or a related person with a disability.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a Government of Canada program. It aims to help qualified first-time homebuyers purchase their first home. The program offers five or ten percent of the home’s purchase price to put towards a down payment. Therefore, reducing monthly mortgage payments to help more Canadians become a homeowner.

 

Eligibility requirements for the incentive include:

• Having Less Than $120,000 Total Annual Qualifying Income 

• Your Total Borrowing Does Not Exceed Over Four Times Your Qualifying Income 

• Being A Canadian Citizen

• Alternatively, Being A Permanent Resident Or Non-Permanent Resident Allowed To Work In Canada 

• Meeting The Minimum Down Payment Requirements From Savings, RRSP, Or A Non-Repayable Financial Gift From A Relative/Immediate Family Member

first time home buyer

Alberta Resident First Time Home Buyer Programs

There are several Alberta specific programs also worth looking in to.

Attainable Homes Calgary Program

The Attainable Homes Calgary Program is specific to Calgarians who seek affordable homeownership options. The program works by providing down payment help. Individuals, couples, and families can be eligible. Since 2009, the program has helped 1000 Calgarians meet their homeownership dreams.

RAMP

The second program is the Residential Access Modification Program (RAMP). RAMP helps low-income Albertans with mobility challenges. You can apply for this grant if you need to make renovations. However, renovations must include ways to make the home safer or more accessible. The program offers a grant of up to $7,500 per person each benefit year. Eligibility includes those living with progressive neurodegenerative disease or uses a wheelchair. Income thresholds are also considered.

PEAK

Public Essential And Key Workforce (PEAK) helps middle-income people buy a home. PEAK is divided into two categories, those with dependent children and those without. For those with no dependent children, you must have a household income of up to $80,000. However, for singles or couples with dependent children, the income threshold is $90,000. Moreover, PEAK is a down payment help program for those who don’t have resources for a 5% down payment.

Mortgage Specialists Are Here For You

Above all, the biggest thing to remember is to take your time. Don’t rush into decisions either. If you are purchasing a home with a partner, clear communication is important. Make sure both people agree on the house being purchased, the plan to save and purchase, and have realistic wants and needs. Be patient with yourself and your partner. Rushing the process could lead to regret later on.

 

Know that being a first-time homebuyer doesn’t have to be done alone. Federal, provincial, and municipal incentive programs are available and worth looking into. While there are many incentive programs out there, they can be hard to understand. Working with an experienced mortgage broker will save a lot of time and confusion.

first time home buyer

In conclusion, write all your questions before meeting with a mortgage specialist. Ask how incentive programs could benefit you. They will be with you every step of the way. Being a first-time homebuyer should be an exciting and rewarding process.

 

At the Mortgage Group Calgary, we have a team of some of the best mortgage brokers in Calgary. We provide mortgage solutions based on expertise and experience to best fit your financial situation. Contact us today for a consultation on how you can get on track to becoming a homeowner. 

Spousal Buyouts

Negotiating spousal buyout

When The Relationship Ends, But You Still Have A Mortgage

According to the Vanier Institute of the Family, the average marriage lasts about 13.7 years before a divorce. Going through a separation or divorce can be challenging legally and emotionally. There’s no easy way to say goodbye, especially when you share a home with the person you are saying goodbye to. 

 

Many separating couples don’t know about spousal buyouts and how it can help make the process easier. Whether you’re divorcing or separating from your partner, or just thinking about it, these buyouts let one partner “buy out” the other person on the mortgage.  

 

Most buyouts are between spouses or common-law partners, but some can be between friends or family who have bought a house together. This is why spousal buyouts are also referred to as “co-borrower buyouts.” Whatever your situation looks like, both parties must have the right information to move forward. 

What Is A Spousal Or Co-Borrower Buyout?

The buyout works by primarily refinancing your home up to 95% to buy out the other owner’s equity share and pay off joint debt. The stress of carrying debt can impact your mental health. The buyout allows both parties to alleviate any stress that their joint debt may be causing and start fresh. A buyout can also come in handy in situations where selling the property isn’t optimal.

Meeting With A Mortgage Broker

For a spousal or co-borrower buyout to work, several qualifications need to be completed. When you’re ready to separate, it’s essential to speak with a mortgage broker right away about your options. A broker can help you to determine if you qualify for a buyout, and if not, what might work instead.  

spousal buyouts

Considerations

The first thing that needs to be done is for both parties to decide who will keep the property. This is a decision that can only be made by the two parties. If both partners can’t come to an agreement, a buyout won’t be possible. Other options, like selling the property, might work best in this situation. 

 

The person buying out the other must make sure that they can afford to own the home. Both parties contribute income to shared expenses in many situations, but after a buyout, the buyer will need to pay for expenses such as mortgage payments by themselves.  

 

If you have talked it over with your partner and amicably decided on who wants to keep the home and is financially able to do so, you’re ready for the next step: meeting buyout qualifications.  

Qualifications

One thing to know is that all parties must be current registered owners on the title to qualify for a buyout. Another vital requirement to be eligible for a buyout is to have a finalized separation agreement. The agreement includes crucial information, like spousal or child support payments. The lender needs to see this agreement and make sure all net assets are allocated. 

 

A buyout is like a private sale, and as such, it is necessary to have a full property appraisal. This appraisal is ordered at the time of the buyout approval, so don’t worry about getting it done ahead of time. If done ahead of time, it likely won’t be usable because your lender often has specific requirements and appraisers they want during this process.  

 

The End Result

In the end, the buyer will have the home, and the other owner can take the equity from the buyout to find a new place to call home. 

 

If you are a divorcing or separating from a partner and are interested in learning more about options, including buyouts, reach out to our team at the Mortgage Group Inc. Our Calgary mortgage brokers are always happy to help you find the best solution.