What Is Mortgage Insurance & Do You Need It?

When buying a home, there are many things you need to do and lots to learn about the mortgage process. From the application process to interest rates, it can feel overwhelming. Now, you’ve come across the term mortgage insurance. What is it? Do you need it? Who can help you through it? These are some questions we’ll answer in this article.

What Is Mortgage Insurance?

You may have come across a few variations of mortgage insurance. First, let’s talk about mortgage default insurance. Sometimes it’s also referred to as mortgage loan insurance.


So how does it work? If you put down less than 20% on your down payment, you are required to have mortgage insurance. A lower down payment means a higher ratio mortgage. As a borrower, this puts you at a higher risk than someone who puts down a higher down payment. Your lender wants protection if you cannot make your payments. 

Down Payment

Homes in Canada purchased under $500,000 require a minimum 5% down payment. For homes between $500,000 and $1,000,000, you need to put a down payment of 5% on the first $500,000. and 10% on the balance. Lastly, homes over $1,000,000 require at least a 20% down payment on the purchase price. Thus, a million-dollar home does not qualify for mortgage insurance. 


With that said, there are many benefits for new homeowners. For example, mortgage insurance allows Canadians to buy a home without a large down payment. This helps lower the barrier for those who want to become a homeowner but might not have enough funds put away in savings. If you can produce a 5% down payment, you can begin your homeowner journey. The 5% can come from your savings, a gift from family, RRSP’s or investments.


Mortgage insurance protects the lender. Therefore, it helps more people qualify as a borrower. In addition, it ensures mortgage funding availability during slumps in the economy.

Where Can I Get Mortgage Insurance?

In Canada, there are three mortgage insurance companies that work with lenders. This includes the Canada Mortgage and Housing Corporation (CMHC), Sagen Financial, and Canada Guaranty.

mortgage insurance

Premium Cost

The insurance premium is calculated based on the loan to value ratio.  You are responsible for this cost. You can either pay the premium in a lump sum or have it added to your total loan amount.

For example, your loan-to-value could be up to 95%. That means you should expect roughly a 4% premium on your total loan. Keep in mind that Manitoba, Quebec, and Saskatchewan have provincial sales tax as well. In this case, you must pay the PST upfront.

Can I Avoid Mortgage Insurance?

If you want to avoid paying the cost of the premium, there are a few ways to do so. As mentioned earlier, a down payment of over 20% means you do not need mortgage insurance.


You can increase your down payment amount in a few ways. The first is through monetary gifts. A gift from a family member could help you put down more in your down payment. If you are a first-time homebuyer, you may take money out of your RRSP. The Home Buyers’ Plan allows you to withdraw up to $35,000 tax-free. 


Lastly, you may consider purchasing a less expensive home to pay a larger down payment.

Mortgage Life Insurance

Do not confuse mortgage default insurance with mortgage life insurance. When you take out or renew your mortgage, they might offer you this optional coverage. Similar to default insurance, you will pay a premium that’s added to your mortgage payment. You can purchase life insurance through your lender or another insurance company. This gives you the freedom to look at what’s the best option for you.


Life has many unexpected moments. Understanding your coverage can greatly help your loved ones. If you lose your job, become critically ill, become injured or disabled, or pass away, the insurance can help pay off your mortgage. If you have dependents or a spouse, this could take off financial strain if something happens to you.

However, other forms of insurance may already help cover this. Carefully go through your policies because you may already have them under your employer.

Consulting A Broker

With so many options available, how do you know what’s best for you? Working with a mortgage broker can help. It can be easy to miss the fine print on insurance documents or be unsure of what coverage you qualify for. By factoring in your personal goals and needs, they will help you better understand your mortgage insurance.

For more professional advice on mortgage insurance, contact our team at The Mortgage Group Inc. We will assist you every step of the way with any and all of your mortgage needs.

Is My Credit Score Good Enough For A Mortgage?

credit score

When was the last time you checked up on your credit score? If you’re thinking of buying a home, now might be a good time to do so. In this article, we go over how a credit score impacts your ability to get a mortgage. You’ll find out what a good credit score is and ways to improve it so you can qualify for a mortgage the first time.

How It’s Calculated

They calculate credit scores based on what you do with your available credit. Payment history makes up the highest percentage at 35%. In other words, your history plays a big role, and it’s important to keep up with your regular payments. This includes credit cards, lines of credit, and car or student loans.

How You Use Your Credit

The next important factor in calculating a credit score includes how much you owe. Depending on your current payments for various loans, your lender will determine whether you can take on more. For example, you could be maxing out on your credit cards. A lender may see this as high risk because they don’t believe you can pay for a new loan on time.


Credit utilization looks at the percentage of the debt you have compared to the available credit. Staying below 35% of your available credit shows you’re not maxing out and can help you achieve a higher credit score.

credit score

Credit History

Other factors that go into calculating a credit score include the length of your credit history. The longer the history, the easier it is to build a solid credit score. 


The amount of new credit applications also plays a role. For example, opening multiple new credit accounts could reduce your score because it shows a struggle in keeping up with payments. 


Lastly, the type of credit used, and any record of bankruptcy, are also considered. 

What Is A Good Credit Score?

Here is a breakdown of credit score standing based on Equifax’s scoring system. Scores between:

• 300-559 Are Poor

• 560-659 Are Fair 

• 660-724 Are Good 

• 725-859 Are Very Good 

• 760-900 Are Excellent 


In Canada, Equifax and TransUnion are the two main credit bureaus. Although both calculate their scores slightly differently, they help provide the same information. Banks, credit card companies, insurance companies, landlords, employers, car leasing companies, and retailers can then view your information. 


Most major banks allow you to view your score for free online. Periodically checking your score will give you a better idea of where you stand and how to improve. For a more in-depth report, you can request one from Equifax or TransUnion. In addition, you can request to see your credit report. This report provides information on your payment history, bankruptcies, types of credit, and more. Obtaining a credit report will not impact your score.

Why Credit Score Matters

Credit score matters because it shows how trustworthy you are. From a lender’s perspective, they only want to work with those they know will make their payments on time. In other words, you’ll have more options, flexibility and likely be approved for your mortgage with ease.

The higher your credit score, the more likely a mortgage broker will be able to find the lowest rate available.  In the long run, this can help save thousands on your mortgage payments.

Although it varies, credit scores above 650 allows your mortgage broker to obtain a mortgage approval from a Prime lender. Scores above 650 mean you are a lower-risk borrower, and lenders will be more willing to give you a loan. If you feel like yours could improve, there are a few ways to help increase your credit score.

How To Increase Your Credit Score

The simplest way to increase your credit score is to pay your bills on time. This includes credit cards, cell phones, student loans, or car payments. Skipping or paying late will reflect poorly on your overall score. If you cannot make your payment on time, contact your lender. They may extend your payment due date.


As mentioned earlier, a good score means having a longer credit history. Even if you have a credit card you hardly use, don’t cancel it. The longer the credit history, the better chances you’ll have of building a better score.

Qualifying For A Mortgage

Although credit score matters, it accounts for only part of the big picture. Throughout the mortgage preapproval process, you want to maintain a good credit score as well. If possible, wait to apply for new credit. This includes buying a new car, appliances, or any other loans because they will increase your total debt. Avoid applying for multiple mortgage applications in a short period. This could flag you as a credit seeker. A mortgage broker has access to numerous lenders and will be able to find you the lowest rate available.

Talking To A Mortgage Broker

A mortgage approval can take anywhere between two days to two weeks. However, working with a mortgage broker can help make the process faster and easier. If you’re not sure where your overall standing is for getting a mortgage approval, they can help. They can help you see the big picture by taking in all factors, including your credit score. In addition, they’ll come up with a customized plan for your mortgage preapproval and give you the right advice to get you on the right track.

Are you ready to apply for a mortgage? Contact us today to talk to any one of our experts here at The Mortgage Group Inc. 

Should You Pay Off Your Mortgage Early Or Invest?

Where should my money go? When you’re paying off your home, this is a valid question to have. Often, new homeowners aren’t sure whether to put all their money towards their mortgage or split it up and invest as well. Today’s article outlines some key points you should consider for both paying early and investing. 

When To Pay Off Mortgage Early

You may have extra cash because of various circumstances and aren’t sure where it should go. We understand that the day you don’t make mortgage payments anymore will be a monumental one.


There are a few reasons people choose to pay off a mortgage early. The first benefit is that you will have greater financial freedom sooner. Knowing you don’t have to make any more payments can benefit one’s overall mental health. Additionally, you can use your money for other things, such as saving for retirement or planning the next big purchase.


The next reason is to save money on interest. One way to pay off your mortgage faster is through lump-sum payments. In essence, you contribute a large, single payment instead of instalments. Paying off your mortgage early can also build equity. 


While there are many benefits, it’s important to consider the drawbacks. With that said, consider what other debt you have. Make a list of everything you are currently paying off to help you get organized.


Current housing market interest rates are low. You might be paying off a new car or have student loans on top of your mortgage. These types of debt could have interest rates higher than your mortgage. You may want to hold off on putting all extra funds toward your home. Prioritizing other forms of debt could also help you save on interest in the long run.


Although you may have extra cash now, that may not always be the case. Never put all your money toward your mortgage at the expense of emergency funds. You should leave rainy day funds untouched.

When To Invest

Next, let’s take a look at what it means to invest your extra money. This will depend on where you choose to invest. Investing in stocks gives you more financial freedom than if you were to put it towards your mortgage. In other words, you can sell or move funds you invest, but you can’t take money out of your mortgage without refinancing


You could also sell your stocks and put that extra money toward your mortgage for the best of both worlds.



Of course, there is always a risk when investing in the stock market. You must be willing to take risks when investing because there is no guarantee. Ask yourself whether investing is something you see yourself doing for the long haul or if you’re looking to make quick extra cash. Ultimately, this depends on your risk tolerance. 


If you prefer a low-stakes approach, it’s important to ask yourself how much you’re willing to invest. With long-term investing strategies, such as a mutual fund or an ETF portfolio, you could potentially see more returns from compound interest than your mortgage interest rate.


Lastly, investing will be more work than paying your mortgage. For your mortgage, you simply put more funds toward it. However, with the stock market, you will need to carve out more time researching and paying attention to fluctuations if you don’t already do so.

Mortgage Refinance

If you’re hoping for a lower rate or change your mortgage type, you may want to refinance your mortgage. Refinancing can also help you access the equity in your home. However, be sure to check the penalty fee first.


A refinance means breaking and starting a new mortgage. You can either get a new lender or stay with your current one. By getting a lower rate, you can help speed up the payment process. You can save on interest rates and also pay off your home faster. In turn, you could use the money you save and put it towards investments.

Final Thoughts

The money you choose to invest won’t be going toward your home at the end of the day. You’ll still have your mortgage to pay off if you spend all your extra cash in the stock market. Therefore, we suggest being strategic with your funds. Split your money in both directions.


For those who prioritize shorter-term and low-risk scenarios, put more funds toward your mortgage. If you’re looking for something long-term, consider adding more money towards a tax-exempt investment account. If you’re not sure what ratio to do this in, consider speaking to a mortgage broker. 

Working With A Mortgage Broker

Paying off your mortgage sooner means you won’t have to worry in the future. However, you might have other forms of debt that also need attention. Having investments provides flexibility in where and how you divide your money. With that said, there’s no guarantee with the stock market, and you should consider how big of a risk-taker you are.


If you’re still unsure how to handle your mortgage or what your options are, talk to a mortgage broker. They can provide personalized advice that best first your needs, budget, and lifestyle. For example, you could qualify for a refinance. In addition, perhaps you are interested in other forms of investments. Investing in real estate could be another option you could discuss with your mortgage broker. 

Wherever you are on your financial journey, our team at The Mortgage Group Inc. is there for you. Find out how to get a personalized plan by contacting us today.  

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. 


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%.


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. 


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.