Mortgage Architects ~ Rob Cagnin, AMP

FAQ's

Questions and answers regarding mortgage information, general inquiries, and common concerns can be found in this section.

For further information on how I can help you, please contact us now.

What determines Mortgage approval?

Funds: How much cash do you have saved for your down payment and closing costs? Do you have other options to get funds (gift from family, RRSPs)? If you already own the home, how much equity do you have built up in your home?
Income: Are you salaried with fully confirmable income or self-employed showing much less income on paper that what you actually earn. Employment information such as your occupation, length of time at your current position and how much you earn will be evaluated. If you are self employed showing very little income an excellent credit history or significant equity will help the approval process.
Credit history: Your credit report takes many factors in to consideration such as how much you owe, what the balances on your credit facilities are in relation to what the available limits are and how timely your payments have been.

Why use a mortgage consultant as opposed to a bank?

A mortgage broker deals exclusively with mortgages. By combining professional expertise with access to many different wholesale lenders and hundreds of loan products, a broker provides their clients with the most efficient and cost-effective method of offering home financing options. The broker's objective is to provide individualized service and attention tailored to meet the client's needs and wants. When dealing with a bank, you are often limited to their product line, which may not be the best product for you.

A mortgage broker has access to many lenders that the banks do not. Thereby they are able to represent you in obtaining a financing option that best fits your specific financial goals. Some people don't want to spend the time and energy seeking out the best mortgage, by contacting a range of lenders, obtaining information about interest rates, fees and closing costs, and comparing available loans. A mortgage broker will perform those tasks for you. In many instances, a broker can get you a better rate at your own bank than you would be able to obtain yourself.

Other people may have troubled credit histories, which make it difficult for them to locate reasonably priced credit. Sometimes a mortgage broker will be able to locate a lender who offers better terms than they can find on their own. Additionally, some people may want more flexibility in the amount they borrow than is offered by their bank. A mortgage broker may be able to accommodate that desire, by finding them a lender which will, for example, lend them money with a lower down payment than their bank demands.

The best part of all of this is that there is no cost to you at all as a client.* The broker will be paid their fee, typically a commission from the institution where the mortgage is placed, based upon the amount borrowed, in return for finding the mortgage.

*there may be exceptions where a brokerage fee is required

How much of a down payment is needed to buy a home?

It was once standard practice to put down 20%, but in today's society it is quite rare. You need to take into consideration the options available in regards to financing your home. There are mortgage options available that only require a down payment of 5% or less of the purchase price, but the advantage of having a larger down payment will be having to borrow less, avoiding purchasing a mortgage insurance policy to secure the loan and having more equity in your home.

Mortgages with less than a 20% down payment are known as "high ratio mortgages". These types of mortgages require mortgage insurance to be purchased from an insurer such as Canada Housing and Mortgage Corporation (CMHC) or Genworth Financial (GE).

***Tip: When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, emergency expenses, and repairs and decorating.

What if I have bad credit?

Your credit history is only one factor that a lender will look at. While someone with good credit will have a better chance at securing a loan with more options to choose from, it does not mean someone with bad credit cannot qualify for a loan. In fact, there are several mortgage programs specifically designed for people with bad credit.

What is the difference between a fixed-rate mortgage and a variable-rate mortgage?

Fixed-Rate Mortgage: A mortgage for which the rate of interest is fixed for a specific period of time (the term). Payments will remain stable throughout the life of the loan.
Variable Rate Mortgage: A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in the Bank of Canada prime lending rate. If interest rates go down, more of the payment goes to principal. If interest rates go up, more of the payment goes towards the interest.

***Tip: Choosing a fixed or variable mortgage is very dependent on personal circumstances and preferences. There really is no one clear cut best choice for everyone. For some, the prospect of saving significant interest with a variable is worth the volatility that a variable rate mortgage can present. For others, getting a great rate locked in for a fixed period of time with no chance of that rate fluctuating is clearly the more attractive option. You should always evaluate both options and you should be the one to choose the best alternative for you.

What is the difference between a High Ratio Mortgage and a Conventional Mortgage?

High Ratio Mortgage: A mortgage where you have a down payment of less than 20% of the purchase price. This type of mortgage must be insured against default by Canada Mortgage and Housing Corporation (CMHC), Genworth Financial (GE) or one of the other government approved insurers.
Conventional Mortgage: A mortgage loan up to a maximum of 80% of the purchase price is referred to as a conventional mortgage.

Why refinance a home?

Refinancing is the process whereby you get a new mortgage to pay off your existing mortgage or other debts or take some equity out of your home. People have many different reasons to refinance, some of the more common reasons being:

To lower your monthly payments
To pay off other debts
To structure debts most efficiently to ensure you are paying the least amount of interest possible
To obtain cash in order make home improvements
To free up cash for some other goal such as paying tuition fees

Client Testimonial...

Thanks for all your help during the mortgage selection process. You exceeded our expectations, and I will continue to speak very highly of you and your services to anybody looking for a mortgage.

Romeo and Tara C-Kitchener

We would not have sought Rob's services if it had not been for a referral from our financial advisor. Our reasoning was that we thought Rob's services applied to people who had lots of property and who could afford his fees. We were totally misguided and wrong on both fronts. Rob gave us the answers we needed (at no cost to us) to put us back on track. We are confident that no matter what your situation is Rob can make it better.

Robert and Laura Y-Burlington

Contact me by Email: rob@robcagnin.ca, or by Phone: 905-634-6111 Ext 113.