F.A.Q

What is a mortgage agent?

A mortgage agent is an independent professional that will work with multiple lenders to find you a mortgage that suits your needs. They will find a lender with the best rates and terms for your situation. There is usually no fee to work with a mortgage broker if you qualify under standard lending guidelines. Your mortgage professional gets paid a commission (or finders fee) from the lender. If there is a fee, this will be disclosed and documented up front.

What are the costs in obtaining a mortgage?

Some of the costs associated with obtaining a mortgage are legal fees, appraisal, home inspection, and utility hook-ups. We usually recommend that you have approximately $2500 set aside to complete your property purchase.

What is the difference between insured and conventional mortgages?

Your mortgage must be insured when you have less than 20% to place as a down payment on your purchase. By law, banks cannot lend more than 80% of the value of the home unless it is insured by the CMHC (Canada Mortgage and Housing Corporation), Genworth or Canada Guaranty. These insurers protect the lender against default. An insurance premium is charged and added to your mortgage amount.

A conventional mortgage is when you have 20% or more to put as a down-payment on your purchase. In most cases, there is no insurance premium charged. Occasionally, the lender may still need to have the mortgage insured depending on the location of the property or type of property being purchased.

What are the costs of the CMHC, Genworth or Canada Guaranty premiums?

Below is a chart of the premiums you would pay on an insured mortgage. The amount that would be added to your mortgage will depend on the amount you have put as a down payment. The premium is a percentage of the mortgage amount. Your amortization is how long your payments are spread out. You can amortize your mortgage up to 35 years.

Why is getting a pre-approved mortgage so important?

Getting a mortgage pre-approval is important for several reasons:

1. It is important to know what purchase price you are qualified for before you go shopping for a home, so that you are shopping in the right price range.
2. You need to ensure that you can comfortably afford not only your mortgage payments, but all of the other costs of owning a home such as property taxes and utility bills. If you have not owned a home before, these amounts may be a bit surprising. Your mortgage professional will help you take a look at the entire picture.
3. You need to ensure that you will qualify for a mortgage based on the lenders criteria. If there are issues, it is better to discover them at pre-approval stage so you can work on fixing those issues prior to your search for a home. If you are not able to qualify for a mortgage at this time, Conexia can assist you in taking the steps necessary to qualify for a mortgage in the future.

Once I am pre-approved for a mortgage, is it guaranteed?

Your mortgage professional will have confirmed your income, credit, and down payment at this stage. However, we cannot pre-approve the property you will be purchasing, and this is still subject to lender/insurer approval. Therefore, it is important that you always put a “subject to financing” condition on your offer to purchase a home. Your real estate agent will assist you in writing the offer to purchase.

Also, a pre-approval is only valid if there is no material change in your financial situation. If something has changed since you received your pre-approval (i.e. changed jobs, acquired new debt etc), please contact your mortgage professional so they can review your file.

What happens when I find a home?

When find a home, you and your real estate agent will write an offer to purchase. Once the negotiations have been completed, a copy of the offer to purchase and property highlight sheet is forwarded to Conexia. We then submit the mortgage for final approval to the lender. Once the lender/insurer approval has been obtained, the lender will send a mortgage commitment to Conexia outlining the details of the approval, along with any paperwork that may still be required.

Your mortgage broker will then contact you to go over the approval and ask you for the paperwork required to complete the mortgage file. Once the paperwork has been received and approved by the lender, your mortgage file will be complete and you can remove your “subject to financing” condition on your offer to purchase.

Once you have removed all of your other conditions, such as “subject to home inspection”, then you will have purchased your home! Your next step will be to go to your lawyer’s office, approximately 10 days prior to the possession date, to sign the legal paperwork required to complete your purchase. You will be expected to bring the remaining down-payment and closing costs. These funds must be in the form of a certified cheque or draft.

When you have completed the paperwork with the lawyer, you will then wait to take possession of your home on the possession date negotiated.