FAQ

1. What is the difference between a pre-qualification, a pre-approval and an approval?
Pre-Qualification is an estimation of a loan amount based on general information provided by the borrower such as income, assets and debts. A pre-qualification does not require a credit check. This is a very casual estimation and projection for the loan amount. A Pre-Approval requires an application by the borrower, employment documents and other financial documentation. Obtaining a pre-approval is an asset to a borrower who is actively looking to purchase a property. It details the purchase power and can give you a better idea about what the interest will look like on your mortgage. You might be able to lock in an interest rate, also known as a rat hold for 60 to 120 days. An Approval is like the pre-approval process, but the borrower must provide additional information regarding the property being purchased. After the approval, the lender issues a mortgage contract which may contain conditions that need to be satisfied in order to proceed with funding the mortgage loan.
2. What is the minimum down payment required to purchase a home?
Depending on the purchase price of the property, you will need: 15% of the purchase price, if the purchase price is $500K or less. 15% of the first $500K and then 10% for the amount over that, if the purchase price is from $500K lo $999,999 20% of the total purchase price, if the purchase price is over $1M However, there are situations where the requirements may differ such as being self-employed, having poor credit etc.
3. What is mortgage default insurance?
Mortgages with less than 20% down payment must have mortgage loan insurance provided by either CMHC, Sagen or Canada Guaranty. This insurance protects the lender in the case that borrower cannot make payments.
4. How can I use RRSPs to help buy my first home?
If you’re a first-time homebuyer, the government has the Home Buyers’ Plan (HBP) program to help you get into the housing market. This program allows you to withdraw up to $35,000 in RRSP savings ($70,000 for a couple) to help finance your first down payment These funds need to be repaid in a 15-year period.
5. Can I use a gifted down payment?
Many lenders will accept a gifted down payment from the immediate family. A formal gift letter will need to be signed in order to confirm that it is a gift and not a loan.
6. What is a refinance?
Refinancing a mortgage is revising and replacing the terms of an existing mortgage contract. Usually, a refinance is done to access equity for home renovations, purchase a second home or investment property or pay off high interest debt.
7. Why use a mortgage broker?
As mortgage brokers, we have access to many lenders, including Canada’s top tier banks. We work for you, not the lender and our services are, for the most part, free to the borrower. We provide unbiased and expert advice to find the optimal solutions for you.