Understanding the ins-and-outs of mortgages
Using a mortgage broker is one of the best ways to make the process easier and more beneficial to you. In fact, some lenders only provide mortgages through a broker, so it’s in your best interests to work with a broker to have access to the widest range of options. This way, you get to choose. You aren’t stuck with something a lender offers that doesn’t fit your needs. Mortgage brokers work for their clients, but it’s the lender who pays them. Lenders need clients and having someone trustworthy bring those clients to them for a fee is the best of both worlds: you get personalized, focused service directed by your needs; you also get access to reliable, trustworthy lenders who want your business; plus, you skip the hassles of contacting numerous lenders because I take care of everything for you.
Where the process starts
We start with an in-person meeting to explore your goals and interests. Your unique situation (self-employed, low credit rating, first-time home buyer) will help me identify the lenders that are the best fit. In our meeting, you’ll also learn about the documentation and information required to put together your application. Once the information is collected, I can determine your pre-approved amount – the mortgage amount you can afford. Because I shop the mortgages for you, you save time, frustration and possibly a significant amount of money. Once your application is complete, we can lock in a rate for up to 4 months while you shop for real estate and we consider the best lender. If rates go up, you’ll have a lower rate locked in. If rates go down, you’ll still get the lower rate.
Mortgage specifics
There are a number of elements to mortgages that have their own terminology. I’m here to answer all your questions whether it’s about the difference between an open mortgage and a closed mortgage, fixed terms or variable, long mortgage terms or short. As we discuss what each of these things mean, we’ll also look at which option is best for you. This may include aspects like repayment options, access to tools to communicate with the lender or if the lender will include property tax payments in the mortgage payment. Often those buyers with a low risk tolerance will want a fixed mortgage rate, but understanding financial markets will also play a part in decision making. Fixed rates are great for those who want a consistent payment throughout their term for budgeting or other reasons. However, variable rate mortgages often result in a lower rate. Mortgage amortization is the length of time to pay the mortgage off in full. Most property owners will renew their mortgage several times before paying it off in 20 years, 25 years, or another amortization. Chances are, you already know what payment frequency works best for you. If you’re paid every second week, you’ll likely want your mortgage payment to coincide with that. Those who are self-employed often prefer a monthly payment.
Next steps
Once your application is complete and you’ve found the property you want to purchase, I will prepare it for the lender. This includes your credit score. Another benefit of working with a mortgage broker is that your report is accessed just once, by me, not by every lender. The higher the score the better and it goes up as you pay back loans, make timely payments on credit cards and ensure you prove financial responsibility. When your offer on the property has been accepted and the lender approves your application, we’ll meet to sign approvals and take care of final details.
Circumstances to consider
The great thing about mortgages in Canada, and specifically mortgages here in BC, is that there are so many options to accommodate different people at different life stages. First time home-buyers will likely have between the minimum 5% and 20% of the purchase price saved for the down payment. Those with less than 20% of the purchase price are known as “high ratio” borrowers and will have mortgage default insurance added to their payment. Owning a business and being self-employed is another circumstance where flexible mortgage options are important. Although your business may be thriving and you have the accounting reports and statements to back that up, it can be a complex process with some lenders. That’s why I work with you to ensure the lender we choose understands your needs.
Here for you throughout the entire process
Whether it’s the initial time we connect or halfway through the application process with the lender, I’m here to answer all of your questions and keep you up to date. Purchasing property is a significant investment and requires help, I’m pleased to serve as your guide.
