Mortgage FAQs

Q: What is a mortgage broker?

A: A mortgage broker is a professional who is a middleman between borrowers and lenders. They work with multiple lenders to find the best mortgage product for their clients. In addition, they can help with the mortgage application process, advise on the different types of mortgages available and help negotiate better rates and terms.

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

A: A fixed-rate mortgage has an interest rate that remains the same for the entire term of the loan, while a variable-rate mortgage has an interest rate that can fluctuate over time. With a fixed-rate mortgage, the monthly payment remains the same, while with a variable-rate mortgage, the monthly payment can change depending on the interest rate.

Q: How much can I afford to borrow for a mortgage?

A: The amount you can afford to borrow for a mortgage will depend on your income, credit score, and debt-to-income ratio. Lenders will consider all of these factors when determining how much you can afford to borrow. A mortgage broker can help you determine how much you can afford to borrow based on your circumstances.

Q: How long does the mortgage approval process take?

A: The mortgage approval process can take a few weeks or months, depending on the lender and your specific circumstances. A mortgage broker can help speed up the process by gathering all the necessary documentation and communicating with the lender on your behalf.

Q: What documents do I need to provide for a mortgage application?

A: The documents required for a mortgage application will vary depending on the lender and your specific circumstances. Commonly required documents include proof of income, proof of employment, proof of assets, and proof of creditworthiness. A mortgage broker can help you understand which documents the lender requires and guide you through the process of gathering them.

Q: How much will I need for a down payment?

A: The amount required for a down payment will depend on the type of mortgage you are applying for and the lender. For conventional mortgages, the minimum down payment is usually 5% of the purchase price, while for high-ratio mortgages, the minimum down payment is usually 20% of the purchase price.

Q: Can I get a mortgage with bad credit?

A: Getting a mortgage with bad credit can be more difficult but not impossible. Some lenders specialize in bad credit mortgages, and a mortgage broker can help you find one that meets your needs. However, it is essential to note that interest rates for bad credit mortgages are typically higher than for borrowers with good credit.

Q: What is the mortgage stress test?

A: The mortgage stress test is a measure put in place by the government of Canada to ensure that borrowers can afford their mortgages even if interest rates were to rise. It requires borrowers to qualify for a mortgage at a higher interest rate than the one they have agreed to with the lender. This helps ensure borrowers can afford their mortgage payments even if interest rates rise.

Q: Can I refinance my mortgage?

A: Yes, you can refinance your mortgage. Refinancing involves taking out a new mortgage to pay off an existing one. It can lower your monthly payments, shorten your mortgage term, or take cash out of your home's equity. A mortgage broker can help you understand the options available and determine if refinancing is right for you.

Q: What is the maximum mortgage amount I can qualify for?

A: The maximum mortgage amount you can qualify for depends on your income, credit score, and debt-to-income ratio. Generally, lenders approve mortgages up to four times your gross annual income. However, some lenders may approve higher amounts for those with excellent credit and low debt-to-income ratios.

Q: What credit score is needed to qualify for a mortgage in Canada?

A: The minimum credit score to qualify for a mortgage in Canada is typically around 600. However, the higher your credit score, the better your chances of getting approved and getting a lower interest rate. Lenders usually require a minimum credit score of 600 to qualify for a conventional mortgage and a minimum credit score of 680 for a high-ratio mortgage.

Q: How much of a down payment is required for a mortgage in Canada?

A: The minimum down payment required for a mortgage in Canada is 5% of the purchase price for homes priced under $500,000 and 10% for homes priced over $500,000. With a down payment of less than 20%, the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or one of the other mortgage default insurance providers.

Q: What documents are required during the mortgage approval process?

A: The documents required during the mortgage approval process may vary depending on the lender but typically include the following:

• Proof of income: This can include pay stubs, T4 slips, and notice of assessment from the Canada Revenue Agency (CRA)
• Proof of down payment: This can include bank statements, RRSP statements, or gift letters (if the down payment is a gift from a family member)
• Proof of assets: This can include bank statements, RRSP statements, or mutual fund statements
• Proof of identification: This can include a passport, driver's license, or other government-issued ID
• Proof of employment: This can include a letter from your employer or pay stubs
• Proof of property: This can include a purchase and sale agreement, property tax statement, or an appraisal

Q: How long does it take to get approved for a mortgage?

A: The mortgage approval process can take anywhere from a few days to a few weeks, depending on the lender and the completeness of your application. It's important to have all required documents ready and to provide accurate and complete information to speed up the process.

Q: What happens if my mortgage application is denied?

A: If your mortgage application is denied, the lender must provide you with a written explanation of the reasons for the denial. This typically includes information on your credit score, income, or debt-to-income ratio deficiencies. You can use this information to improve your chances of getting approved for a mortgage. If you believe the lender has made an error, you can file a complaint with the Financial Consumer Agency of Canada.

Q: Can I get a mortgage with a co-signer?

A: Yes, you can get a mortgage with a co-signer. If you cannot make the payments, a co-signer will be responsible for the loan. This is typically a parent or other family member. The co-signers income and credit will also be considered in the mortgage approval process.