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CheapMoney FAQ Starter List
In a fixed rate mortgage the interest rate is locked in for a set amount of time, meaning you will know for the duration of your mortgage term what your payment will be. In a variable rate mortgage, the interest rate on the mortgage may go up and down as market rates fluctuate, meaning your payments will differ throughout your term. If interest rates decrease your total payment goes down. If rates increase, then your monthly payment increases too.
In most cases, if you are making a down payment of less than 20%, mortgage default insurance (referred to as CMHC) will be required. Insurance protects lenders in the event that the borrower does not make payments.
If keeping an eye on mortgage rate fluctuations is something you do not want to keep up with, then considering a longer-term mortgage is the way to go (5-10 years). If you’re looking to keep an eye on rates and take advantage of the changing rates, then a shorter-term mortgage may be better for you.
If you renew before maturity (term end date), you can receive a guaranteed interest rate. You can renew your mortgage up to 4 months before it matures. Keep in mind that this advance-offer rate may not be the best deal possible from a lender, and it may be beneficial to explore other options to receive the best deal.
Pre-approval on a mortgage means being given a guaranteed interest rate for a specific amount of money for a fixed duration of time. Usually, you are guaranteed the pre-approval rate for two to four months. Essentially a pre-approval gives your confirmation that you are cleared to potentially land a mortgage, and gives an idea of what that may look like.
Anyone who qualifies – in most cases you may qualify for a mortgage with as little as 5% down payment on the total purchase price of a home.
In most cases, mortgage insurance coverage becomes active right away. Ensure that you understand all terms and special conditions that may apply to your coverage by speaking to your lender.
Simply put – yes. Federal rules allow an individual to use up to $25,000 in RRSPs ($50,000 for couples) towards a mortgage down payment. There are certain conditions that apply.
You designate a beneficiary of your choosing for your mortgage insurance.
Refinancing your mortgage means paying off the existing mortgage debt and arranging a new mortgage with new terms, or re-negotiating the terms and conditions of an existing mortgage. It may make sense to refinance your mortgage if you are able to lower your existing interest rate by at least 2%.
In a home equity loan, the borrower uses the equity of their home as collateral. Home equity loans are secured against the value of your home, so lenders may offer lower rates.
In most cases, a minimum for 5% down payment on the total property cost is required to qualify for a mortgage. For down payments of less than 20%, mortgage insurance is required.
There is a First Time Home Buyers’ Tax Credit that allows first time buyers to regain some of the costs they paid, mostly as they relate to closing costs such as legal fees and inspections. In certain provinces homebuyers can qualify to get a rebate on some of the Land Transfer Tax they paid. In Toronto, homebuyers are eligible to receive an additional rebate if they are a first time homebuyer.
Credit score and the size of your down payment, along with your income and employment status, debt-to-income ratio, and your assets and liabilities.
Lenders usually adjust their prime rate to reflect the Bank of Canada’s Policy Interest Rate, meaning that prime rates tend to be similar. From there, much of a lenders pricing model is based off of risk and type of mortgage. The interest rate isn’t the only thing that affects the total cost of the loan – there are additional factors that lenders consider.
When you pay additional payments towards your mortgage, they go towards paying off your principal. So, while extra payment won’t affect your interest rate itself, your payments will go down, as there is less principal on which your interest rate is applied.
No - If you want to switch providers through your mortgage term, you will have to break your current mortgage term and pay a penalty amount to your current lender.
There are many advantages that come with working with a mortgage broker. Brokers have a network of a wide variety of lenders to help easily find the best one for you; savings you a lot of time and legwork. They can also steer you away from unfavourable loans. Working with a broker can save you fees and potential complications as well.
Fees associated with the loan, closing costs, down payment requirements, and mortgage insurance are just some of the things to compare when looking at lenders. When you work with CheapMoney, we do this legwork and vet lenders for you to ensure you are receiving the best mortgage possible.
The mortgage approval process does not take too long. From the time your documents are submitted, it should not take longer than 48 hours to receive approval from a lender.