MORTGAGE FAQ's
Frequently Asked Questions
Getting Started
What does a mortgage broker do?
A mortgage broker acts as an intermediary between you and mortgage lenders. Instead of going directly to one bank, I shop your application to over 50 lenders—including major banks, credit unions, trust companies, and private lenders—to find you the best rate and terms for your situation. I handle the paperwork, negotiate on your behalf, and guide you through the entire process. Best of all, my services are typically free to you because lenders pay broker fees upon successful funding.
Why should I use a mortgage broker instead of going directly to my bank?
When you go to your bank, you’re limited to their products and rates. As your mortgage broker, I have access to 50+ lenders competing for your business. This means: • Access to better rates (often 0.25% to 1% lower than posted bank rates) • More product options tailored to your situation • One application submitted to multiple lenders • Expert advice on which mortgage features matter most • Someone in your corner negotiating for you
How much does it cost to use your services?
For most mortgage transactions with A-lenders (major banks and institutional lenders), there is no cost to you—the lender pays my fee upon successful funding. However, broker fees payable by the borrower may apply for private mortgages, alternative lending solutions, or complex applications. Any fees will be clearly disclosed in writing before you commit to proceeding.
What areas do you serve?
I specialize in serving clients throughout the Greater Toronto Area, with particular focus on Milton, Oakville, Burlington, Mississauga, and Brampton. However, I can help with mortgage financing anywhere in Ontario.
Mortgage Qualifications
What credit score do I need to get a mortgage in Ontario?
Credit score requirements vary by lender: • 680+: Access to the best rates from A-lenders (major banks) • 620-679: May qualify with A-lenders at slightly higher rates • 550-619: Alternative/B-lender options available • Below 550: Private lending may be an option Don’t let a lower credit score discourage you—I work with lenders across the credit spectrum and can help you find solutions while working to improve your credit for future renewals.
How much income do I need to qualify for a mortgage?
Lenders use two key ratios to determine affordability: • Gross Debt Service (GDS): Housing costs should not exceed 39% of your gross income • Total Debt Service (TDS): All debt payments should not exceed 44% of your gross income You must also qualify at the “stress test” rate—currently your contract rate plus 2%, or the Bank of Canada’s qualifying rate (whichever is higher). This ensures you can afford payments if rates rise.
How much down payment do I need?
Minimum down payment requirements in Canada: • Under $500,000: 5% minimum • $500,000 to $999,999: 5% on first $500K + 10% on remainder • $1 million+: 20% minimum (no CMHC insurance available) With less than 20% down, you’ll need mortgage default insurance (CMHC, Sagen, or Canada Guaranty), which protects the lender and allows you to buy with a smaller down payment. I do work with Lenders that can make your dream of home ownership easier than you think please contact me
Can I use gifted money for my down payment?
Yes! Gifted down payments from immediate family members (parents, grandparents, siblings) are accepted by most lenders. You’ll need a signed gift letter confirming the funds are a true gift with no repayment required, plus documentation showing the money has been deposited into your account.
What documents do I need for a mortgage application?
Typical documentation includes: • Identification: Two pieces of government-issued ID • Income verification: Recent pay stubs, T4s, Notice of Assessment, employment letter • Down payment proof: 90 days of bank statements showing savings history • Property information: Purchase agreement, MLS listing • Other assets/debts: Investment statements, loan documents Self-employed applicants need additional documentation such as 2 years of T1 Generals, financial statements, and business licenses.
First-Time Home Buyers
What programs are available for first-time home buyers in Ontario?
Several programs can help first-time buyers: • First Home Savings Account (FHSA): Save up to $40,000 tax-free for your down payment • Home Buyers’ Plan (HBP): Withdraw up to $60,000 from your RRSP tax-free (must repay over 15 years) • First-Time Home Buyer Incentive: Shared equity program with the federal government • Land Transfer Tax Rebate: Up to $4,000 provincial rebate in Ontario, plus up to $4,475 municipal rebate in Toronto • Home Buyers’ Tax Credit: $10,000 non-refundable federal tax credit ($1,500 in savings)
What is the First Home Savings Account (FHSA)?
The FHSA is a registered account that lets you save for your first home tax-free. You can contribute up to $8,000 per year (lifetime max $40,000), get a tax deduction on contributions (like an RRSP), and pay no tax on investment growth or withdrawals used for a qualifying home purchase. It’s one of the best tools available for first-time buyers.
How much are closing costs in Ontario?
Budget approximately 1.5% to 4% of the purchase price for closing costs, including: • Land Transfer Tax: Ontario LTT is tiered (0.5% to 2.5% based on price). Toronto has an additional municipal LTT. • Legal fees: $1,500 to $2,500 typically • Title insurance: $300 to $500 • Home inspection: $400 to $600 • Appraisal fee: $300 to $500 (sometimes covered by lender) • Mortgage default insurance: If applicable, added to mortgage or paid upfront
Mortgage Types & Terms
What's the difference between fixed and variable rate mortgages?
Fixed Rate: Your interest rate stays the same for the entire term (e.g., 5 years). Your payments are predictable, which makes budgeting easier. Best if you prefer stability or expect rates to rise. Variable Rate: Your rate fluctuates with the lender’s prime rate, which is influenced by the Bank of Canada. Historically, variable rates have saved borrowers money over time, but payments can increase if rates rise. Best if you’re comfortable with some uncertainty and want potential savings.
What mortgage term should I choose?
The most popular term in Canada is 5 years, offering a balance of rate security and flexibility. However: • 1-2 year terms: Good if you expect rates to drop or plan to sell soon • 3-4 year terms: Middle ground with decent rates • 5 year terms: Best rates, most stability, most common choice • 7-10 year terms: Maximum stability, but higher rates and steeper penalties I’ll help you choose based on your plans, risk tolerance, and current market conditions.
What's the difference between term and amortization?
Term: The length of your current mortgage contract (typically 1-5 years). At the end of each term, you renew or refinance. Amortization: The total time to pay off your mortgage in full (typically 25-30 years). Longer amortization = lower payments but more interest over time.
What is mortgage portability?
Portability allows you to transfer your existing mortgage to a new property when you move, keeping your current rate and terms. This is valuable if you have a great rate and want to avoid penalties. Most mortgages include portability, but conditions vary—I’ll help you understand your options.
Renewals & Refinancing
When should I start thinking about my mortgage renewal?
Start 4-6 months before your renewal date. This gives you time to: • Shop the market for better rates • Get pre-approved with other lenders • Negotiate with your current lender • Complete any necessary paperwork Don’t just sign the renewal letter your lender sends—those rates are often not their best offer. Contact me to ensure you’re getting a competitive rate.
Should I refinance my mortgage?
Refinancing may make sense if you want to: • Access home equity for renovations, investments, or debt consolidation • Get a significantly better interest rate • Change your mortgage type or terms • Remove someone from the mortgage (e.g., after divorce) However, refinancing comes with costs (legal fees, appraisal, potential penalties), so the benefits must outweigh the expenses. I’ll run the numbers with you to see if it makes sense.
What are mortgage prepayment penalties?
If you break your mortgage before the term ends, you’ll pay a penalty: • Variable rate: Usually 3 months’ interest • Fixed rate: The greater of 3 months’ interest OR the Interest Rate Differential (IRD) IRD penalties can be substantial, especially with big banks. Before signing any mortgage, I’ll explain the penalty structure so you know what you’re committing to.
Self-Employed & Alternative
Can I get a mortgage if I'm self-employed?
Absolutely! Self-employed Canadians have several options: • Traditional qualification: Using 2 years of tax returns and Notice of Assessments (T1 Generals) • Stated income programs: Some lenders allow you to “state” reasonable income with strong business history • Bank statement programs: Qualification based on business deposits • Alternative/B-lenders: More flexible income verification The key is having at least 2 years in business, good credit, and reasonable down payment. I specialize in helping self-employed clients navigate these options.
What if I have bad credit or past bankruptcy?
A lower credit score or past credit issues don’t automatically disqualify you. Options include: • Alternative lenders: Accept lower credit scores at higher rates • Private mortgages: Focus on property equity rather than credit • Credit rebuilding strategy: Short-term solution while improving credit Many clients start with alternative financing and refinance to better rates once their credit improves. I’ll help you create a plan.
What is a private mortgage?
Private mortgages are funded by individual investors or private lending companies rather than banks. They’re typically used when traditional financing isn’t available due to credit issues, income verification challenges, or unique properties. Private mortgages have higher rates and fees but can be a valuable short-term solution. They’re usually for 1-year terms with the goal of transitioning to traditional financing.
The Process
How long does the mortgage process take?
Timeline varies by situation: • Pre-approval: 1-3 days once documents are submitted • Full approval after accepted offer: 3-10 business days • Closing: Typically 30-90 days from accepted offer to possession Having documents ready and responding quickly to requests helps speed up the process.
What's the difference between pre-qualification and pre-approval?
Pre-qualification: A quick estimate based on information you provide, without verification. Good for initial budgeting but doesn’t carry much weight with sellers. Pre-approval: A thorough review including credit check and document verification. You receive a written commitment for a specific amount at a locked-in rate (typically 90-120 days). Much stronger when making offers.
Will a mortgage application hurt my credit score?
A mortgage application results in a “hard inquiry” on your credit report, which may temporarily lower your score by a few points. However, if you’re rate shopping, multiple mortgage inquiries within a 14-45 day window (depending on the scoring model) are typically counted as a single inquiry. The minor impact is far outweighed by the benefit of finding the best rate.
Still Have Questions?
Every mortgage situation is unique. If you didn’t find the answer you’re looking for, or want personalized advice for your situation, I’m here to help.
