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brainstormingWhat is a Conventional Mortgage?

A conventional mortgage is considered to be a mortgage where the down payment is equal to 25% or more of the purchase price. This kind of mortgage generally does not require Mortgage Loan Insurance.

What is a High Ratio Mortgage?

A High-Ratio mortgage is a mortgage which is greater than 75% of the purchase price or appraisal, whichever is less. High-Ratio mortgages require Mortgage Loan Insurance which is provided by either Canada Mortgage and Housing Corporation (CMHC) or Genworth, a private Insurer, and protects the lender against loss. Mortgage Loan Insurance premiums range from .50% to 3.75% of the mortgage amount and are calculated based on the overall loan to value ratios.

What is the difference between floating rate and fixed rate mortgages?

Variable or floating rate mortgages will change on a periodic basis during the term of the loan determined by changes in the Prime lending rate set by Bank of Canada and according to a lender set formula.

Fixed rate mortgages provide that the interest rate will not change throughout the term of the mortgage, but is set at a fixed rate at the beginning of the term.

What are typical pre-payment privileges available with my mortgage?

Most lenders today offer pre-payment privileges of 15% of the original mortgage balance. There are a few exceptions that offer only 10% and others that offer 20% and even 25%. You can increase the payments by up to double the regular payment but it is not necessary to double up. Pre-payment privileges can typically be taken advantage of in the form of annual lump sum payments also.

What are the early payout penalties that apply to my mortgage?

Early payment penalties are either a three-month interest penalty or interest differential penalty which will apply if you pay off the mortgage before your renewal date or the term. Both calculations are done but the greater of the two apply. Interest differential is charged when interest rates have decreased relative to your rate, whereas three-month interest charges are typically charged when interest rates have increased relative to your rate.

What documentation is required to confirm my down payment?

For funds derived from a bank account, lenders require three months of bank statements confirming the down payment. For funds derived from RRSP,  GIC, or stock portfolios, the most recent statement is required. For funds derived from the sale of property, a fully executed binding sale agreement is required.

How does bankruptcy affect my ability to qualify for a mortgage?

Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing. If you have been previously discharged from bankruptcy, the best way to determine whether or not you qualify at this time is to fill out an application and have one of the TMG The Mortgage Group Alberta Ltd. team members discuss your situation. TMG The Mortgage Group Alberta Ltd. has many lenders to approach based on your circumstances.

When should I obtain an approval for lower rates for my mortgage which is maturing?

Begin shopping around by asking your TMG The Mortgage Group Alberta Ltd associate request from lenders for an interest rate at least 90 days before your mortgage matures. Lenders will often guarantee an interest rate to you as much as 120 days before your mortgage matures. Most lenders will cover or offset a majority of the costs of transferring your mortgage. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.

Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one.

How will child support affect mortgage qualification?

Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for.
Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

What is a HELOC?

A HELOC (home equity line of credit), is a secured, revolving open mortgage product which requires only the accumulated interest to be paid each month as a minimum payment, and is often available to be paid off in full at any time, without penalty. HELOC’s are an excellent way to use your home as a piggy bank, and utilize your equity from time to time for purchases, investments or those unexpected contingencies in life.

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