How Working With a Mississauga Mortgage Broker Can Get You The Best Canadian Mortgage Interest Rates

One of the first things that many people think about when they are applying for a mortgage is the current interest rate and how it will affect their monthly payment, as well as how much money they will end up spending over time. Although interest is avoidable if you are able to buy your house outright, most of us are unable to do this and interest becomes a necessary evil, one that can’t be avoided. However, by working with a Mississauga mortgage broker, you have a chance to save yourself on interest by obtaining the best Canadian mortgage interest rates possible – all while maintaining a good credit score.

Since a credit check is unavoidable when going for mortgage approval – indeed it is often the first thing a mortgage broker will ask to see – making sure that these checks don’t harm your credit is very important. Rather than going from bank to bank to find out the best Canadian mortgage interest rates and applying to see if you qualify, which will result in numerous credit checks thereby negatively impacting your credit score, working with a Mississauga mortgage broker allows you to research various different lenders for the best Canadian mortgage interest rates all using the same credit check.

So how does a Mississauga mortgage broker help you save on interest? There are a few important things to keep in mind.

As mentioned, a Mississauga mortgage broker has the ability to check with a number of different lenders to find the best Canadian mortgage interest rates for you. Instead of going from bank to bank, which will often only give you access to one or two interest rates, a Mississauga mortgage broker with access to multiple lenders can do the research for you and go to the different banks and private lenders to find you the best Canadian mortgage interest rates out there.

Another way to save on mortgage interest is by having your Mississauga mortgage broker search out a mortgage with adjustable rate mortgage interest. If you are willing to take a bit of risk, you can reap great rewards. What is a mortgage with adjustable rate mortgage interest? An adjustable rate mortgage is a type of mortgage in which the interest rate changes to reflect changing interest rates. Typically the rate is set for a specific period of time for the beginning of the mortgage, and then changes (either increasing or decreasing) as Canadian mortgage interest rates change. This can end up saving you thousands on interest because if the interest rates go down, you are not stuck with a rate that is higher – as would be the case with a fixed rate mortgage. Additionally, the interest rate on an adjustable rate mortgage is already lower than a fixed rate mortgage because of the risk involved.

Instead of going from bank to bank, which can negatively impact your credit score while only giving you a few different rates, working with a Mississauga mortgage broker can give you the freedom to look at many different Canadian mortgage interest rates while still keeping your credit in check.

For more information about Mississauga mortgage brokers and how they can help you get the best Canadian mortgage interest rates, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Self-employed or on 100% commission: A Mississauga Mortgage Broker Can Help You Get the Best Mortgage Rates

Buying a home is an exciting time. Whether you are a first time home buyer, are moving up or down-sizing, buying an investment property or looking to refinance your home, getting a mortgage gives you the ability to search within your price range for the perfect property. However, if you are self-employed or on 100% commission, you may be finding it far more difficult to obtain mortgage financing compared to someone with a regular salaried income – unless you work with a Mississauga mortgage broker.

Statistics show that almost 20% of all Canadian income earners secure their primary source of income from either a personal business or from a job that pays based on commission. Even though this represents a substantial portion of the Canadian population, it remains clear that self-employed and 100% commission paid individuals have much more difficulty obtaining mortgage financing. Why is this and how can you get a mortgage if you are self-employed or on 100% commission?

Why is it so tough? Since most big banks provide mortgage approval based on your average monthly income, easily visible through past paystubs, those who run their own business or work on 100% commission know that the process is far more complex. Monthly income often varies from one month to the next, and a yearly income can often be hard to determine as far as how it differs from year to year. Another issue for big banks is that many self-employed business owners minus expenses in lieu of surplus income, which is something that banks often refuse to recognize, whereas a Mississauga mortgage broker may not.

When applying for a mortgage when self-employed or if you are working on 100% commission, lenders often want a great deal more income verification and information compared to those with traditional income sources. An outline of projected profits for the upcoming years is often considered far less guaranteed when compared to salary, regardless of how your business may have been performing over the last few years. Working on 100% commission poses the same problem, as even if your profit margins and sales have been strong, they are not necessarily guaranteed to stay that way.

So what can you do if you find yourself in this position? Working with a Mississauga mortgage broker rather than going through a big bank, often provides you with far more options if you are self-employed or on 100% commission and looking for mortgage approval. A Mississauga mortgage broker, one with access to a wide portfolio of lenders, can ensure that you are able to receive mortgage funding even if you are not a regular salaried employee. Working with both banks and private lenders, the right Mississauga mortgage broker will be able to obtain the best rates for your mortgage regardless of your employment situation.

If you are self-employed or on 100% commission and looking for a mortgage, find out how a Mississauga mortgage broker can help you by contacting Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Ontario First Time Home Buyer? What You Should Know About Your Down Payment on a House in Ontario

As you start out on the road to purchasing your first home, you will quickly realize that there are several different things that need to be considered and done before you make an offer on the perfect house.  As an Ontario first time home buyer, one of the things that you should be thinking beforehand is your down payment on a house.

What is a down payment on a house? A down payment on a house is the total amount of money you are required to pay upfront when you purchase a home. The minimum down payment required in Canada is 5% of the total purchase price. So, for example, if you are purchasing a home for $300 000, the down payment on a house, at the 5% minimum, would be $15 000. However, 5% is just a minimum, and you are able to put down any percentage you would like after that.

What is a down payment on a house for?  The main purpose of a down payment on a house is to protect the lender in case the borrower defaults on the loan. It reduces the lender’s risk as the down payment is used as collateral and if defaulted, the lender is able to recover at least partial funds from the loan.

As an Ontario first time home buyer, the purpose of a down payment on a house for you is to pay some of the mortgage up front. Whatever the amount of your down payment is, that amount is taken off of the total mortgage price, meaning that you are required to pay less over time.

So what are the benefits of a bigger down payment on a house? There are a few. The first, and most obvious, is that a bigger down payment means a lower monthly payment. If you are an Ontario first time home buyer this can be crucial because it decreases your overall monthly carrying costs – which can mean a higher chance of mortgage approval and less financial strain in the future. It also means that, since you are borrowing less, you are not paying as much interest. A further benefit of a bigger down payment on a house is that your CMHC insurance premium, calculated as a percent of your mortgage amount, decreases as your down payment increases.

So where can the money for your down payment on a house come from? As an Ontario first time home buyer you have many different options as far as putting together a down payment on a house. Obviously saving a certain amount from every paycheque is a valid option – but it is not the only one. One of the ones that is quite appealing for Ontario first time home buyers is to take advantage of the RRSP Home Buyers’ Plan, which allows Ontario first time home buyers to use up to $25 000 from their Registered Retirement Savings Plan, tax free. Another source is a gift from a family member – but it has to be a gift, it cannot be a loan.

As an Ontario first time home buyer, getting ready to purchase a house is an exciting time. Being prepared is crucial if you want the process to run smoothly. Knowing how much of a down payment on a house you will need and where it will come from is just one of the many things that you will need to consider.

For more information about a down payment on a house and other things to know as an Ontario first time home buyer, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Canadian Mortgage News - CMHC Mortgage Amortization Changes and How They Will Impact You

The second half of this year has been big for Canadian mortgage news. In July, the Canadian Mortgage and Housing Corporation (CMHC) amended its guidelines and mortgage amortization rules in an effort to try and decrease the debts of current and future homeowners in Canada. These guideline changes have had some significant impacts, particularly for those individuals seeking mortgages of over 80% financing.

The most significant change is with regards to the mortgage amortization period. Any mortgage contract prior to July 9^th provided the option to choose a 30 year amortization period. After July 9^th though, this mortgage amortization period has changed from 30 to 25 years. This will, on average, increase monthly mortgage payments by about 12%.

There are some pros and cons depending on your current financial situation that accompany these mortgage amortization period changes, especially for first time home buyers. Firstly, these changes make it a bit tougher to get approved for a mortgage.  Since one of the goals of these changes overall is to ensure that the individual seeking the mortgage is better prepared for home ownership, a shorter mortgage amortization period may affect your approval. When a lender assesses an individual’s ability to financially manage a mortgage, they usually calculate the maximum amount that is financially manageable. Since a shorter mortgage amortization period increases the monthly mortgage payment, this may negatively impact your ability to receive approval for a mortgage.

At the same time, if a small increase puts you over the threshold of affordability, perhaps it is time to rethink the amount that is being sought.

On the flipside, the positive aspects relate to the decreased interest that you will pay thanks to a shorter mortgage amortization period. Knocking 5 years off of your mortgage term can save you significant interest in the long run, and leave you mortgage free 5 years sooner.

Another result of the CMHC guideline changes impact mortgage refinancing. Mortgage refinancing, originally maxed at 85% of the value of the home, has been reduced to 80%. This change, like the altered mortgage amortization period, is meant to promote saving through home equity and to decrease the debt load for current homeowners.

Since these changes are due largely in part to the high amount of debt being carried by average Canadians, it is no surprise that yet another change to CMHC guidelines is in respect to individual gross debt service ratio. Gross debt service ratio, which refers to all of your property-related costs (mortgage payments, property taxes, heating, condo fees, etc.), must not exceed 39% of your total income. This has been decreased from 44%.

Another CMHC change aside from a shortened mortgage amortization period, lower mortgage refinancing, and a lower gross debt service ratio, includes the banning of government-backed mortgage insurance on those properties costing over $1 million – although this is less of an impact for most of the population that the other changes.

For more Canadian mortgage news or to find out more about CMHC guideline changes including a shorted mortgage amortization period, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com