Toronto Mortgage Knowledge Centre

Toronto Mortgage FAQ's

Why use a Toronto Mortgage Broker?

Whether you’re in the market for a new home or a first time home buyer, you’ll want to be sure that you have a Toronto mortgage broker working for you that will match your needs to the very best mortgage product with the best rate! Our Toronto Mortgage Knowledge Centre provides useful mortgage information.

• We Work Harder For You to Save You Money
• We are independent and have 100’s of different mortgage products available
• We get better mortgage rates than your local bank branch 99.9% of the time
• We are not middle-men; our direct relationships with trusted lenders will save you money
• Our services are FREE to our clients OAC
• Our goal is to show you how to pay off your mortgage sooner with more savings
• We will help you to invest and make more money through your mortgage

I have good credit and a very good job – should I still use a Toronto mortgage broker?

YES! The old myth that mortgage brokers only help bad credit and no job applicants is exactly that a MYTH. If you’re looking to shop for the best mortgage product with the best rate, you would need to visit different branches, making appointments with bank tellers and applying over and over again. This WILL hurt your credit score and cost you time and sanity. Toronto mortgage brokers only have to pull your credit report once then we shop for the best rate and product without damaging your credit score and wasting any of your time. Best of all it’s FREE!

Is Applying Online Safe & Secure?

Yes. Your personal and financial information is encrypted and sent to our secure off site server. Your information is never sold or used for third party companies. If you don’t feel comfortable about applying online, not a problem and we understand, your application can be done either in person, via fax or by telephone. We will do what is convenient for you!

What is the maximum purchase price of a home with as little as 5% down?

As of September 2003, CMHC has removed its price ceiling limitations. There is not a limit from CMHC but majority of lenders do have maximum purchase that varies from lender to lender. Believe it or not, we have access to lenders who will give you the 5% CASH on closing, so you can get a mortgage with 0% down payment.

What is a “No Frills” or “Value” Mortgage?

A no frills and value mortgage product varies from lender to lender but in general these types of mortgages have very competitive rates usually below the average, making them very attractive to customers who especially shop rate not product. The biggest differences besides the rate from a normal mainstream mortgage are the following:

1. They are usually “Closed” meaning you cannot break the mortgage, refinance or prepay unless you have a bonafide sale and if it’s allowed the penalties are astronomically high.
2. They are “Skinny” meaning you might only have a monthly payment option, amortized over 25 years restriction, they don’t offer any annual or monthly prepayment options opposed from a main stream mortgage that usually offers bi-weekly, weekly payments, prepayment from 5% - 25% annually or as a payment top up.
3. They are not usually assumable or portable, meaning if you sell your home and purchase another you may not be able to carry your current mortgage with you and would have to pay a penalty and reapply at a higher rate mortgage.
4. They are usually a “Quick Close” meaning the rate is guaranteed for only 30 to 45 days opposed to the average of 120 days with main stream mortgages.
5. Most of these types of mortgages require the client to pay the insurance premium regardless if it’s a conventional mortgage resulting in an average of 1% insurance fee added to the mortgage amount.

How do Toronto mortgage brokers find the best rates for clients?

We study the mortgage rate markets and have direct access to many different lenders that offer us exceptional rates that are not advertised to the public. Due to our direct relationships and our volume with lenders, we are able to offer our clients promotional rates that the client wouldn’t be able to negotiate with their banks on their own.

How to save $1000’s by refinancing your current mortgage?

Refinancing your mortgage and paying the penalty can still save you money, use your equity to consolidate your debt, get a better rate or lower your monthly payments makes sense.

Why purchase an investment property?

We help our clients to increase their assets and create wealth. Why not let us help you by more then one property? We are experts at finding ways to help you achieve your dreams of multiple home ownership. There are many tax benefits to buying a rental property. We will create a financial plan, and show you how to always be on top and get your money make money for you!

How is using a Toronto Mortgage Broker different from using your Bank?

The answer is simple, RATE and SERVICE! Many of our clients have been very happy after switching their mortgage with us. You will do very little work, no negotiating, no shopping around, excellent service, and a stress free experience. After working with us, you will never go back to the bank again!

People are simply tired of dealing with their bank’s rates that are being offered today. They never give you the best rate off the top and you always have to NEGOTIATE. Aren’t you fed up with negotiating, and still not know if you got the best deal or not? Our job is to always find the best deal for you! Our name “LENDING SUPERSTORE” says it all….Our promise to you is to “SHOP TILL WE DROP!”

People are tired of dealing with the bank’s poor level of service today. How many times have you called your rep at the bank who NEVER returns your calls? Or calls you back days later when you needed help yesterday? Our clients have been very satisfied with our service because our Mortgage Agents are easily ACCESSIBLE. We will meet with you at the convenience of your own home. You don’t have to take time off work to come to a branch. We have fast turnaround times, and we treat everyone the same way we want to be treated!

What is a conventional mortgage?

A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price, a loan to value of or less than 80%, and does not normally require mortgage loan insurance.

What is a high ratio mortgage?

Within Canada, if a loan is high ratio it must be insured with mortgage insurance. The high ratio insurance premium is paid by the borrower as a onetime “fee” at the time of funding of the mortgage. The insurance protects the lender against default on the mortgage. Mortgage insurance premiums range from 0.50% up to 5.15% of the mortgage loan amount, depending on the loan to value ratio.

If the borrower defaults, the lender will take legal action and sell the property. In the event of a shortfall, the mortgage insurer will pay the lender the difference/ shortfall.

Borrowers with less than 20% down payment on a property would not otherwise be able to obtain a mortgage due to the risk incurred by financial institutions, without Mortgage Insurance. Borrowers with less than 20% down payment would have to be insured by one of the 3 insurers which are CMHC, Genworth Financial, or Canada Guaranty.

What is an amortization?

Amortization is referred to the life of a mortgage, or the amount of time it will take to fully repay the mortgage based on a set amount of principal and interest mortgage payments.

What is a term?

The term of a mortgage is the current contract period of the mortgage. Terms can range from 6 months to 25 yrs.

What is an open mortgage?

With an open mortgage, the borrower can repay the loan, in part or in full, at any time prior to renewal/ maturity without penalty. An open mortgage offers more flexibility without penalty, but with a slightly higher interest rate.

What is a closed mortgage?

With a closed mortgage, the borrower cannot repay, renegotiate, or refinance before maturity without paying a penalty. In some cases depending on the type of product, a closed mortgage is completely closed for a certain period and can only be repaid early if the house is sold, meaning a bonafide sale. The mortgage in this case can be repaid early with a penalty.

What is a fixed rate mortgage?

The interest rate on a fixed-rate mortgage is set for a pre-determined term - usually between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected. The rate is guaranteed to stay the same for the entire term of the mortgage

What is a variable rate mortgage?

A variable rate mortgage is one where the interest rate fluctuates with prime rate. The Bank of Canada announces 8 times out of the year any prime rate changes and the banks adjust their bank prime rate accordingly. If the bank’s prime rate increases, your payments too will increase, and if the bank’s prime rate decreases, so will your payments.

Some institutions have options for a fixed or variable payment plan. If you are on a variable payment plan then your payments will go up or down with prime. If you are on a fixed payment plan, then your total mortgage payments will continue to stay the same and the bank will adjust within your payment the amount that will go towards principal and interest.

What is a payment frequency?

The payment frequency refers to how often and when payment will be made. Most lenders offer four payment frequencies: Weekly, Biweekly (every other week), Monthly, Semi-monthly (payments made twice a month)

How can you use your RRSP to help you buy your first home?

Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP.

To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan.

The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.

While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your financial planner whether this strategy makes sense for you, given your personal financial situation

What is mortgage life insurance?

Mortgage life insurance, when approved, is paid by the borrower and assures that any outstanding balance on the mortgage will be repaid in the event that the insured borrower dies. The applicable premium will be calculated and will be collected as part of each regular payment. (ie. annual mortgage life insurance premium divided by the frequency of their payments). If a borrower does not wish to have their mortgage life insured, they must sign and waiver of insurance. Borrowers may also arrange their own insurance from a 3rd party insurer.

Who pays my property taxes?

Borrowers can decide whether they would like the lender to pay their municipal taxes on their behalf. The lender may decide to pay the property taxes as a condition of the mortgage on high ratio loans. If the borrower requests that the lender pay their municipal taxes OR if the lender makes it a condition of the mortgage agreement to pay the taxes, the lender will collect an amount with each regular payment (ie. Annual estimated municipal taxes divided by the frequency of their payments) and place the funds in a tax escrow account attached to the mortgage. The lender will then pay the taxes directly to the respective municipality when due.

If someone doesn’t pay their taxes upon notification, th municipality has the right to sell the property for the outstanding tax arrears and pay nothing to the lender.

Is fire insurance necessary?

Yes it is. All lenders and banks will not allow the mortgage to close without proof of fire insurance. The borrowers must obtain sufficient fire insurance to cover the full replacement value of the property in the event of fire or damange. Full replacement value covers the cost associated with rebuilding the house, but does not cover the contents. The brrowers would have to get additional coverage for contents. This is a condition of all mortgages to ensure that the security of the home is protected. When the fire insurance is obtained, the borrowers must name the lender as the “First Loss Payable.” This ensures that in the event of fire or damage to the property, the lender is the first paid in any claim situation.