SAMARY MORTGAGES

Frequently Ask Questions

Why do you need a mortgage broker agent?

  • A mortgage agent coordinates borrower’s needs and lender’s terms and conditions until closing the mortgage. It is a time-consuming process due to significant background information gathering and verification involved
  • Unlike your bank, a mortgage agent works for you, his/her loyalty is to you, not the lenders
  • A good mortgage agent will find the best product in the market for you; bank provides their own product only
  • If you have a lower credit score or other challenges, a professional mortgage agent knows and has access to lenders who are willing to provide mortgage products to you
  • Contact Samary, your trusted mortgage agent for a quality conversation

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What is a Conventional Mortgage?

  • A mortgage that does not carry any form of high-ratio or mortgage insurance premium (e.g. down payment 20% or more is considered as a Conventional Mortgage)
  • Contact Samary, your trusted mortgage agent for more details

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What is Closed Mortgage

  • A closed mortgage is a restrictive type of mortgage that cannot be prepaid, renegotiated, or refinanced without paying breakage costs or a penalty to the lender
  • With a closed mortgage, the interest rate is more attractive than an open mortgage because you are limited by how much extra you can pay towards your mortgage each year
  • Whenever possible, be sure to select the “original mortgage balance pre-payment option” as this will enable you to pay off more in a year than the “current balance” alternative
  • Contact Samary, your trusted mortgage agent who is willing to have an informative conversation with you

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What is Open Mortgage?

  • An open mortgage provides the flexibility of being able to repay all or part of your mortgage at any time during the term without paying a prepayment charge/penalty
  • The interest rate is usually higher than on a closed mortgage with a comparable term length; this is because it allows more flexibility to put extra money toward your mortgage on top of your regular payments
  • Contact Samary, your trusted mortgage agent for a detailed insight

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What is the mortgage default insurance?

  • Mortgage default insurance protects lenders in the event a borrower defaults on a mortgage
  • If your down payment is less than 20% of the purchase price of your home, you must buy mortgage loan insurance
  • Mortgage insurance in Canada can be purchased from Canada Mortgage & Housing Corporation (CMHC), Sagan (former Genworth Financial) and Canada Guaranty
  • Contact Samary, your trusted mortgage agent for an assessment

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What is a stress test?

  • The mortgage stress test requires lenders to check that a borrower can still make the payment at a rate that is higher than the actual mortgage rate
  • When you apply for a mortgage, you will be offered a contracted rate; hopefully, this will be as low as possible; however, your lender needs to check that you will be able to pay back your mortgage based on the Bank of Canada qualifying rate
  • This means that your income needs to be high enough and your existing debt low enough, to be able to pay down your mortgage at that higher rate
  • Current Bank of Canada qualifying rate is 4.79% (from 01 June, it may increase up to 5.25%!)
  • Contact Samary, your trusted mortgage agent for a quick Pre-Approval

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Can I use gifted funds as a down payment?

  • Yes, gifts from close family members such as parents, siblings etc. are acceptable for a first time home buyer, owner occupied unit
  • A gift letter signed by the donor is required
  • The gifts must be in the borrower’s bank account prior to the application submission
  • Contact Samary, your trusted mortgage agent to discuss the actual need of a gifted funds

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How much maximum I can withdraw from RRSP for down payment?

  • The Home Buyer Plan (HBP) allows you to withdraw up to $35,000, tax–free, from your Registered Retirement Savings Plan (RRSP)
  • It can be used only to buy or build a qualifying home
  • After the 2 year grace period, you’ll have a maximum of 15 years to repay the full amount back into your RRSP
  • This is only for;
    • First time home buyers
    • Residents or Citizens of Canada
    • Owner occupied homes
  • Contact Samary, your trusted mortgage agent to discuss the actual benefits and the economy in your specific situation

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What is the minimum down payment?

  • 5% of the purchase price for a property less than $500,000
  • 10% for the next $499,999  
  • 20% for all dollars exceeding $999,999
  • Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources (ex. Savings, RRSP, TFSA etc.) or a gift from a family member
  • 20% of the property value for rental units

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Will I even qualify for a mortgage if I have bad credit or bankruptcy?

  • If you know you have a low credit score, you should be transparent with the mortgage agent from the start
  • Depending on the circumstances surrounding your consumer proposal or bankruptcy and it’s history, there are lenders in the market who will consider providing mortgage financing to you
  • Contact Samary, your trusted mortgage agent who will find mortgage products, which are best tailored to your situation

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