The Benefits of Consulting a Mortgage Broker

Michael Hallett • May 08, 2019
Navigating the real estate and mortgage processes with the help of an expert mortgage broker can help set your mind at ease when making one of the largest financial decisions of your life.

Mortgage brokers negotiate with lenders on behalf of borrowers daily, so they know the ins and outs of what’s really important when arranging the best mortgage product and rate based on the unique immediate and longer-term needs of each borrower.
Brokers have access to multiple lenders’ products — including offerings available through banks, credit unions and trust companies, as well as alternate and private lenders. This means more choice for you — and better access to a product and rate that will meet your specific mortgage requirements.

Look Beyond Rate

While mortgage rate plays an important role in the affordability of your mortgage, there are a lot of other factors that can end up costing you more down the road if you fail to consider them when negotiating your mortgage terms. For instance, if you opt for a five-year fixed-rate no frills mortgage product to take advantage of a great rate upfront, but you decide to move before the five-year term is up, you may face thousands of dollars in penalties to break your mortgage. These penalties can far outweigh any savings you made in opting for a lower upfront rate.

By discussing your longer-term needs and goals with you at the start of your home and mortgage shopping experience, your mortgage broker will also help ensure you look for properties within your means — avoiding the potential issue of falling in love with a home you simply can’t afford.

Your mortgage broker will ensure you’re pre-approved for a mortgage so you know what you can afford. And, should rates increase during your pre-approval period, rest assured you will be offered the lowest rate.

Use a Broker at Renewal

It’s just as important to negotiate your mortgage product and rate at renewal time as it is the very first time you get a mortgage.
Your mortgage broker should stay in touch with you throughout the life of your mortgage and help you every step of the way. This partnership lets them re-evaluate your needs annually and assist you with a refinance when you’re in need of extra money for such things as financing renovations or your children’s education. You may also wish to buy an investment or rental property down the road.

Ask questions

If you don’t understand something your mortgage broker has told you, it’s important to ask for clarification. It’s their job to ensure you understand. After all, in the vast majority of cases, mortgage brokers across Canada are paid by the lender once they successfully place your mortgage. So it’s in your broker’s best interest to ensure you receive the best possible mortgage product and rate now and as long as you have a mortgage.

This article was produced by Mortgage Professionals Canada (formerly CAAMP), the national association and the collective voice of the mortgage industry in Canada.

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The Property Matters in Mortgage Financing

By Michael Hallett • 08 May, 2024
When looking to qualify for a mortgage, typically, a lender will want to review four areas of your mortgage application: income, credit, downpayment/equity and the property itself. Assuming you have a great job, excellent credit, and sufficient money in the bank to qualify for a mortgage, if the property you’re looking to purchase isn’t in good condition, if you don't have a plan, you might get some pushback from the lender. The property matters to the lender because they hold it as collateral if you default on your mortgage. As such, you can expect that a lender will make every effort to ensure that any property they finance is in good repair. Because in the rare case that you happen to default on your mortgage, they want to know that if they have to repossess, they can sell the property quickly and recoup their money. So when assessing the property as part of any mortgage transaction, an appraisal is always required to establish value. If your mortgage requires default mortgage insurance through CMHC, Sagen (formerly Genworth), or Canada Guaranty, they’ll likely use an automated system to appraise the property where the assessment happens online. A physical appraisal is required for conventional mortgage applications, which means an appraiser will assess the property on-site. So why is this important to know? Well, because even if you have a great job, excellent credit, and money in the bank, you shouldn’t assume that you’ll be guaranteed mortgage financing. A preapproval can only take you so far. Once the mortgage process has started, the lender will always assess the property you’re looking to purchase. Understanding this ahead of time prevents misunderstandings and will bring clarity to the mortgage process. Practically applied, if you’re attempting to buy a property in a hot housing market and you go in with an offer without a condition of financing, once the appraisal is complete, if the lender isn’t satisfied with the state or value of the property, you could lose your deposit. Now, what happens if you’d like to purchase a property that isn’t in the best condition? Being proactive includes knowing that there is a purchase plus improvements program that can allow you to buy a property and include some of the cost of the renovations in the mortgage. It’s not as simple as just increasing the mortgage amount and then getting the work done, there’s a process to follow, but it’s very doable. So if you have any questions about financing your next property or potentially using a purchase plus improvements to buy a property that needs a little work, please connect anytime. It would be a pleasure to walk you through the process.

Getting a Mortgage While on Parental Leave

By Michael Hallett • 01 May, 2024
Chances are if the title of this article piqued your interest enough to get you here, your family is probably growing. Congratulations! If you’ve thought now is the time to find a new property to accommodate your growing family, but you’re unsure how your parental leave will impact your ability to get a mortgage, you’ve come to the right place! Here’s how it works. When you work with an independent mortgage professional, it won’t be a problem to qualify your income on a mortgage application while on parental leave, as long as you have documentation proving that you have guaranteed employment when you return to work. A word of caution, if you walk into your local bank to look for a mortgage and you disclose that you’re currently collecting parental leave, there’s a chance they’ll only allow you to use that income to qualify. This reduction in income isn’t ideal because at 55% of your previous income up to $595/week, you won’t be eligible to borrow as much, limiting your options. The advantage of working with an independent mortgage professional is choice. You have a choice between lenders and mortgage products, including lenders who use 100% of your return-to-work income. To qualify, you’ll need an employment letter from your current employer that states the following: Your employer’s name preferably on the company letterhead Your position Your initial start date to ensure you’ve passed any probationary period Your scheduled return to work date Your guaranteed salary For a lender to feel confident about your ability to cover your mortgage payments, they want to see that you have a position waiting for you once your parental leave is over. You might also be required to provide a history of your income for the past couple of years, but that is typical of mortgage financing. Whether you intend to return to work after your parental leave is over or not, once the mortgage is in place, what you decide to do is entirely up to you. Mortgage qualification requires only that you have a position waiting for you. If you have any questions about this or anything else mortgage-related, please connect anytime. It would be a pleasure to work with you.
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