There are many common questions people have with regards to qualifying for a mortgage. Here are some of the most common.
How much down payment do I need for a mortgage?
The minimum down payment you need for a mortgage in Canada is 5%.
This can come from your own funds, RRSP's in some situations, gifted from a family member, or in some cases, borrowed from a lender.
Can I use my RRSP's for my Down Payment?
Yes, there are first-time homebuyer programs available which allow you to use your RRSP's tax-free so you can purchase a home.
Please contact us to see if you and your types of RRSP's qualify.
If you have more questions about down payments for your mortgage, please contact us to for more details.
Income and employment types
What types of income is acceptable to lenders?
All mortgage lenders have different rules on what types of income they will accept.
Acceptable sources of income can be:
- Tips (if properly documented)
- Self-employed income
Some lenders also accept spousal and child support, as well as Canada Child Care Benefit and foster care income.
Please contact us for more details on the acceptability of your income sources. You may also want to read our in-depth article on Alternate Sources of Income that are Acceptable for Mortgages on our website.
What kind of employment is acceptable to mortgage lenders?
Depending on the lender, we can use:
- Business for self-income
- Commission income
- Contracted income
- Hourly income
- Salaried income
We also have solutions for:
- Tips (if properly documented)
- Child and spousal support
- Foster care income
- Maternity Leave
- Rental Income
- Part - Time employment
- Full-Time Employment
Let us maximize your allowable income to maximize your qualification budget.
Here are some of the factors you should consider before signing a mortgage renewal.
How do I ensure I am getting the Best Rates Available for my new Term?
Your current lender may not offer you the best rates they have on your renewal or even offer the best rates available.
There may be other lenders with better rates available at your renewal time. A mortgage associate with Advantage Mortgage has access to many lenders and can place your mortgage to ensure you get the best rate available that meets your needs.
How can Using a Mortgage Broker Save me Money and Help me Pay off my Mortgage Sooner?
If you are able to secure a lower interest rate you will save money on your mortgage repayment in the next term.
Also, you have the option of shortening the Amortization Term on your next term allowing you to pay off your mortgage years earlier. Both of these will help you save money in interest repayment over the term of the mortgage.
We will also try to find you a lender with the best prepayment options where you can pay a percentage of the principal every year without penalty, saving you interest.
Some mortgage lenders also allow you to increase the monthly payment, which again will save you interest over the term.
How do I ensure that if my Situation Changes and I need to Sell or Upgrade, I will be paying the least amount in Penalties if I have to get out of my Current Mortgage Term?
If you need to terminate your current mortgage term, there are two major ways banks and lenders calculate the penalty that you will pay.
The first is a three-month interest penalty.
The second is an IRD (Interest Rate Differential) penalty calculation.
Many lenders calculate this from their current posted interest rate and not the discounted rate that you signed for your current term.
This difference is used in a calculation with the remaining term on your mortgage to calculate your penalty. They will then charge the larger of the two types of penalties.
A mortgage broker at Advantage Mortgage can help find lenders that do not use this type of difference calculation as it is based on your actual signed rate and not the higher posted rate.
They can also give you options for variable rates or open terms if your situation going forward would benefit from that type of mortgage.
What if I am thinking of Upgrading, but not for a few Years? Are there options to assist me to minimize penalties?
Yes, mortgages with portability options.
If you're renewing and you know a possible upgrade or move is in your future, having a mortgage professional make sure that your new mortgage is portable will help you save money on fees.
Portability means you can move your mortgage to another property, minimizing penalties, and if needed, allowing you to port the current mortgage amount and add additional funds to the mortgage amount if you are upgrading to a more expensive property.
What does having a Mortgage Associate cost to assist me at Renewal Time?
Mortgage Associates are paid by the lenders. They are also paid on the amount of the mortgage and not the interest rate, so they will look out for your best interests.
At Advantage Mortgage, our goal is always to provide the best service possible, as we rely on referrals and repeat customers to grow our business.
Here are some common Questions that you may have with a Refinance
How do I ensure I am getting the Best Rates Available for my new Mortgage?
With access to a Large Selection of lenders, we can shop around and find you the Best Rate for your new Mortgage that best meets your needs and Financial Situation.
How much of the Equity in my Home can I Access?
Lenders will go to 80% Loan to Value on a Refinance Mortgage. That means you can access up to 80 % of the Value of your Home for Investment or Debt Consolidation. Typically an Appraisal will be required to get an accurate Value for your Home in the Current Market Conditions.
How do I ensure that if my Situation Changes and I need to Sell or Upgrade, I will be paying the least amount in Penalties if I have to get out of my New Mortgage Term?
If you need to terminate your Current Mortgage Term there are two major ways Banks or Lenders calculate the Penalty that you will Pay. The first is a Three Month Interest Penalty.
The Second is an IRD ( Interest Rate Differential) Penalty Calculation. Many Lenders calculate this from their current Posted Interest rate and Not the Discounted Rate that you signed your current Term at. This Difference is used in a Calculation with the Remaining Term on your Mortgage to Calculate your Penalty. They will then Charge the Larger of the two Types of Penalties. A Mortgage Professional can help find Lenders that do not use this type of Difference Calculation and it is based on your actual Signed Rate and not the higher Posted Rate.
They can also give you options of Variable Rates or Open Terms if your Situation going forward would benefit from that type of Mortgage.
What if I am thinking of Upgrading, but not for a few Years? Are there options to assist me to minimize penalties? Yes, Mortgages with Portability Options.
When Refinancing and you know a possible Upgrade or Move is in your Future, having a Mortgage Professional make sure that your new Mortgage is Portable will help you save money in fees. Portability means you can move your Mortgage to another Property, minimizing Penalties, and if needed, allowing you to Port the current Mortgage Amount and Add additional funds to the Mortgage amount if you are Upgrading to a more Expensive Property. We can also adjust your Mortgage Term to Minimize any Penalties you may incur.
Do lenders look at property types when qualifying?
One of the most crucial factors of a mortgage approval is the property itself.
Please note: Some mortgage lenders will not fund a mortgage on certain property types, so having access to multiple lenders improves your chances of becoming approved and purchasing your dream home.
New to Canada?
Buying your first home in Canada can be overwhelming, but Advantage Mortgage can help to make the experience an easy and enjoyable one. Here are some questions that could help you.
Can I purchase a home if I am new to Canada?
Yes, we have mortgage solutions for clients that are new to Canada on work visa's, pending landed immigrant status or recent permanent status.
This includes clients that do not have established credit in Canada.
What type of citizenship do I need and how long do I have to be in Canada to qualify?
In Canada, you can qualify for the New To Canada Programs offered by our insurers with either Landed Immigrant Status or Permanent Resident Status. Typically you have to be in Canada for a minimum of three months with a history of full-time employment for 3 months. Corporate relocations can be exempt from this requirement. You can qualify for the New To Canada Program for up to 5 years from moving to Canada.
How much down payment do I need and what can be the source of this money?
With Permanent Residence Status, you can qualify for a mortgage with a minimum of 5% down payment. This can come from your own resources or from non-traditional resources, such as a gifted down payment, borrowed money down, or corporate subsidies.
With Landed Immigrant Status, you can qualify with a minimum of 10% down payment with a minimum of 5% coming from your own resources and the additional 5% from non-traditional resources such as gifted down payment or corporate subsidies.
What type of credit history do I need to qualify?
Acceptable types of credit history are:
- international credit reports (Equifax or Transunion) demonstrating a strong credit profile
- two (2) alternative sources of credit demonstrating timely payments (no arrears) for the past 12 months
The two alternative sources required are:
- rental payment history
- (1) another alternative source (hydro/utilities, telephone, cable, cell phone and auto insurance)
Some other sources of optional credit history can be:
- a letter of reference from a recognized financial institution
- (6) months of bank statements from the primary account if international credit reports are not available
How do I get pre-qualified for a mortgage and what is the benefit?
A mortgage associate with Advantage Mortgage will collect all the required documentation to truly qualify you based on your current financial situation and let you know the TRUE BUDGET that you would qualify for based on the government of Canada's new mortgage qualification rules. This allows you to go home shopping with the confidence that you are in your proper price range. This will also allow us to know if there will be any issues with the final approval and completion of the sales process, helping to protect your deposit.
What type of employment do I need to qualify for a mortgage?
Mortgage lenders and insurers each have different guidelines on what type and term of employment will qualify for their programs. The New to Canada Programs requires a minimum of (3) months full-time employment. There are exceptions for corporate transfers. With access to a large selection of lenders, Advantage Mortgage has options to find solutions for your employment situations. Call us today at (780) 991-1600 and we'll help you better understand your options for securing a mortgage in Edmonton.
Let us show you the path to owning your first home in Canada. We recommend you read our informative article with must-have information for newcomers to Canada looking to purchase a home.
Can I get approved if I have previous credit issues?
Yes, of course!
We have access to mortgage lenders that work with all types and levels of credit and credit situations.
Let us help you get back on track to building a solid credit background.
Vacation or Secondary Homes
Do I need Money down to Purchase a vacation property?
In Canada, there is a minimum 5% down needed to purchase a secondary or vacation home.
This can come from your own resources, or in some instances, from a gifted down payment.
What types of properties qualify for this Program?
There are two classifications of properties:
- Type A year-round properties
- Type B seasonal properties
How do I get pre-qualified and what is the Benefit?
A mortgage associate will collect all the required documentation to truly qualify you based on your current financial situation and let you know the TRUE BUDGET that you would qualify for.
This allows you to go home shopping with the confidence that you are in your proper price range.
This will also allow us to know if there will be any issues with the final approval and completion of the sales process, helping to protect your deposit.
How do I determine the Budget for my Vacation or Secondary Home?
We will assess your current income levels and financial situation to confirm what budget you qualify for based on the lender and insurer guidelines for debt servicing.
This will help ensure a smooth purchase and closing process.
Financing for Acreage and County Properties
How much money do I need for a down payment to purchase an acreage property?
In Canada, there is a minimum of 5% down needed to purchase an acreage property.
That being said, certain things that may affect the amount of down payment needed are:
- size of the property (number of acres)
- the type of house
- location of the property in regards to the nearest populated city
- types of buildings on the property
- the intended use of the property
What Size of Acreage Properties Qualify for financing through a Mortgage Brokerage?
Lenders vary on the number of acres a property can include. Most will go to 5 acres, but some lenders will go to a maximum of 160 acres. Depending on the lender, they will also allow only a particular portion of the land to be included in the appraised value of the property to determine the loan-to-value (LTV) of the deal.
Larger properties may require a more substantial down payment to qualify for mortgage financing.
What types of homes can be on the property?
Most lenders have the same rules on types of homes that qualify for financing on acreage properties in comparison to urban dwellings.
One type of home that does have restrictions is modular or manufactured homes. A home on an acreage property must be permanently affixed to the property with set guidelines and have age restrictions.
There are solutions for these types of properties available through our network of mortgage lenders and may require a more substantial down payment.
What types of Outbuildings are allowed?
Typically garages, personal-use shops and sheds are allowed on the property.
Additional buildings above a house and garage may not be used in the appraisal value of the property to determine the loan-to-value of the financing. This may require a larger down payment to qualify for the funding.
Buildings that are used for business use, livestock, or farming may make the property ineligible, as it now falls into a different zoning usage. For business, agriculture, or farming type properties, a different type of financing is utilized.
What type of Zoning is allowed?
Acreage properties in Alberta must be zoned as residential, Ag residential, and in some cases, mixed zoning is allowed. Farming and business zoning is usually not allowed.
What additional Requirements are there?
Two of the most common additional requirements for an acreage property is:
- the source of potable water
- the type of sewage system in place
Acceptable water sources include wells and cistern. Or, if available, municipal water. There may be a requirement to get water testing done or to supply a current water evaluation on the property as a condition of finance.
Acceptable sewage systems include holding tanks, sewage fields, septic tanks, or in some cases, lagoons. Again there may be testing or current certification of the sewage system as a condition of finance.
How close does the Property have to be to an Urban Center?
Simply stated, every lender will have different rules regarding how close to an urban centre property has to be to qualify.
Most financing lenders will have a "distance vs. urban centre population size ratio" guide that they utilize, while some lenders will finance anywhere in Alberta.
Having access to multiple lenders allows us options in placing your mortgage with an acceptable lender that will suit your needs and situation.
Are there any additional factors that may affect the purchase of an acreage?
One of the most common additional factors you may see when purchasing a property in Alberta is the presence of an oilfield component. This may include an oil well, pump jacks, pipeline, or pipeline access directly on the Property. Different Lenders have different rules in place for these types of properties.
Is there any Difference in Qualifying for an Acreage Property?
Qualifying for an acreage or rural property is very similar to qualifying for an urban property.
Income requirements and debt servicing ratios are the same. However, you cannot use income generated by the property such as farming income to qualify as this is a different type of zoning and would not qualify you for financing.
There are additional qualifying factors for the property as stated above that may affect the amount of down payment needed to fit within the acceptable limits of loan-to-value (LTV) of the financing.
Lifestyle Changes affecting mortgages
How do I deal with a Property in a Divorce or Separation?
We have solutions for couples and business partners that have separated, allowing one of them to buy out the other, and in some instances, pay off joint debt.
This can mean the difference between having to sell a home and incur costs of letting one person remain in the house and maintain family harmony in a tough situation.
It also allows the leaving partner to receive equity that can be used to purchase a property for them.
Contact us today, and let us explain all your options in this somewhat difficult time. You may also benefit from reading our article on this topic, "how to deal with a property in a separation or divorce".
Can one Partner buyout the other Partner?
Yes... There are Spousal buyout programs available that allow one partner to finance up to 95% of the value of the home to allow Equity to be given to the other partner. This Program is also available to Partner Separation whether it be a Common-law Partnership or Partners such as siblings, Parental, or Non-Related Partners that have Purchased a property together and now want to split that Co-ownership.
How do we deal with joint debts in the relationship?
There are options where the joint debts can be paid out before the remaining equity is divided between the partners.
We are retired and neither would qualify for a Mortgage. What Now?
There are options to get equity out of the property without having to sell or obtain a new mortgage in one of the partners' names.
What do we need for Legal Documentation to show the terms of the separation?
Depending on the situation, (ie. Dependants or Support payments) will determine the type of documentation needed, such as Legal Separation agreements or Statutory Declarations. We can discuss your individual situation and help answer those questions.
Always get proper Legal Representation during a Separation or Divorce to ensure your best Interests are being looked after.
Does our Separation have to be Complete before we can proceed in dealing with our home?
Each individual situation will determine what the steps and documentation needed will be to proceed with the Process. We can advise you on these steps.
What is the process for getting the Second home and how do we qualify and know our budget?
We would assist you in knowing what your Budget is based on your situation, assist with Pre-Qualification so you are prepared to buy with confidence. We will work to get you the best Rates and Terms based on your individual Situation. We will also Advise you with the documentation needed to complete your purchase and answer any questions along the way.
Does it cost me to get Assistance?
No, it does not. Getting assistance and Guidance from a Mortgage Associate does not cost you any upfront fees. We will discuss your situation and answer your questions regarding your individual situation.
When can I ask for assistance?
Even if you are not sure that you are separating and would like some advice or information, our Assistance is always available to answer any questions you may have about the process with no Obligation.
Talk about this portfolio piece--who you did it for and why, plus what the results were (potential customers love to hear about real-world results). Discuss any unique facets of the project--was it accomplished under an impossible deadline?--and show how your business went above and beyond to make the impossible happen.
Mortgage Products and Options
Can I transfer my Current mortgage to get better rates?
Yes, of course!
There are switch and transfer programs available, as well as refinance options that allow you to secure a better mortgage rate, and in some cases, release some equity from your home to consolidate debt.
Contact us today, and let us show you your options.
Let us Answer any Questions you May have!!
Contact us now for your Free No Obligation Advice.