Frequently Asked Questions About Mortgages
Have you saved up a deposit, found your dream home, and scoped out the neighborhood? All that’s needed now is to secure a mortgage. However, when it comes to mortgages, you may have many questions but often find answers difficult to come by. Therefore, Coast2Coast Mortgages wants to arm you with the most accurate information available to help you buy a house. To do this, we’ve answered some of the most frequently asked questions about mortgages.
1. What costs should I budget for when making a home purchase?
There are one-time and ongoing costs associated with purchasing a home. It would be best if you calculated both when making a home buying decision.
One-time costs may include:
a. Appraisal fees
b. Land transfer taxes
c. CMHC / GENWORTH mortgage insurance application fee and insurance premium (if applicable) – may be added to the mortgage amount
d. Moving expenses
e. Legal fees
f. Property and school tax adjustment
g. Heating, hydro, and water adjustment
h. Title insurance
i. Utility connections
j. Home inspection fee, if necessary
Ongoing housing costs include:
a. Mortgage payments
b. Home insurance
c. Property taxes
e. Condominium fees (if applicable)
Your lawyer and real estate agent can provide estimates of some of these costs and should consult with you before you sign any documents or make any commitments.
2. When is mortgage insurance required?
If the mortgage amount exceeds 80% of the lending value of the mortgaged property, the mortgage is considered a “high ratio.” Accordingly, and as required by law, insurance must be purchased for the total amount of the mortgage. Mortgage insurance is available from CMHC, Genworth, and Canada Guaranty. An application fee and an insurance premium (which can be added to the mortgage amount) are payable to the insurer.
3. What is a “High Ratio” and a “Conventional” mortgage?
An insured “High Ratio” mortgage is when the loan amount is greater than 80% but less than 95% of the home’s market value. In other words, you have less than 20% of a down payment.
High-rated mortgages can be insured by Genworth Financial Canada, a private insurer, or Canada Mortgage and Housing Corporation (CMHC), which operates under the National Housing Act (NHA).
A “Conventional Low Ratio” mortgage is when the loan amount is equal to or less than 80% of the home’s market value. In other words, you have a down payment of 20% or more.
4. Can I take my mortgage with me when I move?
Yes. Subject to credit approval, when you move from one home to another in Canada, you may be able to take your existing mortgage balance with you, at the same interest rate, for the remaining term. Alternatively, you may be able to combine your current mortgage balance with additional financing at a blended rate to finance a new home (applicable to fixed-rate mortgages only). No interest penalty will be charged.
5. Can I switch my mortgage from my current lender to another?
Yes, if you already have a residential first mortgage on your home in Canada with another approved lender, we can help you switch to one of our preferred lenders for the best possible interest rates. Certain conditions may apply, and your current lender may charge prepayment penalties or other costs.
6. Can I increase the amount of my existing mortgage during the term and avoid any penalty?
Yes. When you wish to increase your mortgage to obtain additional funds or buy another property in Canada, most lenders can provide you with a “blended fixed rate.” This rate is a blend of your current mortgage rate and the fixed mortgage rate applicable to the additional funds requested.
No interest penalty will be charged, but the resulting term of the mortgage must be equal to or greater than the remaining term on your existing mortgage. If you have a variable rate mortgage, we can also provide additional funds. But, rate blending is not available, and a modest interest penalty may apply.
7. Can I rearrange my mortgage?
Based on your financial situation, we can provide you with a pre-approval certificate that pre-qualifies you for a maximum amount of mortgage financing at a guaranteed interest rate for a hundred and twenty days from the certificate date. (Subject to change).
8. What will my mortgage cost be per month?
You can use our mortgage calculator to determine approximate monthly payments.
If you have any more questions about mortgages, get in touch with the experts at Coast2Coast Mortgages. As a leading mortgage consultant in Scarborough, Mississauga, and Miami, we work with honesty and integrity to provide quality mortgage solutions that address your needs. Our services are available across the Greater Toronto Area, York Region, Peel Region, Halton Region, Cambridge, Kitchener, Waterloo, Barrie, Innisfil, and the Durham Region.