5 Tips for Successfully Becoming a Homeowner in 2023

General William Douglas 4 Jan

Are you thinking about becoming a homeowner in 2023? If so, now is the perfect time to start preparing! Owning a home is a big financial and emotional investment, and the more prepared you are, the smoother the process will be. Here are five tips to help you successfully become a homeowner in 2023:

Start saving for a down payment:

A down payment is typically a percentage of the home’s purchase price that you pay upfront. The larger your down payment, the lower your monthly mortgage payments will be. Start saving as early as possible so you have a solid foundation for your future home purchase.

Get your finances in order:

Before you start looking for a home, it’s important to get a handle on your finances. This includes creating a budget, paying off any outstanding debts, and building up your credit score. The higher your credit score, the more likely you are to get approved for a mortgage at a good interest rate.

Research mortgage options:

There are many different mortgage options available, and it’s important to choose the one that’s right for you. Consider factors like the length of the loan, the interest rate, and any fees or closing costs. It may be helpful to speak with a mortgage lender or a financial advisor to help you understand your options.

Start shopping for a home:

Once you have a good idea of what you can afford and what type of mortgage you qualify for, you can start shopping for a home. Consider factors like location, size, and features that are important to you. It may be helpful to work with a real estate agent who can help you find homes that meet your criteria.

Get pre-approved for a mortgage:

Getting pre-approved for a mortgage can give you a competitive edge when shopping for a home. It also helps you understand how much you can borrow and can make the process of getting a mortgage smoother and faster.

By following these steps, you can set yourself up for success as a homeowner in 2023. If you have any questions or need help navigating the home-buying process, don’t hesitate to reach out to me. I’m here to help you achieve your homeownership goals.

Advice for Single Homebuyers

General William Douglas 19 Dec

Buying a home is an exciting experience for anyone, and even more of a milestone when you’re doing it solo, but it can be a little different when you’re purchasing on your own. While it can be easier to tailor your mortgage and home search to exactly your needs, it can be somewhat more stressful handling the purchase of a home on your own… fortunately, that’s where a Dominion Lending Centres mortgage expert can help! They assist with your mortgage application, pre-approvals and final financing to make the entire mortgage process much smoother.

In addition to using a mortgage expert and having a trusted realtor, here are some other tips that can help improve your homebuying experience:

1. Be Aware of Your Financial History

Understanding your credit score and your financial history can help to improve your qualification potential. If your credit score is a little lower than it should be, or lower than you’d like for what you are trying to qualify for, you can take steps to improve this prior to seeking a mortgage and get better results.

2. Ramp Up Your Savings

Of course, while a mortgage will cover a large chunk of your home purchase, you are also required to have a down payment. In addition, you need to consider closing costs (1.5-4%) of the purchase price, as well as ongoing maintenance and costs for your new home (repairs, utilities, property taxes). It is important to determine your budget so you are aware of what you can afford monthly. BUT before you shop is also a great time to start ramping up your savings account so you can put more down and potentially reduce the overall mortgage.

3. Study The Marketplace

One of the most important aspects of homeownership is understanding what you can afford and where you want to live. These two key components can help you to determine your budget and the areas that you should be looking for a home, as well as what type of home size, amenities, etc. Understanding what is available can provide you with more information and help you fine-tune your shopping list.

4. Be Flexible When Possible and Firm When Not

While shopping for a home on your own can be much easier as you’re only concerned about your own needs, it is still important to be flexible. While it is easier to find a home that fits just ‘you’, keeping your options open can also have its benefits. Of course, if there are things you cannot live without or a location you really need to be in, it’s important to be firm about those things as well. Creating a list of wants and needs can help you determine where there is room to be flexible, and where there isn’t.

5. Consider Your Present and Future Needs

While you’re shopping for your new home for you today, you will also want to consider what your life might look like in the future. What are you doing 5 years from now? 10 years? Do you want to start a family or have children? Do you plan on changing jobs or perhaps requiring a move in a few years? All these things are important to be aware of so you can make the best choice for you today, but also ensure that you are considering your future needs.

6. Protect Yourself

Lastly, while you might not be purchasing your current home with a partner, it is important to leave room for this in the future to ensure that you and your home are protected. If you have another individual move into your home down the line, you could become common-law and that could cause complications. Having an honest conversation about expectations and responsibilities can help, as well as writing up a document for both parties to sign, indicating these responsibilities as well as outlining the investment made by the original owner and new partner.

If you are a single homeowner looking to make a purchase but are not sure where to start, don’t hesitate to reach out to me. As an expert in mortgages, I have experience in all types of situations and purchases and the knowledge to walk you through the process and ensure you get the best home and mortgage for YOU.

Using Your Homes Equity

General William Douglas 21 Nov

Using the equity with-in your home to reduce your monthly payments

Over the last 5 years owners of Real Estate have seen a great increase in their investments, but have also, due to inflation, seen their monthly expenses increase.

The cost of almost every commodity has significantly increased, monthly costs have increased at a far faster pace than regular income streams.

This has led to many Canadians using revolving debt more and more, Credit Cards, Lines of Credit and additional higher interest loans.

Unfortunately what many Canadians do not know is that when revolving credit balances reach over 30% of their balances then this will begin to negatively affect your credit score even if you make regular payments.

“Monthly costs have increased at a far faster pace than regular income streams”

Consolidating this debt into your mortgage is one way to reduce monthly outgoings and the amount of interest you are paying.

This is not the best strategy for everyone but does work in specific cases.

If you would like to discuss your specific situation please do not hesitate to reach out

Second Property. Get ready to make your next property purchase.

General William Douglas 8 Nov

So, you are looking to purchase a second property! Congratulations! This is an incredible opportunity and we are here to help provide you with the keys to success to expand your financial portfolio and ensure stability for the future.

Before you launch into this purchase there are a few things you should know, such as how to purchase a second property by tapping into existing home equity, the differences in requirements for vacation vs. rental or investment properties and who can qualify.

In the case of purchasing a secondary property, most lenders will allow you to borrow money against the equity you have in your current home and use it as a down payment for a second home. Before jumping in, it is important to understand the different financing options to determine which route best suits your circumstances and property goals.

REFINANCING

One option for tapping into your home equity for the purpose of purchasing a secondary property, is to refinance your mortgage. Essentially, mortgage refinancing means getting a reevaluation on your home and then redoing your mortgage based on the current value. This will allow you to tap into the equity your home has built over the years, and pull out the extra funds for a down payment on your secondary property.  Keep in mind, when using some of your current equity, it will increase the principal amount and the interest payments on your mortgage as the mortgage is now refinanced at a higher amount.

HELOC

There is a second option to unlock your home equity, which is through a line of credit or a HELOC, which stands for “Home Equity Line of Credit”. This option allows you to borrow money using the equity in your property, with the property as collateral.

A HELOC serves as a revolving line of credit to allow the borrower to access funds, as needed, letting you utilize as much (or as little) equity as required. HELOC payments are unique as they are interest only payments versus regular mortgages, which have both Principal Interest and Tax added on. Another benefit to utilizing a HELOC is that you will only pay interest on the amount you actually use! This can provide financial breathing room, especially during tight months. That said, if you do choose to pay the interest as well as a portion towards the principle, it can help you pay off the loan much faster.

You can utilize a HELOC by tying it to your existing mortgage or applying for it separately.

In Canada, you are able to borrow up to 65% of your home’s value using this method. However, keep in mind, your HELOC balance AND current outstanding mortgage cannot exceed 80% of your home’s value when added together.

Connect with me today if you want more information about the mortgage process.

Back to School: Credit Clean Up!.

General William Douglas 8 Sep

It’s time to go back to school… for your finances! The fall is the perfect time for a credit clean-up so that you are ready for the holiday spending season – and anything else the year can throw at you!

When it comes to cleaning up credit, there is no better time than now to recognize the importance of your credit score and check if you are on track with your habits. To get started with your credit clean-up, there are a few things you can do:

  1. Pull Your Credit Report: For most of us, our credit score is something we only think about when we need it. However, if you are unsure of where you stand, this is a great time to find out! The Fair Credit Reporting Act lets you get one free credit report every year through Equifax or TransUnion. Pulling your own credit report results in a “soft” inquiry on your report and will not affect your credit score. Click here to get your free credit report today!
  2. If You Find Errors, Dispute Them: When doing your annual credit score review, it is a good idea to go through line-by-line and confirm no errors. If you find any errors, report and dispute them immediately as they could be affecting your score.
  3. Consolidate Your Loans: One of the best tips for managing your credit and working towards future financial success, is to consolidate your debt. Consolidating debt means reducing multiple loans to a single monthly payment, which typically has a lower interest rate allowing you to maximize spend on the principal amount.

Once you have put the effort into cleaning up your credit, you will want to keep it that way! A few tips for maintaining your credit and maximizing your financial future include:

  1. Pay Your Bills: This seems pretty straightforward, but it is not that simple. You not only have to pay the bills, but you have to do so in full AND on time whenever possible.  Paying bills on time is one of the key behaviours lenders and creditors look for when deciding to grant you a loan or mortgage. If you are unable to afford the full amount, a good tip is to at least pay the minimum required as shown on your monthly statement to prevent any flags on your account.
  2. Pay Your Debts: Whether you have credit card debt, a car loan, a line of credit or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the most impact, start by paying the lowest debt items first and then work towards the larger amounts. By removing the low debt items, you also remove the interest payments on those loans which frees up money that can be put towards paying off larger items.
  3. Stay Within Your Limit: This is key when it comes to managing debt and maintaining a good credit score. Using all or most of your available credit is not advised. Your goal should be to use 30% or less of your available credit. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.


NOTE: If you find you need more credit, it is better to increase the limit versus utilizing more than 70% of what is available each month.

Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor). If you are ready to start your home-buying journey, or are looking to refinance your existing mortgage, a DLC Mortgage Expert can help you review your credit score and financial information to help you get the most from your money.

Buying a home within your means: what does it mean?

General William Douglas 9 Aug

House-hunting is exciting. However, don’t allow your enthusiasm to make you lose sight of the realities of your financial situation. It’s not enough to qualify for a mortgage. You must also ensure you can make the payments over the next 15, 25 or 30 years. Here are a few things to consider to avoid running into trouble.

THE ONE-THIRD RULE

Many financial professionals advise against spending more than one-third of your net income on your mortgage payments. You may be able to afford a larger payment, and your lender may agree to modify your agreement. Still, you should give yourself a buffer to ensure you have money on hand for an emergency.

TOTAL DEBT

You must consider all your debt when determining much you can afford to pay towards your mortgage every month. This is a significant factor for financial institutions and helps them determine how much they’ll let you borrow. For example, if your mortgage, car and credit card payments take up half your net monthly income, the bank may consider you a high risk and lend you less money.

OTHER COSTS

Always keep in mind that the cost of buying a house doesn’t stop at the mortgage. You must also factor in expenses like maintenance, repairs and municipal taxes when making your calculations.

Connect with me today if you want more information about the mortgage process.

Rules for gifting a down payment

General William Douglas 20 Jul

It has become more and more common these days for parents or families to gift their family members money in order to help them buy homes, usually in the form of down payment funds. For most young people in the country, homeownership is essentially out of reach without some form of help as down payments have grown so large in the past decades.

However, it’s not as simple as handing your child a stack of cash to go and get a mortgage. There are important considerations that have to be made, both on the giving and receiving sides before any gift is made.

In this article, we will cover some gift rules such as who can give and receive down payment help, how much can be gifted for a down payment, how the funds are taxed, what is a mortgage gift letter, and more.

Who can gift money?

Usually, anyone can give money to whomever they want, however, when it comes to gifting money for a down payment, it should usually come from an immediate family member. This is most commonly a parent or grandparent, but could also be a sibling or child. Most mortgage lenders prefer that these gifts come from direct family, so gifts from friends are off the table for conventional mortgage loans. In some cases, you may be able to be gifted by a more distant relative like an aunt or a cousin, but this will depend on the lender and you may be required to prove your relation to them.

You also can not get around the close family rule by having someone else give money to a close family member who gives it to you. Your lender may require proof that the money actually came from the gifters bank account by checking banking statements.

How much can I give?

If you are gifting a down payment, you can essentially give as much as you want, though most people like to put 20% down on their homes. In most cases, a buyer can get a mortgage with the entire down payment gifted, however, if they are self-employed they will be required to put up 5% of the down payment themselves.

How is it taxed?

Luckily, there is no gift tax in Canada for gifted down payment money. This means that regardless of how much you give, neither the gifter nor the recipient is required to pay taxes.

A gift is not a loan

You should also know as the person who is providing the money that this is not a loan. Any money gifted for a down payment must be provided with no expectation of repayment, and the gifter must legally certify as much. You could loan money to your family member, but this would not be considered a gift anymore. It would instead be considered an investment and would be subject to the relevant taxes as well as potentially adding to your recipients’ total debt service and affecting their mortgage applicability.

The gifter is allowed to give borrowed money if they want, for example, if they have taken money from a home equity line of credit but they will still be required to pay back the borrowed money and interest on their own with no help from the recipient.

What is a mortgage gift letter?

If you decide to go forward with gifting money for a down payment, you will need something known as a mortgage gift letter. Generally, the mortgage lender will want to know where the gifted money came from, how much it was, and to confirm that this money is, in fact, a gift with no obligation to be repaid. This is where mortgage gift letters come in. The gifter will provide this letter to the recipient to provide to their lender. Without a mortgage gift letter, your recipient may be unable to secure a mortgage as the lender will not be able to verify their financial situation.

Here are some things you should include in your mortgage gift letter:

  • Name of the gift recipient
  • Name of the gifter and relationship to the recipient
  • Amount of money gifted
  • Date of gift
  • An explicit statement that the money is a gift to be used for a down payment and that you have no expectation of repayment.

Considerations before gifting

While it’s fantastic to be able to give your family member money to help with a down payment, there are some considerations you may want to make before you make this decision.

As mentioned before, this gift can not be repaid, so be sure that you actually have the money to spare before you gift it. Also, consider that this is only a gift of money and does not guarantee a home. Your recipient will still need to apply and be approved for a mortgage on their own. This means that they need to have acceptable financial credentials for the lender to consider them. If your recipient does not have a good enough credit score, a steady income, or too much debt, they may still be unable to get a mortgage even with your help.

The recipient will also still need to pay monthly home loan payments. Though you can help them through the saving phase and assist them in getting a down payment, they will need solid financial skills on their own to ensure that they can maintain their mortgage.

There are more costs involved with buying a house than just the down payment. Though you can give a full down payment in some cases, the mortgage borrower will still be required to pay their own closing costs for the sale. These closing costs which comprise legal fees, home insurance, inspections, and more, can add up to thousands of dollars above the purchase price.

Overall, just make sure you and your recipient understand what exactly it means to give money for a downpayment, and what will still be required from both sides. Though you can’t expect any money back from the gift, you do give it with the hopes that your recipient will be happy in their new home. If they are unable to keep up with their mortgage, you may have lost out on that money with nothing to show for it.

Purchase Plus Improvements Mortgage.

General William Douglas 29 Jun

When it comes to shopping for your perfect home, it can be hard to find the exact one ready to go! If you are looking into a home that requires improvements, there is a mortgage product known as Purchase Plus Improvements (PPI). This type of mortgage is available to assist buyers with making simple upgrades, not conduct a major renovation where structural modifications are made. Simple renovations include paint, flooring, windows, hot-water tank, new furnace, kitchen updates, bathroom updates, new roof, basement finishing, and more.

Depending on whether you have a conventional or high-ratio mortgage, if it is insured or uninsurable, and which insurer you use, the Purchase Plus Improvements (PPI) product can allow you to borrow between 10% and 20% of the initial property value for renovations. Additional insight on how the qualifying structure works can be found in the table below:

Type Requirement
Uninsurable $40,000 or 10% of the “initial” value of the property, whichever is less
CMHC Insurable Can exceed $40,000 but not 10% of the “as improved” value of the property.
Sagen™/Canada Guaranty Insurable Can be 20% of the “initial” value of the property but the improvement amount cannot exceed $40,000

The main difference between a regular mortgage and a purchase plus home improvements program is the need for quotes. As part of the verification process, your mortgage professional and the lender will need to see a quote for the work that is planned for the improvements. The quotes will provide us with the cost and plan details required to secure the final approval.

Working with your realtor, your mortgage professional will help guide you through the final approval process, which works as follows:

  1. Find a home
  2. Apply and get approved for a Purchase Plus Improvements mortgage
  3. Get firm quotes on the improvements
  4. Get an appraisal for the estimated as-is and as-improved value of the property.
    • This will be ordered by your lender or broker and quotes are typically reviewed by the appraiser.
    • Note: If you are putting less than 20% down payment on the purchase, often only a final inspection is required to confirm the work on the quotes has, in fact, been done.
  1. Close the purchase
  2. Depending on your down payment, the lender may provide up to:
    • 80% of the as-improved value, less the cost of improvements (if on an uninsured mortgage)
    • 95% of the as-improved value, less the cost of improvements (if on a default-insured mortgage)
  3. Start the improvements
    • The initial advance of funds will be up to 95% of the approved value of the property minus the improvements. You will usually have to pay a portion of the improvements upfront via savings, credit card, personal line of credit, parental funds, etc.
  4. Notify the lender when the project is complete
    • At this point, an inspector/appraiser will confirm the work has been completed to the specifications agreed by the lender
    • Once the lender verifies the inspection report, the balance of funds is advanced.

If you have questions about how a Purchase Plus Improvements Mortgage could work for you or are considering taking this route for your next home, please do not hesitate to reach out to a Dominion Lending Centres mortgage professional for expert advice!

The Rate Debate.

General William Douglas 11 May

One of the first questions that potential buyers want answered is: “What is your interest rate?”

It is easy to think that this is the most important question, but there is a lot more to your mortgage contract than just the rate. And so, the rate debate continues!

The rate debate is a hot topic in the mortgage world. Not just the rate itself, but the importance of the rate versus other factors in the mortgage – such as terms and penalties. As a borrower, it can be easy to get caught up in one thing but, if you’re not paying close attention, ignoring other factors could cost you in the long run.

Before we get into these other factors, let’s talk rate. While not the only factor, it does continue to be an important decision criterion with any mortgage product. The interest rate is the percentage of interest you are paying on the principal loan; lower interest rates mean more money to the mortgage and who doesn’t want that?

VARIABLE VS. FIXED

There are two types of mortgage rates: variable-rate and fixed-rate. A fixed rate is just that – a fixed amount of interest that you would pay for the term of the mortgage. A variable rate, on the other hand, is based on the current Prime Rate and can fluctuate depending on the markets.

Fixed rates are typically tied to the world economy whereas the variable rate is linked to the Canadian economy. When the economy is stable, variable rates will remain low to stimulate buying.

Fixed-Rate Mortgage: First-time homebuyers and experienced homebuyers typically love the stability of a fixed rate when just entering the mortgage space. The pros of this type of mortgage are that your payments don’t change throughout the life of the term. However, should the Prime Rate drop, you won’t be able to take advantage of potential interest savings.

Variable-Rate Mortgage: As mentioned, variable-rate mortgages are based on the Prime Rate in Canada. This means that the amount of interest you pay on your mortgage could go up or down, depending on the Prime. When considering a variable-rate mortgage, some individuals will set standard payments (based on the same mortgage at a fixed rate), this means that should Prime drop and interest rates lower, they are paying more to the principal as opposed to paying interest. If the rates go up, they simply pay more interest instead of direct to the principal loan. Other variable-rate mortgage holders will simply allow their payments to drop with Prime Rate decreases, or increase should the rate go up. Depending on your income and financial stability, this could be a great option to take advantage of market fluctuations.

BEYOND RATES

When considering your mortgage, other considerations such as penalties can be important factors for deciding on a mortgage product. If you have two competing products, say a 1.65% interest fixed rate and a 1.95% interest variable rate, it seems as though it is a pretty easy decision. But, what about the ability to make extra payments? And what are the penalties?

It is easy to think that nothing will change throughout your 5-year mortgage term, so you probably haven’t even considered the penalties. However, when looking at the fixed versus variable rate mortgage, penalties can be quite different. Where variable rates typically charge three-month interest, a fixed-rate mortgage uses an Interest Rate Differential (IRD) calculation.

Given that nearly 70% of fixed mortgages are broken before the term ends, this is an important variable. Fixed-rate mortgages are typically okay when the penalty is your contract rate versus the Benchmark rate. However, when penalties are based on the Benchmark rate (sometimes called the Bank of Canada rate), it is typically much higher than your contract rate, resulting in greater penalties.

In some cases, penalties for breaking a fixed mortgage can sometimes be two or three times higher than that of a variable rate. While the interest rate is lower, lower penalties are sometimes best should anything happen down the line.

CONVENTIONAL VS. HIGH-RATIO MORTGAGE

Another consideration beyond just the interest rate is whether or not you will be obtaining a conventional or a high-ratio mortgage. Whenever possible, it is recommended to put 20 percent down payment on a new home. This results in a conventional mortgage. However, as not everyone is able to do this, many buyers will end up with a high-ratio mortgage product.

So, what does this mean?

High-ratio mortgages need to be insured by either Genworth Financial, the Canada Mortgage and Housing Corporation (CMHC), or Canada Guaranty. This is due to the Bank Act, which will only allow financial institutions to lend up to 80 percent of the homes purchase price WITHOUT mortgage default insurance. Insurance on the mortgage is important to protect the lender should you default on your payments, leaving the insurer to deal with the borrower.

The difference between conventional and high-ratio mortgages is that high-ratio mortgages require insurance, which results in an insurance premium. This is added to and paid along with the mortgage, but is an important factor when considering your monthly payments. These premiums are based on the loan to value (LTV), which is the amount of the loan versus the value of your home.

All high-ratio mortgages are regulated to have mortgage insurance, but some homeowners with a conventional mortgage may choose to pay for mortgage insurance to get a better rate.

SMART QUESTIONS TO ASK

To ensure you understand your mortgage contract, and how it could affect you now and in the future, we have compiled a few smart questions to ask before you sign.

  1. What is my interest rate? Can I qualify for a better one?
  2. Do you recommend fixed or variable-rate?
  3. What are the penalties for breaking my mortgage?
  4. Are there any pre-payment penalties?
  5. Will I require mortgage insurance? If so, what are the premiums?
  6. What will my monthly payment be?
  7. Is my mortgage portable?

These are just a few examples of good questions to ask. It is important to do your own research and be diligent with any contract you are signing. Contacting a Dominion Lending Centres mortgage broker today can help ensure you understand what you are agreeing to, and that you are getting the best mortgage product for you!

Understanding Your Mortgage Rate.

General William Douglas 2 May

When it comes to mortgages, one of the most important influencers is interest rate but do you know how this rate is determined? It might surprise you to find out that there are 10 major factors that affect the interest you will pay on your home loan!

Knowing these factors will not only prepare you for the mortgage process, but will also help you to better understand the mortgage rates available to you.

credit score

Not surprisingly, your credit score is one of the most influential factors when it comes to your interest rate. In fact, your credit score determines if you are able to qualify for financing at all – as well as how much. In order to qualify, a minimum credit score of 680 is required for at least one borrower. Having higher credit will further showcase that you are a reliable borrower and may lead to better rates.

loan-to-value (ltv) ratio

This ratio refers to the value of the amount being borrowed as a percentage of the overall home value. The main factors that impact LTV ratios include the sales price, appraised value of the property and the amount of the down payment. Putting down more on a home, especially one with a lower purchase price, will result in a lower LTV and be more appealing to lenders. As an example, if you were to buy a home appraised at $500,000 and are able to make a down payment of $100,000 (20%), then you would be borrowing $400,000. For this transaction, the LTV is 80%.

insured vs. uninsured

Depending on how much you are able to save for a down payment, you will either have an insured or uninsured mortgage. Typically, if you put less than 20% down, you will require insurance on the property. Depending on the insurer, this can affect your borrowing power as well as the interest rates.

fixed vs. variable rate

The type of rate you are looking for will also affect how much interest you will pay. While there are benefits to both fixed and variable mortgages, it is more important to understand how they affect interest rates.  Fixed rates are based on the bond market, which depends on the amount that global investors demand to be paid for long-term lending. Variable rates, on the other hand, are based on the Bank of Canada’s overnight lending rate. This ties variable rates directly to the economic state at-home, versus fixed which are influenced on a global scale.

location

Location, location, location! This is not just true for where you want to LIVE, but it also can affect how much interest you will pay. Homes located in provinces with more competitive housing markets will typically see lower interest rates, simply due to supply and demand. On the other hand, with less movement and competition will most likely have higher rates.

rate hold

A rate hold is a guarantee offered by a lender to ‘hold’ the interest rate you were offered for up to 120 days (depending on the lender). The purpose of a rate hold is to protect you from any rate increases while you are house-hunting. It also gives you the opportunity to take advantage of any decreases to your benefit. This means that, if you were pre-approved for your mortgage and worked with a mortgage broker to obtain a ‘rate hold’, you may receive a different interest rate than someone just entering the market.

refinancing

The act of refinancing your mortgage basically means that you are restructuring your current mortgage (typically when the term is up). Whether you are changing from fixed to variable, refinancing to consolidate debt, or just seeking access to built up equity, any change to your mortgage can affect the interest rate you are offered. It is always best to discuss your options with a mortgage broker to ensure you are making the best choice for your unique situation.

home type

Among other things, lenders assess the risk associated with your home type. Some properties are viewed as higher risk than others. If the subject property is considered higher risk, the lender may require higher rates.

secondary property (income property/vacation home)

Any secondary properties or those bought for the purpose of being an income property or vacation home, will be assessed as such. The lender may deem these as high risk investments, and you may be required to pay higher interest rates than you would on a principal residence. This is another area where a mortgage broker can help. Since they have access to a variety of lenders and various rates, they can help you find the best option.

income level

The final factor is income level. While this does not have a direct affect on the interest rate you are able to obtain, it does dictate your purchasing power as well as how much you are able to put down on a home.

It is important to understand that obtaining financing for a mortgage is a complex process that looks at many factors to ensure the lender is not putting themselves at risk of default. To ensure that you – the borrower – is getting the best mortgage product for your needs, don’t hesitate to reach out to a DLC Mortgage Broker today! Mortgage brokers are licensed professionals that live and breathe mortgages, and who have access to a variety of lenders to ensure you are getting the best rates. Mortgage brokers can also assess your unique situation and find the right mortgage for you. Their goal is to see you successfully find and afford the home of your dreams and set you up for future success!

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