4 Mar

How to get a Mortgage Approval

Mortgage Tips

Posted by: William Douglas

What do lenders require?

1.) Income – all lenders will require some form of stable income that proves that you can afford the Mortgage Payment required to purchase the property. Income can come from many different sources, salaried, self-employed, pension, stated, child tax, child support to name a few. Keep in mind many lenders have different criteria regarding income, finding the right lender that suits your needs is essential.

2.) Down Payment – all lenders will require a down payment on the property you are looking to purchase, the general range is between 5% and 35% depending on several factors. The source of this down payment is also important, generally it either has to be from personal funds or gifted from a direct family member. The down payment is often one of the key areas that we focus on during the pre-approval process to ensure you are ready to buy when the opportunity arises.

3.) Credit – for certain lenders your history of paying previous debts is very important, which reflects directly on your credit bureau. For other lenders this can be less important allowing clients with lower credit scores to still purchase a property. Again, making sure you are aligned with a professional that understands how lenders view credit bureaus is important. If you would like more information on Credit Scores please CLICK HERE

4.) The Property – This is important for all lenders as the property has to hold enough value to support the amount of mortgage being lent against it. A number of factors are taken into consideration including location, property condition and the general marketability of the area.

This is a very simplistic overview of what is required to qualify for a mortgage, there are thousands of different scenarios in which a mortgage approval can happen. Finding the rights person to guide you through the process is extremely important as each individuals circumstances are always unique.

If you would like to start a Mortgage Application please CLICK HERE

Or please feel free to text or call me on 613-362-5170.

27 Jan

What is a Secondary Unit?

General

Posted by: William Douglas

Properties with a ‘Second Unit’

Have a look through many MLS listings and you will see terms like: “Secondary Suites”, “Basement Apartments”, “Accessory Apartments”, “Granny Flats”, “In-Law Suites”, “Granny Suites” or “Nanny Suites”.    Whether a buyer is looking for a unit for an aging parent to stay nearby or to make some extra money to help make the mortgage payments or cash flow, a Second Unit can be a great solution.

What are ‘Second Units’?

Second units are self-contained residential units with a private kitchen, bathroom facilities and sleeping areas within a single-family or semi-detached home.

Benefits of Second Units

In addition to increasing the amount of affordable rental accommodation in an area, second units benefit the wider community in a number of other ways. They,

  • provide homeowners with an opportunity to earn additional income to help meet the costs of homeownership
  • support changing demographics by providing more housing options for extended families or elderly parents, or for a live-in caregiver
  • maximize densities and help create income-integrated communities, which support and enhance public transit, local businesses, and the local labour markets, as well as make more efficient use of infrastructure
  • create jobs in the construction/renovation industry.

The Canadian Mortgage and Housing Corporation (CMHC) recently announced that in order to facilitate affordable housing choices for Canadians, it would be making some policy revisions on how they consider income derived from secondary suites.

Considering the last 4 years have been nothing but tightening of rules, making it harder for Canadians to secure mortgage financing, this news is certainly welcome!

Cautions about Purchasing a Property with a Second Unit

  • Regardless of where they are located, second units must comply with health, safety and municipal property standards, including but not limited to, the Ontario Building Code, the Fire Code and municipal property standards by-laws.  In addition, a building permit may be required to establish a second unit depending on whether alterations to the house are needed.  As such, buyers considering purchasing a property with a Second Unit or homeowners considering establishing a second unit should contact their municipality prior to doing so.
  • In many cases, illegally-operated secondary suites also go unreported to insurance providers. If a Secondary Unit is not reported to your insurance provider you run the risk of not being covered in the event of a loss.
  • In addition, your lawyer will be required to order a work order search since you are technically purchasing a multi-unit residential property. This results in a longer timeline, a few more dollars and, possibly, some setbacks to deal with in order to close on the anticipated closing day.
  • Be sure to speak to your accountant if you will be receiving rent from the second unit. There are several tax implications for receiving rental income not the least of which is having to claim Capital Gains on the sale of your personal home.
  • A final word of caution, if one (or both) of the units are currently tenanted, be sure to ask for vacant possession of the unit that you will be living in.  If the tenant in the extra unit is staying, be sure to ask for a copy of the lease to make sure your rights are protected.  If the tenant in the second unit is also leaving, make sure you require vacant possession of that unit as well.  Banks will no longer allow the flexibility of a tenant to “move out in 60 days” in order to qualify for a residential mortgage with a 5% down payment.  On closing day, the discovery of a “Rent Adjustment” by your lawyer will immediately cancel your mortgage if the lender was not aware that a tenant would be remaining in any of the units.

So What Does This Mean for You?

If you would like to discuss how much mortgage you qualify for and look at different scenarios of qualifying with a secondary suite rental income, I would love to have an in-depth look at your finances and provide you with mortgage options!

Have questions?

Connect with me here > http://douglasmortgages.com/about/contact/

18 Jan

WHO PAYS YOUR MORTGAGE BROKER?

General

Posted by: William Douglas

If you’re looking to get a mortgage and considering a mortgage broker, there’s a good chance you’re wondering about how much the service costs.

Good news! Clients looking to get a standard residential mortgage pay no fees to the broker.

On standard residential mortgages, it’s 100% free for the clients. We’re paid by the bank or by the lending institution that we give the mortgage to.

But it’s not the only advantage a broker can bring you. When you’re shopping for a mortgage at a bank, they’re only able to offer you something from their stable of products. A broker, however, is able to shop at different banks to get you the best product for your needs.

If you don’t fit in the bank’s box of products, then you don’t get the mortgage. When you go to a mortgage broker, the mortgage broker has access to every lender on the market and is able to sell you basically everything to find a solution that makes the most amount of sense for you.

Because they’re able to shop around, in many cases the broker is able to find you a better rate on your mortgage.

In addition, mortgage brokers are licensed professionals covered by provincial governing bodies that look out for you, the consumer. In many cases, the person you’re dealing with at the bank is just a salesperson, without any requirement to be licensed.

So, if you’re in the market for a new home, try a mortgage broker. It’s the safer, smarter choice for your mortgage. We’d encourage you to shop around, then get in touch with us for a no-obligation chat with a Dominion Lending Centres mortgage professional near you.

If you are interested in relocating to Easter Ontario, I’d be happy to look at your mortgage options with you.

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