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Click on one of the questions below:

What are the sources for mortgage financing?
Will I need mortgage insurance?
Are you Mortgage Brokers?
How much will your services cost?
Will this increase the cost of the mortgage?
What is the best term to consider?
How does my amortization affect the amount of interest I pay?
What difference does payment schedule make?

Is it true that I can get a free 5% Down Payment?

How does the 5% Down Payment Program Work?
Can I use my RRSP's to help purchase my home?
What information is required to be Preapproved for a Mortgage?
Why is verifying my Down Payment important?
Is it true that I might qualify for a Property Purchase Tax Exemption?
What is the Purchase Plus Plan?
What costs will I have to pay on closing?


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  What are the sources for mortgage financing?  TOP
There are a wide range of financial institutions that are involved in the mortgage industry in Canada. Some of these include:
• Chartered Banks, Loan Corporations
• Trust Companies, Credit Unions
• Finance Companies, Pension Funds
• Life Insurance Companies, Private Individuals
• Your VERICO Not a Penny Down Mortgage Consultant will select the mortgage lender whos right for you!


Will I need mortgage insurance?  TOP
A mortgage is a large debt and should be life insured, for your family's peace of mind. Some lenders include life insurance as part of their cost; others will let you insure the mortgage yourself. But VERICO always recommends mortgage insurance in some form.

Are you Mortgage Brokers?  TOP
In the Province of B.C., Mortgage Consultant is the correct term for a Mortgage Broker.


How much will it cost me to have a Mortgage Intelligence Mortgage Consultant?  TOP

First of all the service is FREE!

We are compensated from the lender, not you the borrower. We are only paid when we have successfully helped our clients obtain the best possible terms, conditions and advice based on their individual circumstances.

We are therefore motivated to help you. Most bank employees are paid a salary. We are only paid when we have successfully placed your mortgage. If creative or hard to place mortgages are required, a consulting fee will be disclosed to you up front. As our client, you can choose from the widest range of options, obtain the most competitive rate and best product suited to your specific needs.


Will this increase the cost of the mortgage?  TOP
No because the lender either has to pay its own sales staff to originate mortgages or it can pay a broker, its all the same.


What is the best term to consider?  TOP
Usually the shorter the term the lower the rate. However many people prefer the comfort of a longer-term mortgage and as an example we have provided a historical tracking of the five-year rates. This is another area where your VERICO Not a Penny Down Mortgage Consultant can help.


How does my amortization affect the amount of interest I pay?  TOP
The amortization period has a dramatic effect on the amount of interest paid over the length of the mortgage. Consider the example of a $150,000 mortgage with an interest rate of 6.20%*

With a 25 year amortization the monthly payments are $977.61

With a 20 year amortization the monthly payments are only increased by $107.57 to $1085.18. The savings in interest would be $32,843.40

With a 15 year amortization the monthly payments are increased by only $298.03 to $1,275.64. The savings in interest would be $63,669.38

* The example assumes the interest rate will remain constant through the whole amortization period.


What difference does payment schedule make?  TOP
Most mortgages have very flexible payment alternatives. Weekly, bi-weekly, or monthly payments are most common. These choices also have a great effect on the overall interest payments.

Consider the example of a $150,000 mortgage with an interest rate of 6.20% over a 5 year term.
  

Payment Remaining balance at end of term
Weekly $244.40 $129,285.80
Bi-weekly $488.81 $129,327.89
Monthly $977.61 $135,132.08

Is it true that I can get a free 5% downpayment?  TOP

To help first time buyers and those who do not have sufficient down payment, CMHC and GE have introduced a new program that allows for Cash back scenarios that can be used as the down payment.

  

How does the 5% Down Payment Program Work?  TOP
Under the 5% Down Payment Program, the minimum down payment of 5% of the purchase price or appraised value, whichever is less.

The down payment can be borrowed or be a gift from immediate relatives. If the minimum equity requirement is being met by way of a financial gift, the funds must be in the possession of the borrower at the time of application.

Borrowers are also required to demonstrate at time of application the ability to cover a closing cost equal to at least 1.5% of the purchase price..

Maximum GDSR ~ 32% (Principal + Interest + Property Taxes + Heating Costs must not exceed 32% of Gross Income).

Maximum TDSR ~ 40% (Principal + Interest + Property Taxes + Heating Costs + Monthly Obligations including Credit Cards & Loans must not exceed 40% of Gross Income).

Minimum loan term for CMHC is 6 months with loan qualification based on the current 5 year rate.

GENCOR (GE Capital) currently has no minimum term requirement.

The mortgage loan insurance premium is 3.75% of the mortgage amount. (Premium can be added to the mortgage or paid separately).

Credit history must be in good standing.


"The stress that I expected never materialized!
So many people have expressed how stressful it is to purchase a home.
With you in my court, there were no sleepless night!
~ Anne S.


Can I use my RRSP's to help purchase my home?  TOP

How does the Home Buyers Plan (HBP) work? Each purchaser may withdraw up to $25,000 from their RRSP to buy or build a qualifying home. If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $25,000 to a combined maximum of: $50,000. You must be a resident of Canada; you may participate only once in your lifetime and must be considered a first time home buyer. You are considered a first time home buyer if you haven't owned a home at any time during a specified period. Generally, a five year rule applies. The funds must have been in the RRSP for at least 90 days prior to withdrawal to be eligible under the program. Nothing beats the RRSP vehicle for 1st time buyer's. The payback is over 15 years, with no interest expense, plus you received a tax deduction each year when making the original contributions. A simple and tax effective way to get your $50,000.00 down payment into the real estate market.

 


What information is required to be Preapproved for a Mortgage? TOP
If you are applying for a preapproved mortgage, have the following information ready to give to your VERICO Not a Penny Down Mortgage Consultant:

Have your employer give you a letter on company letterhead outlining your name, position, gross annual income, and number of years employed with the company.

If you are self-employed, you will need three years financial statements, and tax returns (together with official assessment from Revenue Canada). Conversely, If you have good credit and at least 10% down, you will not require the above. This program is specially designed for individuals who do not claim or have a high enough taxable income to qualify through standard "Bank Rules".

Social Insurance Numbers.

At least 3 years history of residences and employers.

Know your banking information (i.e. institutions name, address, type of accounts, account numbers)

Know your assets and their value (i.e. cash amounts, stocks, bonds, RRSPs, car).

Know your liabilities (i.e. car loan, credit card balances).

Also, be sure and advise your Mortgage Intelligence Mortgage Consultant about any past credit problems you may have had.

Finally, write down a list of questions you would like to have answered.


Why is verifying my Down Payment important?  TOP
If there is 'one' thing that causes problems which may delay the closing of your house it's verification of the Down Payment. Here's why:

To meet the Requirements of Canada Mortgage and Housing Corporation, GENCOR (GE Capital) and the Major Lending Institutions

On or before the issuance of a lending commitment you will be asked to provide "Confirmation of Down Payment" from Non-borrowed funds in one or more of the following forms.

Down Payment from the Sale of an Existing Property You will be required to provide a copy of the unconditional "Purchase and Sale Agreement" on your existing property. This needs to be accompanied by a copy of the statement of "Mortgage Balance" on any mortgages presently held against the property. The difference between the sale price and the mortgages owing will substantiate the funds available for your down payment.

Down Payment from a Gift All or part of the minimum equity requirement may be provided by way of a financial gift, as long as all of the following conditions are met:

(a)  the donor is an Immediate relative of the borrower;
(b)  the Approved Lender has verified that the money is a genuine gift; and
(c)  the Approved Lender has verified that the funds are in the borrower's possession prior to the time of the application to CMHC or GENCOR for mortgage loan insurance.
The Approved Lender will verify the authenticity of the gift by obtaining a written confirmation, signed by the donor and the borrower, which will include the following points:
(a)  the money is a genuine gift from the donor and does not ever have to be repaid;
(b)  no part of the financial gift is being provided by any third party having any interest (direct or indirect in the sale of the subject property)
The Approved Lender is not required to forward this confirmation to CMHC, but is expected to retain the Information in its paper or electronic loan record.

Down Payment from Your Own Resources You must supply verification satisfactory to C.M.H.C. or GENCOR and the lender of accumulated savings from non-borrowed funds. This may be in the form of a copy of your bank book confirming a balance equivalent to your down payment including the amount of deposit confirming the savings of said amount for a period of not less than 3 months.

Should a substantial deposit have been made recently, the source of such funds, i.e. Bonds, Stocks, G.I.C.'s or RRSP receipts will also be required.

To avoid any delay in funding your transaction we suggest that you provide a form of the above noted confirmation at least 14 days prior to your closing date.

 

Is it true that I might Qualify for Property Purchase Tax Exemption?  TOP
The property purchase tax, (a tax of 1% of the first $200,000 and 2% of the balance of the purchase price) is waived if you are a first time buyer, Canadian Citizen and the purchase price must not exceed $425,000.00 in the Greater Vancouver, Fraser Valley and Capital Region Districts.


I need a Mortgage Broker. Can you help?  TOP

For most people, a Mortgage Consultant acts like a Mortgage Broker. Mortgage Consulting is the correct title for what most people think of as a Mortgage Broker.

What is the Purchase Plus Plan? 
 TOP
The Purchase Plus Plan lets you add the cost of upgrades to your mortgage before you move in! Eligible upgrades include a new electrical service, a new roof, central air, a new furnace, new siding, eaves, soffits, facia, doors, windows, a new kitchen, carpeting... or any other renovation that would increase the value of the home.

The way it works is like this... Let's assume that you are a first time buyer and have 5% down payment. Before the mortgage financing is arranged, written quotes are obtained from licensed contractors for the repairs and or the improvements to be done to the home. When the application for mortgage financing is made, the request is made for 95% of the purchase price PLUS 95% of the cost to complete the improvements.

Note: The lender will "hold-back" on closing the "improvement" portion of the mortgage until the work has been completed, normally within 30 to 60 days of closing. Once the work has been completed, the lender will advance the balance of the funds and the contractor can be paid. What does this mean? . . let me give you an example. . .

 
The purchase price is:  $150,000 X 95% = $142,500
The quote for the improvements is:  $  11,000 X 95% = $ 10,450
Total Mortgage is:  $161,000 X 95% = $152,950

Therefore, an application is made for a mortgage in the amount of $152,950 which is 95% of the purchase price plus 95% of the improvements.

On closing this is what happens... The Mortgage advanced to complete the purchase is $142,500 plus the original 5% from the purchasers down payment ($7,500) sufficient funds to complete the purchase of $150,000.

After closing the contractor completes the improvements (normally within 30 to 60 days after the closing) the lender advances the hold-back of $10,450, the purchaser pays the additional 5% of the cost of the improvements ($550) and the $11,000 owed to the contractor can be paid as per the original quote for the work.

And you will get $11,000 of improvements done to your home with a cash outlay of only $550 (the balance was financed with your mortgage)!

What costs will I have to pay on closing?  TOP
To avoid any surprises on closing, a good rule of thumb is to set aside an amount equal to 2-3% of the purchase price to cover expenses like these:

The Offer

The Deposit:
Part of your down payment, a deposit is due upon acceptance of your offer.

Prior to Closing

Home Inspection:
Prepared by a qualified inspector to assess the property for defects and poor maintenance.

Appraisal:
Prepared by an appraiser chosen by the lender, by CMHC or GENCOR if the mortgage is insured by either company.

Closing Costs

Legal Fee/Disbursements:
Your lawyer will quote his fee for closing the purchase and mortgage(s) plus an approximation for his disbursements, which includes registration fees, courier costs, photocopies, etc. Ask for an estimate.

Land Transfer Tax:
See the chart enclosed in this package to calculate the Land Transfer Tax which is due on closing and reflected in the "Statement of Adjustments" which your lawyer prepares prior to closing day.

Interest Adjustment:
Monthly mortgage payments are due on the first of the month. Unless the closing date is the first of the month, you must prepay the amount of the interest accruing up to the 1st day of the following month, the Interest Adjustment Date.

CMHC or GE & PST:
If your mortgage is insured by CMHC or GENCOR the insurance premium will usually be added to the mortgage so it is not a cash requirement on closing. However, the premium is subject to 8% PST, and the tax must be paid on closing.

Prepaid Expenses:
If the Vendor has prepaid any other expenses such as utilities, water and sewage taxes, oil in tank or taxes, he must be compensated. This will be reflected in the Statement of Adjustments.

Property Tax Hold-back:
If the lender is collecting and paying property taxes you may be required to pay to the lender an amount to ensure sufficient funds are available to pay the next installment of property taxes when due.

Other Fees:
Occasionally, a lender or the broker will charge a fee for providing the mortgage. If so, these costs should be disclosed to you at the time the Statement of Mortgage is issued to you.


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