Why Use a Mortgage Broker?

In all honesty I probably should have also rolled up into the title "Why Realtors refer Mortgage Brokers" and "What Does a Mortgage Broker Do".  Maybe even add in "Which Mortgage Broker Do I Use".  Basically all of the above is what this post is about.

Anyone that has followed the mortgage market for a few months has seen rates go up and down, this bank has the best rates, now its this bank, and then there is the bombardment of mortgage brokers and agents all contesting that they have access to the best rates.  Well it is true that banks and wholesale finance lenders take turns winning the rate war and most of them are accessible through the mortgage broker market.  What is a bit of a myth is that one broker has the best rates over another.  Having said that, it is true that some brokers do get discounts from certain lenders for high volume and a high success rate for funding ratios (deals submitted vs deals closing).  But you have to be able to fit the model that particular lender is looking for.

So, you want to pick a brokerage that is large enough to receive special treatment from several different lenders, because their volume is so large.  For the perfect model mortgage seeker (good income, down payment and credit) our lender of choice varies from month to month depending on who has the best rates and terms at the time.

Not everyone fits into the perfect model that banks seem to love.  This is really where the importance of a good mortgage broker comes in.  Seriously, I cannot stress enough how crucial this is.  And this is why your Realtor may have referred you to a mortgage broker.  If you do not receive a pre-approval certificate, or are told no if you ask for one, you may want to look elsewhere for your financing.  When I give a pre-approval that Realtor knows they are not wasting their money and spending time away from their family showing homes.  Yes Realtors have lives, they are people and it costs them a lot of money and time to help someone find a home, so they want to be certain you are solid. 

Your Realtor is helping you purchase the largest item and your biggest investment you will ever make in your life.  Give them the love they need to go to bat for you.  Do not hide stuff and think you are at war with them, they are on your side and you will benefit by becoming a team with them.  If you are in the Southern Ontario area, I have a lot of excellent Realtors I have a relationship with, that I would happily refer for you.

Now, why use a mortgage broker?  I can be reached by text, by office phone, by cell phone, by email, by bbm, on weekends and evenings and I enjoy it.  Why seasoned Realtors usually refer a mortgage broker instead of a bank is because they are aware of the many variables required to qualify and that all banks have different variables.  Here is a short list:

• Some lenders do not like self-employed.
• Some lenders will actually gross up self-employed income to qualify for more.
• Some lenders include baby bonus, others don't.
• Some will let you use your car allowance to qualify.
• Some will actually tell you your bonus doesn't count as income.
• Some don't like commission income.
• Some don't like contract workers.
• Some want perfect credit.
• Others will accept the bare minimum.
• Some have cash back, most don't.
• Some let you purchase two homes with 5% down.

I could go on and on.  So a seasoned Realtor understands that it is impossible for one bank to successfully look after all their clients.  So they refer them to a mortgage broker who knows and has access to all the lenders.  As well knows the home buyer will be well looked after, educated and most importantly happy with the results.

Feel free to post a comment or question.  If you would like to talk to me about mortgages or get the name of a good Realtor, feel free to contact me whichever way works best for you.


Ron Miller

905-667-0699

1-855-684-8326
ron.miller@butlermortgages.com
YouTube Hamilton Broker
@HamiltonBroker

Fixed or Variable? How About a 4 Year Fixed?!

                                                 You can view all my videos on You Tube at HamiltonBroker. Feel free to subscribe.

Currently there are big changes going on in the Canadian mortgage world.  We have discounts on the variable rates disappearing and the 5 year fixed is at an all-time low.  When we look at what is available right now, 2.75% on the variable and 3.39% available on the 5 year fixed, the decision on what to choose in my mind is obvious, the 5 year fixed.  Some people may still be stuck on the variable right now but is it really worth it?

Approximately 83% of the time through Canadian mortgage history the variable rate has proven itself to be the best deal over the fixed.  What I believe may happen in the next couple years is the 17% of the time that fixed is the best deal, is going to happen.

Now let's say you are still stuck on the variable.  There is another choice, it is the 4 year fixed rate.  Currently hanging around 3.09% makes it a really good deal.  You are protecting yourself from variable increases as well you are taking advantage of the low fixed position.  With the lower payment you can also decrease your amortization in order to pay down the mortgage faster, still with a reasonable monthly mortgage payment.

When you take into consideration that the average life of a 5 year term is around 3.6 years it is not necessary to take the long road with the higher rate.  With the Bank of Canada claiming they are not raising Prime until 2013, and remember the World economy is still uncertain, it may be longer.  Taking the 4 year term allows time to see what is going to happen as the Canadian mortgage world changes.  And if you do decide to break a 4 year term, the worst case usually will be a 3 month interest penalty.  If you have to take a small penalty to save thousands it is certainly worth it.

Well why not just take the variable then?  Remember, you usually do not get the banks best discounted rate when you switch from variable to fixed, a common calculation for this switch is Prime plus 1.00% or higher.  Right now that would put you at 4.00%, when the current five year rate is 0.70% below that it is not a good deal.  It is common to refinance when considering switching from variable to fixed, the small penalty saves you a lot of money.

To conclude, while in the middle of change it is best to take the road that will do the least damage if you make the wrong decision and having said that, the 4 year fixed is the best decision because you really can't lose.  It allows you time to wait and observe to see what the next trend will be.

Any questions or you want to talk to me about mortgages, feel free to contact me whichever way works best for you.

Ron Miller
905-667-0699

1-855-684-8326
ron.miller@butlermortgages.com
YouTube Hamilton Broker
@HamiltonBroker

Ask a Mortgage Question

I wanted to add this post to my blog because I want to answer some direct questions regarding Canadian mortgages that you may have.  When I review the topics that have been typed into search engines to find my blog I notice that your questions may not be completely answered with what you find.

So you can feel free to ask any mortgage question I will be sure to add a reply as soon as I can.  I will also be posting questions that people have asked their search engines and replying to them.

Purchase Plus Improvements

You can view all my videos on You Tube at HamiltonBroker.

This program is excellent if you are looking to do some renovations on your new home purchase.  Purchase plus improvements allows you to renovate the kitchen, install a new furnace or central air system, possibly your dream home is perfect except the roof is in dire need of repair.

It is really important for Realtors to be aware of as well.  Their clients found the perfect home but the kitchen is 25 years old, you can still make the deal work.  In this case it is really important to have a mortgage broker on their side that really knows how to put deals together.

So let's just say that you found the perfect home but you need a new kitchen.  Let your mortgage broker know that you want to do purchase plus improvements.  This does not change your pre-approval as long as you qualify for the extra amount.  Here is a brief step by step of the process.

1. Put in your offer and get it accepted.
2. During your 5 days you have to get financing approved.  Inform your broker that you want purchase plus improvements when you hand him/her your offer.
3. Get a quote ASAP to give to your broker for the work you want done from a licensed contractor. (Some lenders may want 2 or 3 quotes).
4. An appraiser will go to check the work you have requested and send their report to the broker or lender.
5. You get your approval for the purchase plus improvements.
6. On closing your lawyer will hold back the extra funds required for the improvements you want done.
7. Have your contractor complete the work and once it is done the appraiser will return and verify the improvements are completed, then at this point the lawyer will release the extra funds to you.

There is a few things to keep in mind.  Money will NOT be released until verification that the improvements are completed.  If you do not have a contractor who is willing to wait to get paid then this program will not work unless you can pay for everything up front first.  If you tell your broker that you want a new roof, than make sure that is what you fix.  You cannot turn around and say, well we changed our mind we wanted a new bay window instead.  Purchase plus improvements does not include appliances, a new pool or car.  It must be improvements to the home.  You can check out Genworth or CMHC is your want to read up a little more.

This program is really handy if you find your perfect home but just need a couple things updated.  If this is for you feel free to get a hold of me and I will see what we can do.

Ron Miller
905-667-0699

1-855-684-8326
ron.miller@butlermortgages.com    

Renewing your Mortgage Early, Cap It!!!

You can view all my videos on You Tube at HamiltonBroker.

Renewing a mortgage early usually happens when you want to take advantage of lower interest rates or you want to switch to a variable rate from a fixed.  Also a lot of financial savvy people will also purposely switch in the middle of their term simply to extent the low rates that they have.  If you have a variable rate and want to switch to a fixed and your current bank is not offering you a competitive rate, this is definitely a time to do a switch.  A family that plans on having a baby will also use this plan to secure low payments for a longer term, especially if they are going to lose an income if someone decides to stay home and look after the baby.  If you plan on getting pregnant and have a mortgage, plan wisely.

There are costs involved with switching early.  You will most definitely have at least a three month interest penalty.  Banks are even approaching their clients 6 to 8 months before their renewal is up and asking them to renew early and not even offering to waive the penalty.  The penalty may also be more than three months if you have a high interest rate than what is being offered at the time you are looking to switch.  In which case it will be an IRD penalty, interest rate differential.  This is the amount of money that the bank loses if you break your mortgage early.  If you have 18 months left on your mortgage and you have a 5% interest rate and the current rate is 4% you will be charged 1% on the remaining 18 months which will work out to around $3,000.  Depending on the size of the penalty and your long term savings or piece of mind will determine if you should renew early.  There is also a discharge fee or around $250 to release your current lenders charge from title.  If you do decide you wish to renew early call your bank and ask if they will waive all penalties and fees.  If they won't?  Because they can.  That is when you call me.  Why stay with them if they aren't looking after you?

These fees bring to the purpose of this post.  Some lenders will allow you to cap your mortgage to avoid having to pay these fees out of pocket.  Simply add the penalty on top of your current mortgage without having to refinance when you switch, "cap your mortgage".  The few lenders that allow this, do it for one simple reason, to get more business.  Because lenders allow the cap, it saves the additional costs of having to get a lawyer and it saves you from having to pay up front for your penalty and discharge fees.   There is limitations to how much you can cap, so contact me to see how it will work for you.

If you have any questions please do not hesitate to contact me or leave a comment.

Ron Miller
905-667-0699

1-855-684-8326
ron.miller@butlermortgages.com    

Mortgage Renewal

You can view all my videos on You Tube at HamiltonBroker.

I have already made a post on the mortgage renewal letter but have decided to add to it, because I feel some important points were missed, also I added the video.  Some people don’t take this very seriously and it is a real shame because the amount of money they are losing out on.  When you think about it, what is a $50 or a $100 difference in a monthly mortgage payment if you just accept what the lender offers you?  Well it’s $600-$1200 a year or $6,000 over five years.  What does paying that extra money do for you?  Absolutely nothing except drain your pocket, your retirement, kids’ education or whatever.  Money down the toilet!

 

What is interest?  It is the cost of borrowing, that simple.  The cheaper it is to borrow money, the more money for other things.  It amazes me to see someone clip coupons to save 50 cents on a pound of butter, but yet when the renewal letter arrives from their lender they just sign it and send it back.  How many coupons do you have to clip to save $6,000? Even if it is just a small difference of $500, it is still worth it to consult with a broker.

What does it cost to switch lenders at renewal time?

About $250, especially if your mortgage was default insured by CMHC, Genworth or Canada Guaranty (formally AIG).  The $250 is a discharge fee that your current lender charges to remove the mortgage from the title of your home.  If it is not insured there may be an appraisal fee around $350.  Some of or all of these expenses may be covered by a new lender or your broker, depending on the amount of your mortgage.  If you are going to have to cover all these expenses and your savings are not going to be high enough, you may just want to stay where you are.  That does not mean you cannot negotiate with your lender.  It is ok to call a mortgage broker and explain that you want to know what the going discount rate is right now.  Then call your lender back and ask for that rate.

How do you get the best mortgage rate at renewal?

The best thing to do is actually contact a mortgage broker 4 to 5 months prior to your mortgage renewal date and ask them to keep an eye on rates for you.  Even fill in an application and authorize the broker to do a credit check when they are actually going to submit your mortgage application.  We will hold on to the application and wait for the right moment to submit it.  Occasionally lenders have sales on rates just as department stores have sales, which can turn into huge savings for you.  Basically you are hiring a broker to nail down the best possible deal for you over the course of four months.  Watch out for brokers who do not use multiple lenders, make sure you call a high volume broker that uses at least 8 to 10 major lenders.

A new ploy that some lenders are using to trap people into the any rate that they want is by waiting 2 to 3 weeks before your renewal date to send you your mortgage renewal lender.  This is in hopes that you are not paying attention and will not have enough time to find a better rate.  All we really need is one week, so don’t be concerned if you contact us a little late.  Be pro-active, it can save you a lot of money.

As always you are free to contact me anyway that works best for you.  On weekends and evenings there is better chance of contacting me by email.

Ron Miller
905-667-0699

1-855-684-8326
ron.miller@butlermortgages.com    

   

Mortgage Document Collection

You can view all my videos on You Tube at HamiltonBroker.

This is the process where you have to bring in documents to your mortgage broker or bank to back up what you told them at the time of your pre-approval. 

 

Down Payment

This is probably the hardest form of document collection for people to do properly.  But it must be done properly as it is the law set out by FINTRAC under Canada’s Anti-Money Laundering and Anti-Terrorist Act.  If we put on the application that your down payment is coming from your own resources, than that means cash in the bank and we have to show that it has been there for 90 days (not 89) or has accumulated over the last 90 days from means that can be explained, ex. pay deposits or gifts from family.  It can also be a quarterly statement from RRSP’s or another form of an investment.  So, if your money is sitting under your mattress it is not an acceptable down payment on a home, put it in the bank.

I once asked a client if the deposit is coming from their own resources.  They replied yes.  When document collection came and I asked them for 90 days of bank statements, they replied well we got the money from a line of credit.  Not good, we did save the deal under borrowed down payment.  Now my question to all clients is, “Where is the Money Now? Show Me the Money!”  If we put on your application that the money came from your own resources and then there is an additional deposit in your bank account for $5,000 dollars and you tell us it is from your parents, we then have to re-qualify you with gifted money and have your parents sign a gift letter.  If you tell us that the money was transferred from another account then we need a 90 day history from the day it was transferred.

If you are buying your children a home with existing equity in your current home under the secondary home program with as little as 5% down, that is fine as long as we know where the funds are coming from up front. 

It is ok to change your story after your pre-approval and decide your source of down payment is changing but once you have an accepted offer on a home then do your best to have your story straight. 

Income

I do ask for some documents up front, at least a recent pay stub or in the case of self-employed I would ask for two years NOA’s and T1’s. 

This process is why it is so important to be completely honest with your broker because there will come a time when what you told them will have to be backed up with paper.  This is also the time where the difference between a good broker and an ok broker is differentiated.  It is our job to ask you the right questions and base your approval on that.  You may not know the right things to say.  If I ask you how much money do you make a year, and you reply 50k, I have to make sure that is correct.  Is this including over time, or is it regular hours?  If it is including over time then the documents required will change.  In addition to asking for a job letter and pay stub, we will also need two years’ worth of T4’s from your employer to include the extra income.

Let’s say you are self-employed for less than two years and we approved you for a mortgage.  We may require your T4’s from your past employer to confirm you have been in the same industry that your new business is in.

Different types of income require different documents.  Also some lenders do not accept all types of income, so we have to make sure you are going to the right lender.  For example, your year-end bonus may not be an acceptable form of income to certain lenders, but if you need that to qualify then obviously we will have to find a lender who will accept it.

Additional Stuff

We will also require void cheques for where you want your mortgage payments to come out of.  We of course will need lawyer information, and government issued photo ID.  If you are renewing we will need current mortgage statements and property tax statements.  The list of documents changes for everyone's situation.

A good mortgage broker will ask you if the documents that may be required are available for when the time comes or even collect a lot of it up front.  There still may be surprises, but always ask your broker or bank what you will need to prove your income.  It takes three to six weeks to get a NOA from the governemnt, don't find out you need it 2 weeks before closing if it lost.  (There is a way to get it in one day.)  My point is paperwork must be in order all conditions met or funds will not be forwarded.

If you have any questions or concerns I am available to answer them.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com 

What Does a Mortgage Broker Do?

A good mortgage broker basically takes your situation and finds a lender who will give you a mortgage at the best terms and rates. From one point of view you are basically hiring your own agent who will go to different lenders and sell your story. And 90% of the time you are not paying for this service.

Rate Shopping

You may have the perfect scenario with credit, income and down payment, so you are basically hiring us to find you the lowest possible rate with terms that meet your needs for a pre-approval on your home purchase. If you already have a mortgage it is a good idea to be signed up with a broker regarding your renewal date. Often banks will not send out your renewal letter untill a week or two before you need to renew which then puts you in a bad spot with not much time to negotiate. Yes you can negotiate with a bank. If you have your mortgage on a watch list with a broker who deals with many different lenders than basically over a 120 day period you are looking to secure a low rate that can save thousands over the course of five years. $40 or $50 a month in savings could go straight to other investments or a child's school fund.

Possibly you did get approved but have no idea if you recieved a competive rate. Find out.

Bank Turned you Down for a Mortgage

Your situation may be a little different with one of the three pillars (credit, income or down payment) a little damaged or insufficient and your banker or another broker has told you no, you cannot get a mortgage. At this point is when you contact a well established brokerage. If you use a brokerage that is filing 50 to 100 mortgages a month you know they have a very broad spectrum of lenders they are using which opens up opportunity for you. A brokerage has to meet a quota at most of the lenders they deal with, so if thier numbers are low, you know they are using a limited number of lenders.

Take for example if your credit was damaged due to a divorce, illness, a tough emotional time in your life or any number of reasons. We will actually look at your credit history over the last six years and go to lenders with a reason this happened and litterally do our best to talk them into giving you a mortgage. It may take some time or we may have to help you with some credit repair, but if you are pro-active you will enjoy home ownership.

Possibly you are on a salary but it is not high enough to purchase what you want, but you have a large amount of investments. Your net worth will get you a mortgage. Maybe you work part time and have had four different jobs over the last two years. Did you know you can still qualify? Maybe you are on a contract and your bank has turned you down. Did you know you can still qualify? Maybe you work at a temp agency? Yep still qualify. Your ex won't give you a seperation agreement? We don't care, you can still qualify. Self-employed? Many different options here.

Every single lender has their own little rules aside from the mortgage insures. Just because one lender does not like your situation do not give up. Someone will want your business.

Often when applying for a mortgage at a bank someone will take your application and send it away for approval at central underwriting. If it comes back declined, they may not even know why and you have no idea why. Find out why.

Get educated and get a game plan, we will help.

If you have any questions please do not hesitate to contact me.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com

Mortgages, Bankruptcies and Consumer Proposals

I feel that this post is really important for a lot of people that are trying to get their financials back to together after a bankruptcy or a consumer proposal. There are many reasons for filing and a lot are circumstances beyond one’s control. I see many different scenarios from people referred to me from bankruptcy trustees, Realtors and other clients. My job is to help you get back on track, to get you in a better position for your mortgage needs.

If you own a home and are considering a bankruptcy or consumer proposal you should be consulting a mortgage agent or broker who is familiar with this process, bad advice can really screw you up. I have seen it many times. Professional bankruptcy and consumer proposal trustees will always suggest talking to a mortgage professional before you file, if they do not, get a different trustee.

Filing a Bankruptcy with a Mortgage

Occasionally while filing a bankruptcy you will be allowed to keep your home, it just depends on the amount of equity in the home, if there is none there is a good chance you do not have to sell. Then there is renewal time, what then? You may not be able to renew your mortgage especially if you have filed against the financial institution that holds your mortgage. If you have not missed any mortgage payments you may just receive a renewal letter in the mail. At this point just sign it and send it back. No-one will give you a mortgage if you are in a bankruptcy; however, if you already have a mortgage you can get lucky and have it renewed.

Some American mortgage companies have left the Canadian market due to the bankruptcies of their own companies in the States, so unfortunately your mortgage will not be renewed unless they were bought out by another company and are willing to renew.

Filing a Consumer Proposal with a Mortgage

A consumer proposal works a little different, generally you can keep your home even if there is equity in it; however it is best to speak with a trustee on this matter, different scenarios and rules apply. We can find a lender to renew your mortgage if you have been in a current proposal for 12 months or more if we can receive a letter from your trustee stating you have not missed any payments on the proposal and have sufficient equity in the home. Again your mortgage lender may just send you a renewal letter, just sign it or call us if you need some advice.

Purchasing a Home After a Bankruptcy or Consumer Proposal

You really need to get prepared if you plan on buying a home after you have filed a bankruptcy or consumer proposal. You can buy a home with 5% down after being discharged for at least two years, but you have to really understand that you need impeccable re-established credit after you are discharged for a length of two years.

The very first thing you need to do is obtain New credit as soon as you are discharged. If you were allowed to keep a car with a loan during your bankruptcy or consumer proposal that is not new credit. Once you are discharged immediately get two secured credit cards (not a prepaid). You want these limits to be as high as possible, at least $2,000 worth of new credit on two separate trade lines. And never ever miss a payment, if you are more than 30 days late during your two year re-establishing period, lenders will reject your application.

I have had people come into my office with a $500 credit card they have had for two years that there trustee told them to get and expect to buy a home. Would you lend someone $300,000 who has had a bankruptcy and only has a $500 credit card?  That is why it is important to consult with both a bankruptcy or consumer proposal trustee and a mortgage agent, get expert advice from the right expert. You can read more about fixing your credit by clicking “How to Fix and Maintain Your Credit Score”.

There are different possibilities when purchasing with more money down, the day you are discharged from either a bankruptcy or consumer proposal you can purchase with 25% down providing you are in good standing with your trustee. After a year you may be able to purchase with 20% down. Please keep in mind, it does not matter why you filed bankruptcy or a consumer proposal, all that matters is how you are re-establishing yourself.

What I have covered above has probably raised more questions than I have answered and I understand that, but it is impossible for me to explain every scenario and all the different rules in a short post. You can contact me if you need to discuss your situation further or if you would like me to refer you to a bankruptcy or consumer proposal trustee who has your best interest at heart.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com

Refinancing, Debt Consolidation

People refinance thier homes for many reasons; starting a new business, clearing out credit card debt, renovating or property improvement, putting a child through school or just to take advantage of low interest rates. Sometimes refinancing makes sense for people retiring, they may not have the home paid off for whatever reason and at retirement they take a big hit on income. So why not stretch the amortization to the max and enjoy the golden years without feeling a financial pinch.

Refinancing is actually pretty simple, you just break one mortgage and get another one. In order to find out if it is best for you, it is a good idea to speak with someone who will explain all the pros and cons. We have all seen those flyers in our mailboxes that explain the savings when you consolodate and for the most part they are true, but rarely will they tell you the costs associated with it.

Refinancing Fees

There will be legal fees, usually about $1,000 and a penalty. The penalty can be just three months interest or interest rate differential. If your rate is higher than your currents lenders discount rate then they will penalize you the differnce in money they lose when you break your mortgage. If you are on good standing with your lender they may waive this penalty for you. If they don't why keep giving them your business?

Another thing, in most cases there should not be a broker fee. Occasionally there will be depending on your credit, income and equity in the home. Generally if the deal is going to a "B" lender you can expect some sort of fee. Make sure you know what it is when you get the approval, do not find out a rediculous broker fee is being charged when you are signing the papers. A mortgage insurance premium may also apply if you are refinancing over 80% of your homes value.

It is a good idea to sit down with a mortgage broker or call one to see if the costs make sense to you. If you are saving money or if it is going to cost you money. It could be the piece of mind you recieve is worth the extra costs. With interest rates as low as they are you can save a lot of cash over a five year term, and easily justify the costs, especially if you have high credit card debt.

We can finance up to 85% or your homes value, feel free to call me if you want a quick estimate on your home to see what is possible.

I hope this helps, feel free to ask questions or comment. Email or call for privacy.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com

New To Canada Mortgage

In 2010 there was approximately 280,000 new immigrants to Canada. Most of which are hoping for a new life and will be productive, some are simply looking for a better place to spend their money or have a better home for thier children. Some have received transfers from their employers.

When buying a home in Canada with less than 20% down you need to have mortgage default insurance which protects the bank, not you in the event that you fail to make your mortgage payments. If you are new to Canada there will be insurance premiums no matter how much you put down, it just depends on your credit strength. These premiums can be as low as 0.50% for 65% Loan to value (35% down). Some lenders will waive these for permanent residence status with significant established Canadian credit.

Canadian mortgage insurers do allow for new Canadians to purchase homes with as little as 5% down. Qualifying is actually quite simple. You arrived in Canada within the last 36 months, have three months worth of work history and have permanent residence or landed immigrant status to purchase with 5% down and 12 months worth of credit. If you are transferred from your employer to Canada and meet all other criteria as well as a letter from your company, you can purchase a home the day you arrive in Canada. Also if you are a non permanent resident with a work permit you will require a minimum of 10% down. If you have diplomatic immunity then sorry about your luck, you are not getting an insured mortgage in Canada.

While you are only required to be working for 3 months you are required to have at least 12 months worth of credit. It may be difficult to recieve credit as soon as you arrive here, but the insureres will accept 12 months worth of phone bills or other utility bills that are paid in full on time. Make sure you have at least two 12 month records. Rent payments from a landlord as well a letter from your previous financial institution on a case by case basis. With 10% down or more we may get away with 6 months worth of bank statements or a letter from your Canadian banking institution that states you are in good standing.

If you are arriving from the United States an American credit bureau is acceptable, from any other country it is case by case. You can purchase in as little as three months if you have acceptable forms of documentation to support your case. If you show up on the shores of Canada and are working but cannot support your credit worthieness you will have to earn that once you get here. If you plan on moving to Canada bring your credit bureau from your home country with you, it may not be accepted for a mortgage but it may help you in getting a jump start to recieve credit in Canada. A credit bureau in Canada is only good for 30 days, so see if you can have easy access to ordering another one when you need it.

The 5% down must come from your own resources and in special cases a gift from a family member. If the funds are coming from another country do your best to prove where the source is from. Strict down payment rules apply to show the funds did not come from the proceeds of crime or terrorism.

For self employed and new to Canada it is very difficult to qualify. You must be able to verify your income. Self employed in Canada are required two years worth of income tax to be filed and taxes paid. If you have 35% down you will have no problem getting a mortgage, but less than that will require you to have a good arguement as to why you are worthy of a mortgage. The mortgage will not be insured and therefore the lenders see it as a risk. The stronger you are the better interest rate and terms you will recieve.

It is very important to show financial and credit strength. If you call up a bank or a broker when new to Canada and say you want a mortgage but have nothing to show that you are not a risk, then you are a risk, even if you feel your the most responsible person. Document everything and make sure you use a mortgage broker who is familiar with new to Canada progams. Make sure you ask if there will be a fee, if they say yes then tell them to piss off, we are paid by the lending institution. Mortgage brokers who charge for this service are simply taking advantage of people who do not understand the Canadian mortgage system.

Not all the rules for the mortgage world in Canada are written in stone and there can be some exceptions. Different lenders may also have their owns rules for qualifying and actually argue to the insurers that they want to process a particular deal or decide a client is strong enough and not require the mortgage to be insured. The relationship a mortgage broker has with lenders and insurers can really help your cause. Basically there is two levels of approval, first we find a bank to take your mortgage then they find an insurer or we request which insurer the lender sends it to. Use a broker who will go to bat for you and get you what you are entitled to under Canadian regulations.

This post is a little longer than I wanted it to be, but there is a lot to discuss. I could go on for a few more pages. If you are planning on coming to Canada it is good to contact me ahead of time. If you are already here then what are you waiting for?

Prior to looking for a home, the very first step is talking with a mortgage broker and getting yourself pre-approved.

If you have any questions please do not hesitate to email, call or comment. Comments are welcomed and encouraged.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com

Hammertown

Hello everyone, I have been thinking about putting a post about Hamilton ON for a while now, it is not about mortgages, but about the incredible City of Hamilton. If you are reading this from outside of Hamilton and can’t figure out how I could possibly call this city incredible, then it is obvious that you need to finish reading this article. Hamilton is looking for young energetic people that want to get a jump start on life by bringing their skills and enthusiasm to a city that is exploding with opportunity.

The city of Hamilton has probably been asleep for 50 years or more with not much growth and development; however that is starting to change. Rein has voted Hamilton the #1 city in Ontario to invest in and #3 in Canada, The Financial Times actually said that Hamilton is ranked in the top 10 of the future of North America and I rank Hamilton as the most affordable city in the Golden Horseshoe to live in.

When you consider that you can purchase a beautiful 3 bedroom bungalow in a good neighbourhood in Hamilton for around $250,000 compared to the price of a two bedroom condo around $300,000 + condo fees + parking fees in Toronto it is no wonder why so many young professionals are moving to Hamilton. The city of Hamilton has home prices from 100k in the Industrial Sector up to and over 1 million in the Durand neighbourhood. There is something for everyone in Hamilton. A young couple where both work at minimum wage can buy a home in Hamilton, a couple working at one of Hamilton’s many hospitals can literally move into a 100 year old home with incredible charm and old beauty for around 500k more or less and live comfortably. Quality of life is good in Hamilton when a much smaller amount of your income is going towards housing. Entertainment and dining are more affordable as well.

The unemployment rate in Hamilton is 5.5% compared to Toronto at 9.5%. There are a lot of people who think Hamilton is just a steel town. Steel and manufacturing are a major part of our history, but remember Hamilton has a huge health care industry and they are always looking for new employees in every field, the hospitals are still growing and people are retiring. Hamilton Health Sciences is Hamilton’s largest employer. Because of the hospitals, they spring up lot of secondary clinics in the city and many professionals are opening up shop in Hamilton to support the growing demand the hospitals require for additional servicing; examples, bone clinics, heart clinics, rehabilitation clinics, eye clinics, etc. Hamilton has manufacturing, agriculture, huge transportation industry and many more. And we can never forget about our young self-employed sectors that are jumping all over the opportunities in Hamilton.

Keep in mind that if you are planning to purchase in Hamilton, you would be crazy to use an out of town agent. Hamilton is still experiencing growing pains and there are definitely neighbourhoods you may not want to live in. Good and bad areas can be separated by as little as one street. You want to be certain that you use a local Realtor, I have a handful of Realtors that I work with, trust and respect, and I would gladly give you their contact info.

I will be setting up a new blog just about the city of Hamilton, expanding on the points I made above as well as discussing all the great things Hamilton has to offer such as; The waterfall capital of the world, the Bruce Trail, the resources the city provides, the recreational activities available, the re-building of downtown, and much much more. I will be putting this together along with a video blog here is a cute little start. “The Sunny Side of the Street”

I would appreciate any comments good or bad, and or requests for information about Hammertown, I will search it out and find it.

Ron Miller
905-667-0699
ron.miller@butlermortgages.com