Online discount brokers

Discount mortgage broker rate sites have been making an appearance online during the past few years.

While these rate sites and discount mortgage brokers appear to be making offerings that are significantly lower than what the big banks are offering or even a local mortgage broker, there are a few points to consider before you decide to apply online.

Many of these low-rate mortgages are no-frills or low-frills and are packed with restrictive conditions and potential land mines.

If you commit to one of these products without reading all of the fine print, which most often happens, you could find yourself in a difficult situation in the near future since 60 per cent of Canadian mortgage holders break their mortgage around the 38-month mark.

Don’t assume that online rates are better than “offline” rates. Your local mortgage broker can shop the market and secure the best deal and also has the products available that are being advertised.

We will review all the pros and cons with you to ensure that the product is the best fit for your circumstances and you can live with the restrictions.

Many online brokers are long distance and if you have a problem with your application, it could prove challenging to resolve.

These online brokers work on volume, so there could be a lack of service to you and your mortgage. They are working with many clients at one time and may not provide the personal service that you require.

Don’t apply to too many. For each application you zip through online, you generate another inquiry on your credit report. Too many of these could cause a lender to reject you.

When you use the services of a local mortgage broker, generally only one inquiry is made no matter how many lenders review your application.

First-time homebuyers, or people who have limited knowledge about mortgages, are better off consulting a “live” mortgage broker that is close to your area, someone you can “touch and feel” and most of all trust. 

As a first-time buyer, you likely don’t know what you don’t know and that’s why you should be consulting someone who can walk you through the process.

Mortgages are complicated, so it’s important to ensure that not only do you get a great rate, but also ensure you can live with the terms and conditions of the mortgage.

If you would like a review to make sure a mortgage is a good fit for you please give me a call.

First-time homebuyer tips

If you are a first-time home buyer, then buying your first home is an exciting time, but it can also be stressful and you will have lots of questions:

  • What can you afford?
  • What type of mortgage should you get?
  • And so many more.

This will most likely be the largest financial transaction you will make in your life time and it can be overwhelming, so here are some quick tips to make the home buying process go smoother.

The trick is to take it step by step and in the correct order.

  • Take some time to think through the advantages and disadvantages of owning your own home compared to renting. Are you ready for the responsibilities of home ownership?
  • Before you begin searching for a home — and also so you don’t end up being disappointed or wasting the time of a realtor — speak with an experienced mortgage broker. I can review your financial situation to determine how much you can afford and the maximum price that you should be considering. 
  • You may believe you have been pre-approved by your bank, but if there has been no documentation collected and your credit has not been checked, then that pre-qualification is really just a discussion. There is so much that can go wrong with just a pre-qualification. True pre-approvals are based on verified financial information and a credit check. If everything has been checked upfront then you should only need to be concerned about the lender approving the property you wish to purchase.
  •  A pre-approval can also speed up the process when you do find a home although there is no guarantee that the lender will accept the property but it is best to be prepared especially during a sellers’ market. It can also guarantee you a fixed mortgage rate for a certain period of time while you are looking for a home.
  • Ensure that your credit is in good shape and you are maintaining your credit rating by making your loan and credit card payments on time. You might not have realized this but your cellphone payment record is now being reported on your credit report too so it is important to pay that on time each month.
  • There are so many benefits to using a mortgage broker during the home buying process. We have access to many different lenders and can guide you through the process ensuring a greater chance of success starting will a pre-approval. We will show you all of your mortgage options through multiple lenders to help you choose a mortgage that is right for you.

If you would like some assistance getting started on your journey to home ownership please give me a call.

Is your mortgage portable?

Are you thinking about moving up or perhaps downsizing? If so, there are several things you should consider regarding your financing for planning the move.

You may believe that your mortgage is "portable" should you decide to move to a new property, but did you know that both you and the new property must re-qualify for the mortgage.

You should speak to your mortgage broker to find out if you qualify to port your mortgage before you start shopping for a new property or list your current property.

Definition of porting

This option allows you to transfer the interest rate and all the existing terms and conditions of your current mortgage over to your new property. The advantage of "porting" your mortgage is that you automatically avoid any pre-payment fees for breaking your existing mortgage.

But not all mortgages are portable and every lender has different policies regarding the porting of their mortgages.

As an example most variable rate mortgages are not portable, which means you may not be able to take your current great rate with you to a new property and will be required to qualify for new mortgage financing.

If you stay with your current lender they may waive penalties.

Here are a few other points that you should consider to prevent any surprises.

Mortgage penalties 

Most mortgages are portable, but some lenders may not be willing to approve the moving of your current mortgage to a new property.

You may have to seek new mortgage financing with another lender as your current lender may have issues with the property — self-managed strata properties, former grow-ops, age restricted properties, etc.

Or you may no longer qualify for financing with this lender due to all of the changes to mortgage qualifications in recent months or changes in your own circumstances.

There can be a limited window of time for you to complete the porting of your mortgage. Some lenders only allow 15 days to complete while others will go up to 120 days. It’s important to know this information in advance as you plan your move.

If the sale of your current home completes before the purchase of your new home, a lender is going to collect any penalties that are owing and will not reimburse you until the purchase of your new home is complete.

This needs to be included in your financial budget for the purchase of your new home.

Many lenders will not allow you to port and increase your mortgage, so you may be actually looking at today’s rates on a new mortgage financing rather than porting the rate on your current mortgage.

Whether you are moving up or moving down, with a little bit of planning and budgeting all can go smoothly. You may not be planning for a move when you initially secure your mortgage, but a little planning may save you thousands of dollars should you want or need to make a move to a new property.

Every lender has different policies regarding the porting of their mortgages and it’s important to secure your mortgage with a lender that not only has great rates but also the most flexible terms and conditions.

Your first call should be a chat with your mortgage broker to ensure you qualify for your financing and then you can move forward with confidence to your new home.


Buying a former grow-op

Few communities in Canada have escaped having a grow op found in their midst.

Here are a few things you should know if you are considering the purchase of either a remediated or un-remediated grow-op property.

Financing may be an issue (even mortgage renewals).

If you already own the property and it has become public knowledge it was a grow op, when your mortgage comes up for renewal, the financial institution holding the mortgage is not obligated to offer you renewal terms.  The lender may demand the balance in full.

Many mortgage lenders will not offer financing on properties that once housed a grow op. There is an environmental risk associated with former Grow Ops that causes concern.

Mould spores can remain dormant for years. If they were not properly eradicated, there may be a future risk of regeneration of mould. Warm, moist conditions can allow dormant spores to regenerate.

The lender may become responsible for the environmental cleanup when the mould starts up again.

There are very few lenders that will provide financing even for remediated grow-ops. Interest rates are higher, fees including mortgage insurance will be charged and there are specific documents required by the lender which includes environmental testing,

When lenders learn of an issue regarding the property after they have given an approval, if that information would have caused them not to offer an approval before, had they known, they may refuse to complete the mortgage transaction. 

Buying an un-remediated former grow op at a bargain price will require a significant investment of cash. Usually, while in its discovered state, you will need Equity financing. It comes at a higher price in lender fees and interest rates if it can be secured at all.

Additionally, you will need the cash resources to make the necessary reclamation. Once the house is inspected and found clear of mould and spores, some lenders will provide refinancing or will allow for purchaser financing.

You will need a proficient mortgage broker to lead you through the transition of purchase, improve and refinance or sale.

Here are some questions to consider should you be considering the purchase of a former grow-op: 

  • What if the future occupants have compromised immune systems or asthma? 
  • Who carries the legal and ethical guilt, if the toxicity of regenerated mould causes a death?

If you are considering the purchase of a former grow-op, please give me a call to discuss your financing options.

More Mortgage Matters articles

About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories