What MyQ Knows For Sure…
I have been in the industry for years and have come against most situations. Check back here regularly as I share my thoughts on the industry and offer tips to clients (existing or potential) to make their path to home ownership a smooth one.
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Q. What is the fee associated with using a broker? How much will I have to pay you?
A. You never pay your broker for their services. They receive their payment directly from the institution that you eventually sign with. That doesn’t mean that they are loyal to one lender, just the opposite, since they work with multiple lenders, brokers can often negotiate lower mortgage rates as lenders want their clients’ business.
Q. Which lenders do you typically look to when securing a mortgage for your clients?
A. Most lenders attempt to secure as much business as possible from a specific cross section of clients that the lender is familiar with. As an example, most banks will do A lending to clients with secure jobs, high credit scores and offer competitive interest rates whereas many Trust companies will lend to those with lower credit scores and shakier finances at rates that are higher to reflect the risk they are willing to take. Mortgage brokers have a large toolbox full of lenders and will negotiate to get the best rates from the best lender specific to the client’s current financial situation.
Q. What is this stress test that I’m hearing all about?
A. With Canadian household debt at an extremely high level, the stress test is a way to help curb over-spending on homes. Simply put, the rules will effectively reduce the mortgage amount Canadians will be able to “qualify for” depending on their level of down payment and household income. B-20 Guidelines will require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%. This may apply to your new mortgages, renewals and refinancing.
Q. What if I have a poor credit score?
A. A poor credit score will definitely hurt our negotiating power with lenders. A lower credit score means you are a higher risk for defaulting on your mortgage. If you know that you are planning to apply for a mortgage, do what you can to boost your credit score. Here are some tips:
- Pay your bills on time
- Don’t apply for a new credit card within 12 months of applying for a mortgage
- Keep your credit card balance well below the limit. The closer to the limit you soar, the lower your credit score
- Pay debt as quickly as possible
Q. Can’t I just renew with my current lender?
A. The short answer is yes… you can absolutely renew with your current lender and, in fact, they make it very easy for you to do so. They understand that busy people will often take the renewal offer presented to make the process easier on themselves. However, the renewal offer is rarely as good as what you can get with a little preparation and research. Lenders understand that some people are just lazy and don’t’ want to do the work to find a better rate, so they will offer a rate, that is typically above the going rate with the expectation that most will accept. Choosing convenience could cost you tens of thousands of dollars in the long run.
Q. How long does it typically take to secure a mortgage?
A. That really depends on the individual circumstances of the client. Some clients have their financial house and paperwork in order and that speeds things along. Typically you can expect to secure your mortgage in about a week, sometimes less if you are prepared. If there is a lot of back-and-forth to get the paperwork settled, it could take a little longer.
Q. Why work with a mortgage broker? Why can’t I do this myself?
A. You can do this yourself, but it’s likely that there will be mistakes made, headaches and sleepless nights. This is my area of expertise and I can absolutely promise you that I will make this process as easy as possible and secure you the best terms possible. I know the players and the game and at the end of the day, that matters.