we are committed MORTGAGE BROKERS

If you’re looking for your first-time home buyer mortgage, you’re about to take one of the biggest steps in your life. This is an exciting time. It is also a little nerve wracking. There are so many decisions to make, and you’re almost certainly about to take on the biggest financial commitment of your life so far.

Getting advice and assistance from a licenced mortgage broker will help you to understand the various terms and conditions related to your mortgage. This could give you the confidence to enjoy the house hunting process without the fear of the unknown. At Certified Mortgage Brokers Ottawa, we’ve helped hundreds of young people to purchase their first home.

Many people make the mistake of looking for their dream home before they have visited their mortgage broker. We can save you a lot of time by calculating the mortgage and the repayments for which you’ll qualify. Armed with this knowledge you can find a house that you can afford. We can even arrange pre-approval which could give you the edge if you’re bidding on a house that someone else wants.

Before you sign on the bottom line and commit to a mortgage, it is essential that you understand what you are getting yourself into.  This could save you loads of money in the future.

Finally, there are plenty of incentives on offer for the first-time home buyer mortgage. We can help you with information on what they are, how to qualify and how to access the funds.

Mortgage refinancing is the act of closing a current mortgage during its term and concluding a new mortgage with a new set of terms and conditions. When you refinance you can access up to 80% of the equity in your home. Equity is the property value less the outstanding mortgage secured by your property.

Secured loans are by far the cheapest way to access funds. If you have unsecured debt with high interest rates, it makes perfect sense to refinance your mortgage, consolidate your debt and save on the interest. Tapping into the equity in your home could also allow you to renovate your property or finance an investment or your child’s education.

Additional finance is not the only reason that people refinance their mortgages. Sometimes it makes financial sense to take advantage of lower interest rates available through market improvements or progress in their credit ratings. The savings are often of a magnitude to make financial sense to pay the penalties. Then pay off the old mortgage and enter into a new mortgage with its improved terms and conditions.

There are three different options when refinancing

• Breaking the current mortgage and paying the penalties
• HELOC – accessing home equity and paying back the interest on the principal used
• Blend and extend – combining your old mortgage with the new at a combined interest rate.

Your mortgage broker can help you to understand the advantages and disadvantages of each, so that you can compare the costs and benefits.

If you have a mortgage at some stage, you’ll have to renew it, unless you are fortunate enough to have paid it up. Renewal time should be a time of deliberation. Mortgage renewals offer homeowners an opportunity to negotiate better interest rates. It is a time when you should consider the suitability of the terms and conditions of the mortgage to your current lifestyle and future plans.

This is the perfect time to change loan providers if you are dissatisfied with your current one. More than 50% of Canadian lenders sign the renewal and return it without negotiating any changes. These are lost opportunities. A small reduction in rates over the term of the mortgage can translate into thousands of dollars.

By law the banks must post you a renewal notice at least 21 days prior to your mortgage renewal date. When the term comes to an end you pay off your mortgage and then renew for another term. Alternatively, you can shop around and negotiate more favourable terms and conditions with another lender or your current mortgage provider. You should start to consider your options four months before the term of your mortgage comes to an end.

Before you decide to switch you should identify all the costs involved in the switch. Research has shown that mortgage brokers get better rates. This is because they have many lenders on their books and the power to negotiate. The lowest rate may not always be the best. The rates must be weighted up against the terms and conditions. Get advice and make the best of the opportunity.

If you’ve been turned down by one of the big six, you’re not alone. It’s become more common as the federal government tightens legislation in the mortgage industry. Don’t give up. You could still qualify for a mortgage. Private lenders are a lot more flexible than the banks. They will lend money to people who do not qualify for a traditional loan, and they will tailor a mortgage to suit your financial and lifestyle requirements.

Private lenders are more interested in the value of the property that will secure the loan than they are in your credit history.

Private mortgages are short term, normally one to three years. They should be regarded as bridging finance, giving you time to get approval from a traditional bank. The interest rates are higher than those offered by traditional banks, so you should enter the arrangement with an exit strategy in mind.

Private mortgages are interest only mortgages. You’ll pay off the capital when you exit the agreement.

They are ideal for

• Those who have a low credit score
• People with a high debt to income ratio
• The self employed
• Unconventional properties that the traditional banks won’t fund
• Funds that are required quickly to take advantage of an opportunity
• Second mortgages required to consolidate debt or as emergency funding.

If you’re looking for private funding, it is best to contact a mortgage broker, who can put you in touch with the private lender that matches your requirements.

Despite a recent announcement by the CMCH that it is loosening restrictions on granting mortgages for self- employed people, many may still find it difficult to obtain a mortgage.

Lenders typically use debt to income ratios to calculate how much you can afford to borrow. Any rational self-employed person deducts as many of the allowable expenses from their income before submitting tax returns. This results in a lower net income. The outcome is that you qualify for a lower mortgage than an employed person earning the same income.

Because your income is lower, and also not consistent, lenders consider you a higher risk. Higher risk equals higher interest in the world of finance. So, you have one of two choices – accept the higher interest or forgo some of the allowable expenses for two years prior to making application for a mortgage.

If you’re self employed and planning to buy a property, you could save yourself some money by planning ahead. Make sure that you have a good credit score. Pay off loans and credit cards ahead of time. Save up for a higher down payment. The higher your down payment the lower the risk to the lender.

Don’t make any large unnecessary purchases as tax write-offs in the two years prior to applying for the mortgage. Likewise, don’t take a long holiday. You need to maximise your income. Decide on whether you will forgo some of the expense write-offs. Ask your broker about the possibility of using stated income on the mortgage application.

Whether you are building your own home from scratch or buying a new home from a construction company, construction financing in the form of a construction mortgage is what you’ll need to finance it.

There are two types of construction mortgage, a completion mortgage and a progress draw mortgage. A completion mortgage is very similar to a normal mortgage. This is the type of mortgage that you will require if you are buying a new house through a construction company. The money for the home is only paid to the construction company when the structure is complete and you take ownership.

A progress draw mortgage money is paid increments to the builders when they reach certain agreed milestones in the construction.

Arranging construction finance is not as simple as applying for a residential mortgage. The lender will want to limit the risk so he or she will want to see some of the documents pertaining to the building arrangements. These will include plans and blueprints, a copy of the construction contract, building permits and if you are buying an erf, proof of ownership. The lender will also want timescales and an estimate of cost.

In addition, you will be expected to pay a bigger down payment. This is because a construction mortgage carries more risk for the lender. You should also ensure that you have contingency funding of about 15% of the estimated cost of the construction. This is to cover overruns and delays.

All in all, construction financing is a lot more complicated than a residential application so it is best to get the assistance of a mortgage broker that specialises in construction mortgages.

If you have equity in your home a Home Equity Line of Credit could offer you the best in flexible credit at a reasonable interest rate. Your home equity can secure you a loan that you can use any time in any amount up to the agreed limit.

You only pay interest on the amount that you have borrowed. In addition, because it is a secured loan the interest is a lot lower than you could get on a credit card or personal loan. Yet it is as easy to use as a credit card. Interest on HELOCs are calculated on a daily basis

You don’t have to pay back the principal, and anything you do pay back is immediately available for you to borrow again. HELOC loans can cover up to 65% of your home equity. If it is combined with a mortgage it can go up to 80%. Many banks will offer you what is known as a re-advanceable mortgage when you make a down payment of 20%. This is a mortgage combined with a HELOC that allows you to re-use the principal as you pay back the principal.

HELOCs are sometimes used in place of a traditional mortgage. People choose to do this because a HELOC has no limitations on payment unlike a traditional mortgage where you’ll pay penalties for early payment.

HELOCs are available as first and second mortgages. Contact your mortgage broker for advice on the best options for you. You’ll also get the best terms and conditions.