Mortgage Questions

What are your Mortgage Questions? Below are common Mortgage Questions asked by many in Alberta.

Why use a Mortgage Broker?
What is the Home-buyers Plan?
Do I qualify for 5% down payment program?
What Should I expect for closing costs?

Why use a Mortgage Broker?

  • Receive professional negotiating expertise.
  • Convenience and access to numerous new mortgage products.
  • Unbiased knowledgeable advice.
  • Access to unadvertised rates.
  • I work for the YOU, not the bank.

What is the Home-buyers plan?

  • Is a Federal Government Program that allows home-buyers to use $25,000 for each purchaser from his/her own RRSP.
  • You must not have owned a principal residence within last 5 years.
  • You must intend to occupy your home as a principal residence.
  • Minimum repayment is 15 equal annual instalments. This schedule can be accelerated.
  • The funds to be withdrawn must have been invested into the RRAP for a minimum of 90 days prior to withdrawal.
  • You must complete a Form T-1036.

Do I qualify for the 5% down payment program?

  • The home must be located in Canada and is to be occupied as your principal residence.
  • You have from your own resources a down payment of at least 5% of the purchase price of home.
  • Your mortgage payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees (if applicable).
  • You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
  • You meet the lender’s eligibility requirements regarding income, employment and credit worthiness.

What should I expect for closing costs?

(Closing costs are approximately 1.5% of the Purchase Price. )

The following are approximate costs:

  • Appraisal Fee: $200.00
  • CMHC FEE (if applicable): $165.00
  • Survey Certificate (if applicable): $250.00
  • Home Inspection: $250.00
  • Legal Fees (approx.): $750.00
  • Tax Adjustment (if applicable)
  • Interest Adjustment (if applicable)
  • Property Transfer Tax (if applicable)
  • What type of income proof do I need to provide?

Salaried Employees

  • Job Letter- Lenders use 100% of the income. Verification is made on company letterhead, signed by appropriate individual. If you are a recent hire, the letter should confirm that probation period has passed. Bonuses, car allowances, and other forms of remuneration should be mentioned in letter if applicable.
  • Pay Stubs- Many Lenders will also require your most recent pay-stub(s).

Hourly Employees

  • Pay Stubs- showing year-to-date income verification
  • T4’s and/or Personal Tax Returns (T-1 Generals)- 3 years to take an average
  • Notice of Assessment (NOA)- most recent to confirm no taxes owed.

Commission Income

  • T-4’s and/or Personal Tax Returns – 3 years to take an average
  • Job Letter- confirming position
  • Notice of Assessments (NOA)- optional depending on Lender

Self-Employed

  • Financial Statements of Company- 3 years average net income used. Depending on Lenders policies, The add-back of various personal expenses run through company may or may not be allowed. (examples of allowable add-backs- Depreciation, Amortization, Capital Cost Allowance).
  • NOA’s (Personal Notice of Assessments)
  • Personal Tax Returns (T-1 Generals showing personal net income).

Note:

  • Overtime will be used if there is a proven track record. 3 years evidence (T-4’s)
  • Bonuses- Once again, a 3 year track record required
  • Part-time job- should be in place for a couple of years before using additional income
  • Tips- Generally not recognized unless declared
  • Car Allowances- Varies from lender to lender
  • Alimony and Support- Evidence that payments have been made regularly and a copy of divorce agreement is required. Investment Income – must be received continuously. This source of income is limited to interest, dividends, or some type of ongoing revenue. Capital gains, which result from the liquidation of an asset is a 1 time occurrence and can’t be used.

Do not hesitate to call or email me with any additional questions.