FREQUENTLY ASKED QUESTIONS
Why use a Mortgage Broker?
- Power of professional negotiating expertise.
- One stop convenience for access to numerous mortgage products.
- Unbiased knowledgeable advice.
- Access to unadvertised rates.
- Work for you, not the Bank.
What is the Homebuyers Plan?
- The Home Buyers Plan is a federal government program that allows homebuyers
to use up to $25,000.00 for each purchaser from his/her own RRSP.
- You must not have owned a principal residence within the last 5 years.
- You must intend to occupy your home as a principal residence.
- Minimum repayment is 15 equal annual installments. This schedule can be
- The funds to be withdrawn must have been invested into the RRSP for a
minimum of 90 days prior to withdrawal.
- You must complete a Form T1036.
What should I expect for closing costs?Closing costs are
approximately 1.5% of the Purchase Price. The following are approximate costs and do vary from province to province;
- Appraisal Fee: $200.00 and up
- Survey Certificate (if applicable): 250.00
- Home Inspection (approx) 250.00
- Legal Fees (approx): 750.00
- Property Tax Adjustment (if applicable)
- Interest Adjustment (if applicable)
- Property Transfer Tax (if applicable)
What is Property Transfer Tax and do I have to pay it? (Not Applicable in Alberta)
- This tax is charged by the Provincial Government and is collected by your
lawyer at closing.
- Each Province varies as to the amount but it is usually a percentage of the
What type of income proof do I have to provide?In most situations
lenders require a comfort level that the borrower has sufficient income and cash
flow to service the mortgage as well as any other obligations that they may
have. The higher the Loan to Value (ie mortgage amount vs. purchase price) the
more important this becomes as the lender is placing less reliance on the value
and equity in the property and more on the earning power of the borrower. The
following is a summary of what lenders may require depending on what type of job you
- 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 been passed. Bonuses, car
allowances and other forms of remuneration should be mentioned if applicable.
- Pay Stubs - Many Lenders will also require your most recent pay stubs.
- Pay Stubs - showing year-to-date income verification.
- Job Letter - confirming hourly rate of pay, guaranteed hours per week and date of hire.
- T4's and/or Personal Tax Returns (T1 Generals)- 2-3 years to take an average.
- Notice of Assessment - (NOA) - most recent to confirm no taxes owed.
- T4's and/or Personal Tax Returns - 2-3 years to take an average.
- Job Letter - confirming position.
- Notice of Assessment (NOA) - optional depending on Lender.
- Financial Statements of Company - 2-3 years average of net income used.
Depending on lenders policies, The add-back of various personal expenses run
through the company may or may not be allowed (eg's of allowable addbacks -
Depreciation, Amortization, CCA (Capital Cost Allowance).
- NOA's (Personal Notice of Assessments).
- Personal Tax Returns ( T1 Generals showing personal net income).
Overtime - Will be used as long as there is a proven track record - 2-3
years evidence (T-4's).
Bonuses - Once again a 2-3 yr track record required.
Part-time Job - should be in place for a couple of years before using
the additional income.
Tips - generally not recognized unless declared for tax purposes.
Car Allowances - This 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.
These are a few common questions and approximate guidelines about mortgage qualifying, there are many more variables that apply to the qualifying and approval process. I will help you and guide you through the maze of mortgage financing.