Mortgage Overview

The purchase of a home is the biggest investment most people make in their lifetime.

The marketplace is filled with an array of new products and programs from financial institutions, to make it easier for you to realize your dream of owning a home sooner. Today, interest-only loans, self-employment programs, rental purchase programs, vacation property programs, and a host of other innovative financing alternatives are available to the homebuyers, making homeownership easier for more people than ever.

Pre-Approval

Mortgage Pre-Approval

If you are looking for a new home, make sure that you are pre-approved. With a mortgage pre-approval, a licensed mortgage professional can do a thorough verification before sending you shopping for a home. With that done, the dollar figure you are going shopping with, is actually what you can spend.

Raj, your trusted mortgage expert, will let you know for sure what you can afford based on the lender and insurer criteria, and what your payments on a specific mortgage will be.

Dominion Lending Centres mortgage professionals can lock-in an interest rate for you for anywhere from 60 – 120 days while you shop for your perfect home. By locking in an interest rate, you are guaranteed to get a mortgage for at least that rate or better. If interest rates drop, your locked-in rate will drop as well. However, if the interest rates go up, your locked-in interest rate will not, thereby ensuring you get the best rate throughout the mortgage pre-approval process.

In order to get pre-approved for a mortgage, we require a short list of information that will allow us to determine your buying power. We will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products they believe will most likely meet your needs the best, and review all of the other costs involved with the process of purchasing a home.

Getting pre-approved for a mortgage is something every potential home buyer should do before going shopping for a new home. A pre-approval will give you the confidence to know that financing is available. It can put you in a very positive negotiation position against other home buyers who aren’t pre-approved.


fixed or variable

Fixed Rate vs. Variable Rate

The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand an increase in mortgage payments.

You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.

Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.

A variable rate mortgage often allows the borrower to take advantage of lower rates – the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus or plus a set percentage. For example, if the current prime mortgage rate is 5.5 percent, the holder of a prime minus 0.5 percent mortgage would pay a 5.00 percent variable interest rate.

As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage.


Mortgage Term

Determine the Right Term

Choosing the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers.

By understanding mortgage terms and what they mean in dollars and cents, you can save the most money and choose the term that is right for you.

There are many factors, either in the financial market or in your own life, which also have to be taken into consideration when you select your mortgage term length.

If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer-term mortgage, for instance, for ten years, so that you can ensure that you will be able to afford your mortgage payments should the interest rates increase. By the end of a ten-year mortgage term, most buyers are in a better financial situation, have a lower principle balance due, and should interest rates stay risen, will be able to afford higher mortgage payments.

If you are shopping for a mortgage for an investment property, you will most likely want to consider choosing a longer mortgage term. This will allow you to know that the mortgage payments on the property will be steady for a long time and allow you to project your future income from the property more accurately.

Choosing the right mortgage term is a crucial decision for each individual. By understanding your personal financial situation and your tolerance for risk, a mortgage professional can assist you in choosing the mortgage term, which will work the best.


Credit report

Understanding your Credit Report

As credit has become more and more abundant in our society, your credit report and thus your credit rating, has become more important in your daily life.

Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account.

Your credit report is simply a listing of all your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are TransUnion and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all this information is called a Credit Report.

The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about how we choose to live our lives.

The credit score, or beacon score, is a number that gives mortgage lenders an idea of your lending risk. Credit scores range from 300 to 900 - the higher your credit score, the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.

One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct.

The good news is that your credit report is a working document. This means that you have the ability over time to repair any damaged credit and increase your credit score.


Pay Off Your Mortgage

Pay Off Your Mortgage Faster

Mortgages in Canada are generally amortized between 25 and 30-year terms. While this seems a long time, it does not have to take anyone that long to pay off their mortgage if they choose to do so in a shorter period of time.

With a little bit of thinking ahead and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:

  • Making mortgage payments each week or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to approximately 21.
  • When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits.
  • Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or received a nice holiday bonus at work. Apply this money to your mortgage as a lump-sum payment and watch the results.

By applying these strategies consistently over time, you will save money, pay less interest, and pay off your mortgage years faster!


Whether you are first-time buyer or an experienced buyer with excellent credit, Raj Gera from Dominion Lending Centres has access to the very best products and rates available across Canada. Give us a call… you’ll be pleasantly surprised!

Raj Gera, licenced Mortgage Professional with Dominion Lending Centres Pro-lending serving areas of Oakville, Hamilton, Burlington, Toronto, Grimsby, Stoney Creek, St. Catharines, Brantford, Niagara Falls, Kitchener, Waterloo, Milton, Mississauga, and the Greater Toronto Area.

Mortgage Services Include: Mortgage Purchase | Mortgage Renewal | Home Equity Line of Credit | Mortgage for Self Employed | First Time Home Buyer Mortgage | Mortgage Refinance | CHIP Reverse Mortgage

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