What Clients Ask The Most
What You Should Know
I always make sure my clients are satisfied and totally onboard with everything I do. If something isn’t clear after going through my site, take a look at these commonly asked questions regarding mortgages, refinancing, and other related subjects. Still can’t find what you need? Feel free to contact me for more assistance and information.
What is a Pre-Approval?
When you’re shopping for a mortgage, you will want to get a pre-approval first.
Mortgage lenders have a process which allows you to:
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know the maximum amount of a mortgage you could qualify for
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estimate your mortgage payments
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lock in an interest rate for 60 to 130 days, depending on the lender
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The mortgage preapproval process may be divided in various steps. It may also be called mortgage a pre-qualification. Different lenders have different definitions and criteria for each step they offer.
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During this process, the lender looks at your finances to find out the maximum amount they may lend you and at what interest rate. They ask for your personal information, various documents and they likely run a credit check.
What is a Mono-Line lender?
The word "mono-line" means "single-line"....and knowing this can save you lots of money!
Many people are fimiliar with both American Express® Credit Cards and Captial One® Credit Cards. Well these two companies are actually considered mono-line lenders. However, they are mono-line lenders for credit card lending. In the mortgage capacity, we have many mono-line lenders who ONLY do mortgage lending. Mono-line lenders are STILL consider to be "A-Level Lenders".
These mono-line lenders tend to have fewer branches then the Top Canadian Banks. However, when you measure just mortgage business alone, these mono-lenders do just as much, even sometimes more than the Banks Because they have fewer, if no branches at all, they are able to drascially reduce their interests rates due to not having the large overhead costs of running branches.
On average a client who choose to go with a mono-line lender will save anywhere between $12,000 to $22,000 on a 5 year mortgage term.
What is the Stress-Test?
The mortgage stress test determines if you’ll still be able to pay your mortgage should interest rates rise.Â
It provides rules that mortgage providers use to calculate if you qualify for a mortgage and how much you can borrow.Â
The mortgage stress test is used when you buy a home, switch to another mortgage provider, take out a homeowner line of credit or refinance your mortgage, but not when you renew your mortgage with the same provider.Â
The test was introduced in 2018 by the federal government as a way to avoid future market faults as much as possible.
What is GDS & TDS?
Mortgage professionals use 2 main ratios to decide if borrowers can afford to buy a home: Gross Debt Service (GDS) and Total Debt Service (TDS).
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GDS is the percentage of your monthly household income that covers your housing costs. It must not exceed 39%.
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TDS is the percentage of your monthly household income that covers your housing costs and any other debts. In many cases it must not exceed 44%.
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For more information on these calculations, including guidance on which rental income to include in your household income, please reach out to me directly
What is the minimum down-payment requirement?
Canada’s lending rules have specific guidelines around minimum down payment sizes:
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For homes under $500,000, the minimum down payment is 5%. You can calculate a 5% down payment by multiplying the final sale price by 0.05.
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For homes between $500,000 and $999,999, you need 5% for the first $500,000 of the purchase price and 10% for the amount above $500,000. Calculate this minimum down payment by multiplying the first $499,999 by 0.05 and the remaining amount by 0.1. Then add the two resulting numbers together.
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For homes costing $1 million or more, the minimum down payment is 20%. You can calculate a 20% down payment by multiplying the final sale price by 0.2.
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Not everyone gets by with a minimum down payment. There are cases where a lender may require a bigger down payment in order to approve you for a mortgage.
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People who are self-employed or have a poor credit history, for example, often need to put down more than the minimum. And if the monthly mortgage payments on a particular home are too big for a homebuyer’s budget, a larger down payment may be required to reduce the size of the mortgage — and the size of those payments — to a more manageable level.
Nerd tip: If your down payment is less than 20%, you’ll have to purchase mortgage default insurance, which protects your lender in the event you can no longer pay your mortgage.
What is default mortgage insurance?
Mortgage default insurance is designed to protect your lender in the event you stop making payments on your mortgage. This kind of mortgage insurance is required in Canada when your down payment is less than 20% of the home’s purchase price and you find yourself in a high-ratio mortgage.
The benefit of mortgage default insurance is that it makes it less risky for lenders to grant mortgages to people with modest down payment savings. In this way, mortgage default insurance makes the housing market more accessible for Canadians.
There are three providers of mortgage default insurance in Canada: Sagen (formerly known as Genworth Canada), Canada Guaranty and the Canadian Mortgage and Housing Corporation (CMHC). You may hear some people refer to mortgage default insurance as “CMHC insurance.”
Is Now the Time to Buy a Home?
You've probably heard the saying, "The best time to buy a home was 5 years ago." While there's truth to that, what if you weren't ready or able to purchase back then? The good news is that now can still be a great time to buy. Here are a few signs you're ready to take the leap into homeownership:
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1. You're Tired of Renting
Let's face it, renting has its drawbacks. Even with rent control, there's always the risk of eviction for renovations or your landlord deciding to move in. This uncertainty can be stressful. Plus, you're essentially paying someone else's mortgage without building any equity for yourself.
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2. You're Financially Stable
Homeownership is a big commitment, so financial stability is key. If you have a steady income, a good credit score (ideally above 680), and manageable debt, you're off to a great start.
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3. You're Ready to Learn
Buying a home can be complex. It's important to recognize when you need expert guidance. A trusted real estate agent will protect your interests and navigate you through the process. And a mortgage agent like myself can help you understand your financing options and make informed decisions.
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4. You Need More Space
Whether it's for a growing family, pets, a home office, or simply room to breathe, needing more space is a common motivator for buying a home.
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Ready to explore your homeownership options?
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Contact me today for a free consultation!
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Tim McCarroll
Mortgage Agent Level 1 & Client Service Manager
Tim, your dedicated mortgage professional, ensures a seamless journey with market expertise, unwavering dedication, and a personalized approach. Whether you're a first-time homebuyer, seasoned investor, or assisting family, Tim provides expert guidance, identifying your unique needs. Backed by a vast network, technology, and a keen eye for trends, he goes above and beyond for exceptional results. Commitment to honesty, transparency, and open communication keeps you well-informed. As your trusted Mortgage Agent, Tim prioritizes a stress-free experience, building lasting relationships based on trust, integrity, and mutual success. Whether buying, refinancing, or renewing, Tim is your reliable advocate, negotiating the best outcome. Mortgages are about finding a true home, making sound investments, and creating your envisioned future. Let Tim be your guide—contact him today to turn your real estate dreams into reality!
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