Understanding Mortgage Products

General Abishak (Abhi) Sharma 10 Oct

Contrary to belief not all mortgages are the same. There are different products available for individuals that meet different criteria. The best way to define a mortgage is as a loan against your home that is amortized over a certain amount of years (usually 25-30 years), with a certain rate that is fixed, open or variable. But what people don’t seem to recognize is that just like every loan out there, there are different criteria’s and ways to get approved for a loan.

Recently a survey done by Rates.ca says “Only half of Canadians are familiar with the types of mortgages available.”  Now what does that mean to an individual, what difference does it make when I choose a mortgage product?
Well the answer really depends on two main points;

1. How is your income calculated?
2. What is your financial goal?

Lets start with the first question, why does it matter how your income is calculated? Depending on your occupation there are different products that can help you get qualified for more compared to the conventional mortgage route. For example; if you are self-employed you usually don’t show all your income in taxes, as you have write off’s. There are self-employed products that look at your business financial’s and calculate your income from there or if you were to go to a ‘B’ Lender they use your bank deposits and calculate your income from there.
Now if you were to take the conventional route, you probably show way less then any of those two methods, thus the self-employed program would benefit you in an increase of your approval.

Another example; You are practicing to become a Doctor. Now in this case you would be making a certain amount that would not be near the amount that you would make after your practices. Banks are aware of this and there are products out there that have a set amount on what we should qualify you on. For example you might be only making $40,000 while practicing, but the banks will tell us under this program we can use an amount such as $120,000 (income varies on what type of Specialist you are). Thus allowing you to qualify for a larger amount.

Now for the 2nd question, how does your financial goals matter for a mortgage product? Well lets be honest, none of us want to be paying our mortgage when we are old. Everyone wants to be mortgage free as early as possible. Depending on the mortgage product you choose there are different ways to quickly pay off a mortgage. Most mortgage product have a 15/15 option. This means you are able to make a 15% lump sum payment or 15% more in mortgage payments for the year. Using both options, you can pay off the principal amount of the mortgage faster. Now if your mortgage agent knows that you are looking to pay off your mortgage quicker, they can always ask the lender for an exception and increase the pre-payment options. Depending on the lender they can vary from 20/20-30/30.

As a client, how do you figure out if your mortgage agent is giving you the right product? Do your research, ask questions see what type of product is being offered to you and how does it benefit you. When you ask questions, you are able to see if that product even makes sense to your needs.

One of the benefits of working with me and my team is that on our first meeting, we just don’t understand that you need a mortgage but we ask questions to see if the product makes sense for you. Let it be paying off the mortgage faster, refinancing, or getting an investment home, we make sure the products that we provide help meet your financial needs.

Important Guide On How To Become Mortgage Free

General Abishak (Abhi) Sharma 4 Jul

No one wants to have a mortgage for 25-30 years. Here are some important tips that can help you become mortgage free faster.

1. Change your payments to accelerated bi-weekly/weekly payments.
2. Increase your regular payments. Most lenders allow you to put anywhere from 10%-20% towards your monthly payments.
3. Use your lump sum options. Depending on the lender you are allowed to have one big lump sum payment a year which can be anywhere from 10%-20%. This goes toward your principal.
4. Contribute to your max RRSP then use your tax refund to help you contribute to your mortgage payment.

It’s not difficult, it just requires attention and commitment, and I will be here every step of the way to provide guidance and answer any question you may have.

Where Is The Housing Market Today?

General Abishak (Abhi) Sharma 23 Apr

As of January 1st 2018 the Bank of Canada had passed a rule that would be called the B20 regulations. This was an answer to the hot market and the fast increasing prices of the house market. The idea was that you’d have to pass a test that would qualify you at 200 basis points higher, which equals 2% above the contract rate or at a qualifying rate of 5.34% (the higher of the two). This allows the Bank of Canada to see how the market would react if they were to increase rates in the near future without causing a recession.

Once that was done, Bank of Canada started increasing rates every quarter by .25%. Thus resulting in the slow down of the housing economy. The B20 regulations did not only add the stress test but it did create stricter rules for international buyers. Adding a 15% foreign buyer tax helped in differing international investors. The use of these two new major rules helped slow down the housing market.

Now a year and half later, we have a market that is at the slowest. Both Vancouver and GTA have been hit hard with the stress test that everyone is now questioning if there should be a stress test. Recently the budget was announced and Bank of Canada had come up with a few new rules; Increasing RRSP’s from $25,000 to $35,000 for down payment and as of November CHMC will be putting 5-10% down for first time home-buyers/divorcees, with the clients own resources of 5% down to the max mortgage amount of $420,000.

Now lets take a look at today’s market; Bank of Canada has still kept the B20 regulations but the banks have started decreasing there rates from 1-5 year fixed and 5 year variables. This all comes from the slow down of the market and a way for the lenders to push the housing market in a positive direction. So as you being the end user you still have to pass the stress but if you are able to qualify lenders will fight for your business which in the end results in you having the best rate and bang for your buck.

In these pass few months I have seen the banks give exceptions on rules that without clients would not be able to pass the stress test or qualify for a mortgage. But because of today’s market, banks have become more lenient to Mortgage Agent’s that have a good reputation with them. Our good relationship with lenders result in the client getting a better rate and if they require certain exceptions, lenders are more willing to give us those exceptions.

If you have any questions about your mortgages or you know a friend who has a question, please don’t be hesitant and give me a call.


Abishak (Abhi) Sharma

Why Use A Mortgage Broker?

General Abishak (Abhi) Sharma 10 Apr

The mortgage process can seem overwhelming. Using a professional mortgage broker will help guide you every step of the way.

A Mortgage Broker is your essential partner in the mortgage process

With their experience and expertise, a professional mortgage broker can help you select the right mortgage. They put the information in context, anticipate the variables and find the best loan fro you based on your needs and goals. This the kind of help you don’t want to be without.

Mortgage brokers have negotiating power to give you choice

Your professional mortgage broker has established relationships with lenders which elevates their negotiating power on your behalf. By working with an experienced broker, you gain access to competitive rates and extensive range of products and services.

Mortgage brokers save you time

With an experienced and knowledgeable broker, you won’t have to wade through complex information on your own.

Mortgage brokers handle the details

A professional mortgage broker navigates through the obstacles and manages every transaction with the real estate agent, lender, appraiser, credit agency, and lawyers.

Mortgage brokers help you avoid unnecessary risk

Mortgage brokers can help identify applicable penalties, fees and charges with respect to various mortgage products so that you can make the most informed decision on your mortgage.

Working with your broker

Buying a home or refinancing your mortgage is an important decision. Your mortgage broker can offer their professional expertise to help you evaluate your needs and select the right mortgage for you. More than just rates, your mortgage broker knows about lending options, payment alternatives and the importance of service.

Do you know someone looking for a home?

Abishak (Abhi) Sharma can find competitive rates and his optimal service comes from his ability to work with the network of lenders. If you know someone looking for a mortgage solution, I can help.

Pre-Approval vs Pre-Qualifying The Difference

General Abishak (Abhi) Sharma 4 Mar

Planning to get a home is already a big step, figuring out what type of home you can afford is the first step you would want to take in understanding how to get into your dream home. There are two ways you can get a budget, one is pre-qualifying and the other is an pre-approval. So what are the differences between them both?

Pre-qualifying is basically a quick way of seeing how much you can afford, it’s basically a educated estimate. In pre-qualifying there are only 2 major variables; how much is your income? and how many debts do you have? Over that it will come to an educated estimate on how much you can afford.

Pre-approval is like getting an approval, it is a longer process then pre-qualifying but it tells you your actual budget. A pre-approval requires you to submit financial documentation for your income as well as it takes a look at your credit score while looking at all your debts as well. Once you’ve got a pre-approval the interest rate can be held for 60,90 or 120 days. This means you can get today’s interest rate even after 60,90 or 120 days depending on the time you think it will take you to close and get into your new home.

So when you are looking for your next home make sure you get Pre-approved by your mortgage agent or lender.

First-time Home Buyer Guide

General Abishak (Abhi) Sharma 28 Feb

Looking to buy your first home? Well it may seem difficult, you may seem lost and confused but this is natural who wouldn’t feel like that. Buying a home is probably going to be the biggest debt that you are going to take on in your life as well it will be one of your biggest assets.

Too help you out I’ve created a small step-by-step guide that can help you understand what the process will look like while buying your first home.

1.Getting your documents
-Come prepared with the right income documents (you can always ask your mortgage agent on which documents to bring)
2.Get Pre-Approved
-This one is important, you want to know your budget before you fall in love with a home that is not within your budget
3.Find Your Home
-Once you know your budget, work with a trust realtor to find the right fit.
4.Make an Offer
-Work with your trusted realtor and make an offer for the home.
5.Subject Removal
-Subject removal is a period of time in which you (the buyer) works to satisfy the conditions (subjects), that are listed on the accepted offer for the particular property.
6.Complete Financing
-Once your offer is accepted by the seller, go back to your mortgage agent to complete your financing. In addition to the signed offer, you will need to supply your agent with:
>Legal description of the property & building specs.
>Online property listing (usually an MLS online listing)
>Most recent property tax assessment
>Appraisal, home inspection report and land survey
>Estimates for recent or planned renovations
>Heating and Utility costs
>Condominium fees (if applicable)

Yes I know, it is that simple. Working with an trusted mortgage agent and realtor is always a good first step. Make sure you are not afraid to ask any questions or concerns that you may have while buying your first home, it maybe your first time, but it is not the realtors or the mortgage agents first time and they would be more than willingly to help you out.