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.
