That’s the takeaway from a national survey released this week by Rates.ca, which found half of Canadians aren’t aware of the mortgage options available to them.
Not only that, but Canadians are lacking in some other basic mortgage trivia, with an astounding 9 out of 10 respondents not knowing that mortgage interest is charged semi-annually:
28% think interest is compounded monthly;
17% think it’s bi-weekly;
17% think it’s annually;
28% just have no idea.
Should we be concerned?
Dustan Woodhouse, President of Mortgage Architects, and a former active broker who has written multiple educational mortgage books, thinks so.
“Sounds about right. We know about what we pay attention to, i.e., The Kardashians,” he wrote to CMT. “The material concern in this is how easy it makes it for the government to over-regulate the industry, with clients blaming the banks—rather than the appropriate parties. This disconnect is deeply concerning.”
Perhaps even more concerning is the fact that only four out of 10 Canadians (39%) know they can avoid paying default insurance on their mortgage if they make a down payment of 20% or more.
With default insurance running anywhere from 4–5.85% of the mortgage value, we’re talking some serious dinero being spent—potentially unknowingly and unnecessarily.
So, what can be done? Woodhouse admits there are no simple answers, but says making mortgages more tangible to borrowers would be a good place to start.
“The root issue is making mortgages interesting and relevant to clients more often than when they need one,” he said. “It needs to be all about housing, not simply mortgages.”
Paul Taylor, President and CEO of Mortgage Professionals Canada, agrees.
“Unless you deal in mortgages, you only talk about them, generally, once every five years,” he said. “I’m sure at the time of signing, the borrowers understood what their payment obligations were and the schedule; after that, the rest of the information provided was likely filed under ‘nice to know but not relevant enough to me to retain.’”
Making the Case for Mortgage Brokers
With a growing trend towards “do-it-yourself” online mortgage shopping, we wondered if these survey results reinforce the need for mortgage brokers in guiding uninformed borrowers about their mortgage options.
“Big time…more than ever brokers are required,” Woodhouse said.
Taylor added that the stats “clearly demonstrate the need for professional and impartial advice at the time of purchase/renewal/refinance. And while some may suggest they are comfortable purchasing online without counsel, I think we can see that is inadvisable in almost all cases.”
Taylor pointed to the UK as an example. Following the crash of 2008, he noted the country adopted several policies by 2014, including disallowing borrowers to be able to self-declare income, and requiring mortgage consumers to be provided mandatory advice on mortgage products.
“The last point, I think, would likely begin to receive international discussion/attention if online sales begin to increase too quickly given the data this survey demonstrates,” Taylor said. “Given the size of these loans, the personal liability and the potential interest-cost difference for as little as a quarter-point in interest, I expect there may be some scrutiny on consumer outcomes for these self-serve options.”
Additional Survey Tidbits
The Rates.ca survey revealed some additional interesting findings about Canadians’ knowledge gap when it comes to financial products, including:
Nearly 7 out of 10 Canadians (68%) aren’t aware that interest on credit cards is calculated daily.
30% admitted they are unlikely or somewhat unlikely to make the minimum monthly payments on their credit cards.
40% of respondents admitted to not knowing their credit score.
43% said they felt comfortable negotiating their mortgage over the internet.
And 94% believe schools should place greater emphasis on teaching financial literacy.
One of the biggest hurdles land lease communities face is a lack of awareness Canadians may have about this housing option. Many do not understand how the arrangement works. Surprisingly, two in three Canadians are unaware that land lease is even a home-ownership alternative. Here are some frequently asked questions about land lease home-ownership, and answers that correct the myths.
1. What happens when your lease is up?
Some people mistakenly think that their lease could change dramatically, or worse, they could lose their home. At end-of-lease term, a homeowner can either renew their lease or continue on a monthly basis. If someone sells, it just starts a new lease. “We must follow the provisions set by the Residential Housing Act and Planning Act, which means increases and changes to the lease are governed by law,” says Robert Voigt, director of planning for Parkbridge. “Leases are typically 21 years in length, and depending on the project, we have mechanisms for creating longer-term leases. Our main focus is to work collaboratively with residents within the legal framework.”
2. Does the value of your home rise like freehold homes?
Homes in land lease communities go up in price the same way as other homes on the market. “In our experience, if you have a well-maintained home in Parkbridge, it will appreciate in value the same as freehold homes do in the same market,” says Voigt. “Homeowners sell their homes using real estate agents with support from the Parkbridge property team. As an example, our records show that for homeowners in the Antrim Glen community near Hamilton, well-maintained homes have experienced an average seven-per-cent increase in value per year over the past decade.”
3. Are people in land lease homes typically lower income?
“While perception may be that residents are lower income, in reality, they have simply chosen to leverage the equity in their home for the lifestyle they want to live or enter the housing market,” explains Voigt. They’re just looking for ways to make their money go the furthest and get more living space for less.
4. Does the 21-year lease make it difficult to get a mortgage? Since most mortgages have a 25- or 30-year amortization, the 21-year lease for most land lease homes could require adjustments. “You may have to have a shorter amortization period based on your lease, which will mean higher monthly payments, but your home would be paid off more quickly,” says Voigt. “And it could still be less money than you’d spend monthly for a freehold home of equal value.” Parkbridge is working with financial institutions to support financing options.
5. Is it difficult to sell a land-lease home?
Not at all, says Voigt. “Homes go up at the same rate as freehold homes in the same area. If the home is well looked after, you should have no trouble selling it at a similar rate of return as any other house in your community.”
6. Is the community closed off from the larger neighbourhood?
These are not gated communities. “They are built to the same quality and look like other houses, streets and park areas in the broader local community,” explains Voigt.
Whether through ads or our own experiences dealing with banks and other lenders, Canadians are frequently reminded of the power of a single number, a credit score, in determining their financial options.
That slightly mysterious number can determine whether you’re able to secure a loan and how much extra it will cost to pay it back.
It can be the difference between having a credit card with a manageable interest rate or one that keeps you drowning in debt.
Not surprisingly, many Canadians want to know their score, and there are several web-based services that offer to provide it.
But a Marketplace investigation has found that the same consumer is likely to get significantly different credit scores from different websites — and chances are none of those scores actually matches the one lenders consult when deciding your financial fate.
‘That’s so strange’
We had three Canadians check their credit scores using four different services: Credit Karma and Borrowell, which are both free; and Equifax and TransUnion, which charge about $20 a month for credit monitoring, a plan that includes access to your credit score.
One of the participants was Raman Agarwal, a 58-year-old small business owner from Ottawa, who says he pays his bills on time and has little debt.
Canadian company Borrowell’s site said he had a “below average” credit score of 637. On Credit Karma, his score of 762 was labelled “very good.”
As for the paid sites, Equifax provided a “good” score of 684, while TransUnion said his 686 score was “poor.”
Agarwal was surprised by the inconsistent results.
“That’s so strange, because the scoring should be based on the same principles,” he said. “I don’t know why there’s a confusion like that.”
The other two participants also each received four different scores from the four different services. The largest gap between two scores for the same participant was 125 points.
The free websites, Borrowell and Credit Karma, purchase the scores they provide to consumers from Equifax and TransUnion, respectively, yet all four companies share a different score with a different proprietary name.
Credit scores are calculated based on many factors, including payment history; credit utilization, which is how much of a loan you owe versus how much you have available to you; money owing; how long you’ve been borrowing; and the types of credit you have. But these factors can be weighted differently depending on the credit bureau or lender, resulting in different scores.
So, which credit score is giving Agarwal the clearest picture of his credit standing?
Marketplace learned that none of the scores the four websites provide is necessarily the same as the one lenders are most likely to use when determining Agarwal’s creditworthiness.
We spoke with multiple lenders in the financial, automotive and mortgage sectors, who all said they would not accept any of the scores our participants received from the four websites.
“So, we don’t know what these scores represent,” said Vince Gaetano, principal broker at MonsterMortgage.ca. “They’re not necessarily reliable from my perspective.”
All consumer credit score platforms have small fine-print messages on their sites explaining that lenders might consult a different score from the one provided.
‘Soft’ vs. ‘hard’ credit check
The score that most Canadian lenders use is called a FICO score, previously known as the Beacon score. FICO, which is a U.S. company, sells its score to both Equifax and TransUnion. FICO says 90 per cent of Canadian lenders use it, including major banks.
But Canadian consumers cannot access their FICO score on their own.
To find out his FICO score, Agarwal had to agree to what’s known as a “hard” credit check. That’s where a business runs a credit check as though a customer is applying for a loan.
Lenders are contractually obligated not to share a copy of the report FICO provides with the customer. They can only discuss the information and provide insight.
A hard check comes with risk. Unlike the “soft” check Agarwal agreed to from the four websites, a hard check could negatively impact his credit score.
As Credit Karma’s website explains, “Multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer, as it suggests you may be short on cash or getting ready to rack up a lot of debt.”
Mortgage broker Vince Gaetano offered to do a hard credit check for Agarwal, as if he was applying for a loan, so he could learn his FICO score.
Agarwal took him up on the offer and was stunned to learn his FICO score was 829 — nearly 200 points higher than the lowest score he received online.
“Oh my god!” Agarwal said when he heard the news. “I am really happy, but totally surprised.”
Doug Hoyes, co-founder of Hoyes, Michalos and Associates Inc., one of the largest personal insolvency firms in Canada, was also surprised by the disparity between Agarwal’s FICO score and the other scores he’d received.
“How can you be poor somewhere and fantastic somewhere else?”
Marketplace asked all four credit score companies why Agarwal’s FICO score was so different from the ones provided on their sites.
No one could provide a detailed answer. Equifax and TransUnion did say their scores are used by lenders, but they wouldn’t name any, citing proprietary reasons.
Credit Karma declined to comment. However, on its customer service website, it says the credit score it provides to consumers is a “widely used scoring model by lenders.”
‘A complicated system’
The free services, Borrowell and Credit Karma, make money by arranging loan and credit card offers for customers who visit their sites. Borrowell told Marketplace the credit score it provides is used by the company itself to offer loans directly from Borrowell. The company could not confirm whether any of its lending partners also use the score.
“So there are many different types of credit scores in Canada … and they’re calculated very differently,” said Andrew Graham, CEO of Borrowell. “It’s a complicated system, and we’re the first to say that it’s frustrating for consumers. We’re trying to help add transparency to it and help consumers navigate it.”
From Agarwal’s perspective, the credit companies are simply using the scoring system as a marketing tool.
“There should be one score,” he said. “If they are running an algorithm, there should be one score, no matter what you do, how you do it, should not change that score.”
The FICO score is also the most popular score in the U.S. Unlike in Canada, Americans can access their score easily by purchasing it on FICO’s website, or through FICO’s Open Access Program, without any risk of it impacting their credit rating.
FICO told Marketplace it would like to bring the Open Access Program to Canada, but it’s up to Canadian lenders.
“We are open to working with any lender and their credit bureau partner of choice to enable FICO Score access to the lender’s customers,” FICO said in an email.
Hoyes, the insolvency expert, suggests instead of focusing on your credit score, a better approach to monitoring your financial status would be to shift attention to your credit report and ensuring its accuracy.
All four websites Marketplace looked at provide credit reports to consumers.
A credit report is the file that describes your financial situation. It lists bank accounts, credit cards, inquiries from lenders who have requested your report, bankruptcies, student loans, mortgages, whether you pay your credit card bill on time, and other debt.
Hoyes said consumers are trying too hard to have the perfect credit score. The fact is, some activities that could boost a credit score, such as getting a new credit card or taking on a loan, aren’t necessarily the best financial decisions.
“My advice is to focus on what is better for your financial health, not what is best for the lender’s financial health.”
He said paying off debt and increasing savings is a better idea than focusing solely on the factors that can increase your credit score.
You focusing on this one metric, that isn’t the same thing the lender is using anyways, is really pointless, and I think it leads to bad decisions.– Doug Hoyes, Hoyes, Michalos and Associates Inc.
He points to billionaire investor Warren Buffett, the third richest person in the world, as an example.
“Would you rather lend to Warren Buffett, who’s got … cash in the bank but has a lousy credit score because he’s never borrowed and hasn’t built up any history, or some guy who has five credit cards and he constantly … moves the balance from one to the other and keeps his utilization under 20 per cent?”
The real estate, mortgage and auto lenders Marketplace spoke with said they look at more than just your credit score before making a lending decision. They also consider things like your income, your history with their company, the size of a downpayment, and other factors not reflected in your score.
For Hoyes, those factors are much more important than a three-digit number.
“You focusing on this one metric, that isn’t the same thing the lender is using anyways, is really pointless, and I think it leads to bad decisions.”
The good news, according to Borrowell CEO Andrew Graham, is that if you’re doing things like paying your bills on time and not maxing out your credit cards, you will see improvement in whatever credit score you track.
Mortgage Pre-Qualification vs Mortgage Pre-Approval vs Mortgage Approval
What are the differences between each stage of the mortgage process?
By Kara KuryllowiczSeptember 18, 2019
In early 2019, several Canadian banks launched digital apps that offer home buyers easy, hassle-free mortgage pre-qualification in 60 seconds or less. Sounds great, right? The problem is many consumers believe a mortgage pre-qualification is a lot like a mortgage pre-approval or mortgage approval. As a result, prospective home buyers and sellers are left expecting the financial institution associated with the app to lend them hundreds of thousands of dollars, despite the fact they simply keyed their names, addresses, contact information and gross income into various online fields.
Getting Mortgage Approval
“Every week, as many as 40% of my new clients come to me because they’ve just bought a home and discovered that mortgage pre-qualification is meaningless and that they do not have the financing required for the purchase,” says Tracy Valko, owner and principal broker of Dominion Lending Centres Valko Financial Ltd., and a director at Mortgage Professionals of Canada.
Let’s get real: A mortgage pre-qualification gives the financial institution warm leads (names, contact information, purchasing timeline) and tells consumers how much money a financial institution might loan them. There is no way any financial institution will actually lend consumers hundreds of thousands of dollars just because they spent 45 seconds with the company’s mortgage pre-qualification tool.
Lenders do everything they can to ensure the borrower will repay the loan. A mortgage pre-approval looks at how an individual manages his/her money to determine that person’s creditworthiness. The next step is the mortgage approval which assesses that specific person’s ability to repay a loan of a certain amount at a set interest rate on a particular home.
“Always get a mortgage pre-approval before you start searching for a home and have a mortgage approval in place before you waive your financing condition on the offer – back out of a deal after it’s firm and you could be sued by the seller.” says Valko. “A mortgage pre-approval will tell consumers and their realtors what they can realistically afford to buy.”
Let’s further define the terms consumers need to fully understand before they commit to a real estate agent and start shopping for a home.
What is Mortgage Pre-Qualification?
It takes less than 60 seconds because it requests only the most basic information, whether it’s submitted to an online app or a financial representative. Mortgage pre-qualification never requires supporting documentation that proves the consumer actually has a full-time job, is paid a weekly salary and has earned a good credit score. At best, a mortgage pre-qualification can provide a very loose, broad estimate of a consumer’s home-buying power based on the consumer’s unverified data. Because the consumer typically inputs the information into an online tool, it takes just seconds for the software, not an experienced, professional underwriter, to pre-qualify a consumer for a mortgage.
If consumers notice and bother to read the apps’ fine print or legal disclaimers, they’ll likely see a statement like this one: “This is not a mortgage approval or pre-approval. You must submit a separate application for a mortgage approval or a mortgage pre-approval and a full credit report.”
In other words, they’re not actually promising you a dime, let alone enough the hundreds of thousands of dollars you’ll likely need to buy a home anywhere in Canada.
What is Mortgage Pre-Approval?
In general, it will take two to five business days to investigate an individual’s financial circumstances and the risk that a person might represent to the lender. The underwriter will need the basics, such as name, address and contact information in addition to detailed data on their income, assets (e.g. stocks, RRSPs, property, vehicles, savings), liabilities (e.g. debt, loans, mortgages) and their credit rating and report as well as the available down payment. Supporting documentation may be required to prove any or all of the above.
Unlike a pre-qualifying app, lenders’ underwriters may request a letter of employment, a Notice of Assessment, pay stubs, or T4 for the two most recent years as well as documentation indicating the down payment is available. The lender or mortgage broker will also require the consumers’ permission to pull credit scores and credit reports from organizations such as Equifax.
Your credit score, typically 300 to 800+, is based on feedback from lenders who confirm that you do or don’t pay your bills in full and on time every month. The credit report includes your name, address, social insurance number and date of birth as well as your credit history, for example, your debts and assets and whether you’ve ever been sent to collection or declared bankruptcy.
“Lenders want to know how well or how poorly you manage your money and will be looking for patterns of insufficient, late and missed payments,” says Valko.
A mortgage pre-approval is generally valid for up to 120 days at a specific interest rate unless the consumers’ circumstances change, for example, employment status, down payment, or income. For example, a consumer may not realize it, but their probationary status with a new employer, whether it’s three, six or 12 months, does matter to lenders. Likewise, a move from a salaried to a contract or self-employed position will also be seen as a higher risk.
“I’ve had clients believe they were full time, salaried employees, then discover they’re still on probation when we start underwriting,” says Valko. “An electrician client left his full-time salaried position to work independently and didn’t realize it negated his mortgage pre-approval, which was based on the guaranteed weekly paycheck versus the sporadic earnings associated with self-employment.”
What is Mortgage Approval?
This is the big one. Once consumers have identified the homes they want to purchase, they need mortgage approval to buy that specific home. Lenders assess the age and condition of the homes and consider comparable homes to confirm the price being paid is fair and market value. The mortgage approval is valid until the closing date unless the buyers’ circumstances change.
“Only the mortgage approval accounts for property specifics, such as taxes or condo fees, so give your underwriter/lender time to ensure the numbers previously used are still valid and that the property is acceptable to the lender,” says Valko.
If you’re serious about the home search and purchase process, skip the mortgage pre-qualification apps. Instead, take the time and make the effort to get mortgage pre-approval, then find the home suits you best, then get mortgage approval to close the deal. Then? Enjoy your new keys.
Source: REW.ca – Kara KuryllowiczSeptember 18, 2019
As the cost of living soars, more couples are cohabitating, even getting married sooner. But, as Statistics Canada showed, there were 2.64 million divorced people living in Canada last year, and when you throw a family gift into the mix, things get hairy.
“Family gifts are a very complicated area of the law and there are two different ways of looking at it,” said Nathalie Boutet of Boutet Family Law & Mediation. “A gift received before marriage is treated as a pre-marriage asset. There’s a huge exception if that gift is the matrimonial home.”
In other words, pre-marital exclusions don’t apply to matrimonial homes—the reason for which is to rectify a historical transgression that saw women spend most of their time in the matrimonial home but have their name excluded from title, effectively leaving them no recourse upon divorce.
“Parents who want to give money to their child need to understand before marriage that if it goes into a matrimonial home, they end up sharing that with their spouse if there’s a separation,” said Boutet. “If the parents have a condo and they give it to their child who gets married, that becomes equal sharing with the spouse. A parent should understand that first and have a conversation with their child. Sometimes when a person owns a house, they ask the person to sign a marriage agreement as a way to get themselves out of that mess should it ever occur.”
Boutet recommends that in-laws-to-be have the dreaded conversation about signing an agreement that will protect them from relinquishing their asset in the even their child gets divorced.
“I often get called in when parents still own a home and let someone go live in it,” said Boutet. “Sometimes, for planning, have them sign a prenup, or a cohabitation agreement if they’re not going to get married. At the time they begin living together, sign the agreement in case they separate.”
Another interesting scenario divorced couples and their in-laws sometimes find themselves in pertains to cottage ownership. What happens if the couple is married for a period of time during which the cottage was renovated with contributions from the outgoing spouse?
“I have a case right now where the parents own a cottage and the family has been using it for upwards of 30 years, but their child is getting divorced and his wife wants to know what her rights are to recoup renovations,” said Boutet. “The husband’s parents had been very well-advised by their own lawyers and, because they paid for all the materials, the wife could not pinpoint any specific expense she paid out of her own pocket. It was determined that she had done a little here and there, and it offsets the cost of free accommodations she’s had over all the years—she didn’t pay for the land, heating, repairs, things of that nature. So she was entitled to nothing.”
The majority of homeowners are blissfully unaware of alternative mortgages. They presume everyone is entitled to sub-3% mortgage interest rates, with no fees of any kind.
But there is a growing, significant percentage of borrowers who need a different type of mortgage financing solution. Sometimes there is no choice. That is why the alternative lending market (B-lenders) is so important to the overall health of the mortgage industry and, indeed, our economy.
Could this happen to you? Who would you turn to if your bank turned you down for a mortgage? How would you know if you are being given the straight goods, or being sold a bunch of baloney?
If your primary financial institution (bank, credit union, trust company) refuses you a mortgage, you need to source a mortgage broker who can explore alternative financing options for you—hopefully with a B-lender solution. And if that doesn’t work out, then there are numerous private mortgage lenders, too.
Most mortgage brokers are very comfortable working with A-lenders like banks, credit unions and monoline lenders, such as MCAP. And, in recent years, a growing number have expanded their businesses to provide alternative and private lending solutions. Be sure to select a professional who is experienced with these types of specialized products when you are in the market for a non-traditional mortgage.
Mortgage brokers have access to numerous alternative mortgage lenders (B-lenders) who offer excellent solutions above and beyond the traditional branch-based lenders, including:
Expanded debt-service ratios—some alternative lenders will allow GDS and TDS ratios as high as 50%, and are not constrained by 35/42 or 39/44 ratios, as traditional lenders usually are. In fact, if the loan-to-value ratio is low, they can get really creative. (For example, Haventree Bank will allow 60/60 when the LTV is under 65%)
Tolerant of damaged credit histories—they will reserve their lowest rates for those with high credit scores (720 and above, sometimes less) but, at the same time, may entertain your mortgage application with a score as low as 500 or even lower.
Receptive to forms of income that traditional lenders cannot consider, such as Air BnB income, commission income, tips and contributory income from spouses not even on title. And most are more relaxed in their approach to self-employed borrowers.
Suppose for you the door is closed to banks and all A-lenders. How did you get here? Reasons typically include one or more of the following:
Cannot pass the mortgage stress test: inability to meet maximum debt-service ratios.
Low credit scores: could be too many late payments, balances too high on credit facilities, collections and liens, or even a consumer proposal or bankruptcy.
Non-traditional income: could be commissioned or rely on tips and work in a cash-based business. May even be irregular part-time income. Or perhaps you rent out rooms in your home, or have Air BnB income, foster care income, disability income, child tax benefits, etc. Do you buy, renovate and sell houses, and the capital gains are your only income? You could even own “too many properties.” (Yes, that can be a thing!)
Self-employed: you could be a business owner with lots of expense deductions and low reported taxable income. Or maybe you have been self-employed only a short time—fewer than the two years A lenders prefer to see.
How long will it take to graduate back to A-lending?
The length of time you remain in an alternative lending product will vary based on your unique situation, but the ideal timeframe is one to two years. As such, most alternative mortgages are offered as one or two-year terms. There are some lenders who offer three and even five-year terms, but this is much rarer.
There are some borrowers who remain in this space for the long haul. It is unlikely they will ever qualify for a mortgage with an A-lender because of credit and/or income issues and that’s ok. They are grateful there is a reasonable cost alternative.
What added costs come with alternative mortgages?
Your interest rate will be a bit higher than those offered by an A-lender. These days, they mostly range from 3.99% to 5.99%. I don’t have the stats, but it feels like a large percentage of these are in the narrower range of 4.24% to 5.24%.
And the lowest rates are typically for a one-year term, with the two-year term coming in a touch higher.
Here are some sample payments to illustrate the impact of different mortgage rates. The difference is not as much as people expect.
$300,000 at 2.99% with a 30-year amortization = monthly payments of $1,260
$300,000 at 3.99% with a 30-year amortization = monthly payments of $1,425
$300,000 at 4.99% with a 30-year amortization = monthly payments of $1,600
Most of the time, your lender will charge a one-time fee of 1% of the loan amount.
With mortgages arranged with A-lenders, your mortgage broker is paid by the lender at no extra cost to you. This is less the case with alternative mortgages, mainly because the shorter the mortgage term, the less the compensation, yet the workload is at least the same and often more intense.
Therefore, when sourcing an alternative mortgage for you, your mortgage broker will often charge a brokerage fee. They should be upfront about this exact charge early on in the process. The amount varies from broker to broker and from loan to loan. Factors brokers consider are:
The complexity and level of effort they anticipate is involved to fund your mortgage.
The size of your mortgage. The smaller your mortgage, the larger the fee may seem as a percentage of the loan amount, and the larger the mortgage, potentially the smaller the fee may seem as a percentage of the loan amount.
If you are buying a property, lender and brokerage fees come from your pocket. If you are refinancing, they are deducted from the mortgage advance, if there is enough equity to do so.
All fees and costs must be disclosed properly to you according to your provincial regulator’s rules. Lender and broker fees are paid on your funding date
As with most mortgages, you can expect to pay for an appraisal, solicitor and title insurance.
Some lenders charge annual administration or “maintenance” fees of a few hundred dollars, and they typically charge a renewal fee if you accept one of their renewal offers. There is not a one-size-fits-all formula applied when calculating renewal fees.
Monthly property tax administration fees can also be charged (less than $5 per month).
Alternative lenders are a safe route
In the Q1 broker lender market share figures, alternative lenders Home Trust Company and Equitable Bank together held more than 13% of broker market share.
Alternative lenders are not to be feared or disparaged. They serve a very useful role in the mortgage industry and are a terrific midpoint between a bank-issued mortgage and a private lender solution.
When a mortgage borrower does not even fit into the world of alternative lenders, your mortgage broker will need to source a private mortgage solution for you. I will explore this option in future articles.
Brokers must be willing to take on the role of educator when preparing the next generation of homebuyers to apply for a mortgage. A recent survey by Refresh Financial found that only 41% of Canadians know their credit score, and 20% are too scared to even find out their score.
Millennials (those born between the early ’80s and mid-’90s) and generation z (those born from the early ’90s to mid-2000s) are particularly anxious about their credit history and uninformed about how to build good credit. Thirty-nine per cent of millennial and gen z respondents said they were more stressed about their credit score than they were a year ago, and 25% admitted they’re not sure what makes up their credit score. In addition, a third of 18- to 34-year-olds said they believe their credit score is holding them back from making important life choices such as purchasing a home.