FAQ

Answers to your most frequently asked mortgage questions.

What is home equity?

Home equity is the value of the portion of the home that you actually own. It is the market value of your home, minus any outstanding amount of your mortgage or liens against the property.

How much downpayment do I need?

The amount of your downpayment depends on the purchase price of your home. It will also depend on whether you are seeking a traditional mortgage, if you will require mortgage loan insurance, or if you are working with a private lender. CMHC uses the following example:

Purchase price of your home	Minimum amount of down payment
$500,000 or less	5% of the purchase price
$500,000 to $999,999	5% of the first $500,000 of the purchase price 10% for the portion of the purchase price above $500,000
$1 million or more	20% of the purchase price

Can I afford to buy a bigger home?

The answer to this question will require a discussion with your mortgage professional, but the first step is to review your financial situation.

Once you have reviewed your income, equity, debts, investments, credit rating, and future plans, you will be in a position to understand how much you can afford. There are numerous benefits to upsizing your home and it’s wise to get some expert advice from a mortgage professional before moving forward.

What is mortgage loan insurance?

Mortgage loan insurance is insurance for people who have less than 20% downpayment/equity on their home. The insurance premium ensures that the mortgage lender is reimbursed, in the case of default.

What is a fixed rate mortgage?

A fixed rate mortgage is a mortgage where the interest rate and payments remain constant for the term of the mortgage.

What is a variable rate mortgage?

A variable rate mortgage is a mortgage where the interest rate may fluctuate during the term of the mortgage, reflecting changes in the prime rate.

If I just started a new job, will I qualify for a mortgage or do I need to wait before applying?

Many people think that they need to remain in a job for a period of time before being eligible to apply for a mortgage. This is not the case.

The primary consideration for your mortgage lender will be a reliable, steady income. If you receive a consistent rate of pay, without taking into account tips, commissions, or bonuses, then your lender will consider your application.

How do I get started with buying a rental property?

There are a multitude of questions and considerations when looking at buying a rental property. You will want to consider location, condition of property, insurance costs, taxes, maintenance, types of tenants, rental restrictions, neighbours, leases, and much more.

Buying a rental property can be a terrific investment and result in steady cash flow. Connect with a mortgage professional to ensure you are arranging an appropriate mortgage for your unique situation.

If I am self-employed, or recently self-employed, can I get a mortgage?

CMHC has made changes to the way mortgages are approved for self-employed individuals. If you are able to demonstrate the following, then you will be in a good position to apply:

You have an established business.
You have acquired an established business.
You have sufficient cash reserves.
You have predictable earnings.
You have previous training and education.

I was just discharged from bankruptcy two months ago, do I qualify for a mortgage?

You can get a mortgage after bankruptcy, but there are some additional considerations to take into account.

In order to work with a traditional lender, you may need to show that you have the downpayment funds from your own resources. You may also need to wait for a period of time, or wait until your credit rating improves.

In order to work with an alternative lender, you will need to have at least 20% as a downpayment. You may also find that you pay a higher rate of interest, and you may need to obtain a full appraisal.

There are many options and it is possible to obtain a mortgage after being discharged from bankruptcy, but it is best to discuss your situation directly with a professional mortgage broker.

What is the difference between a co-signer and a guarantor?

A guarantor signs a document personally guaranteeing the mortgage, but is not on the title to the property. A co-signer is registered on the title to the property and on the mortgage.

If I'm building a new custom home, can I get a mortgage?

If you are looking for a construction or home builder’s mortgage, then you will need to follow many of the same processes and steps as acquiring a traditional mortgage.

You will have to review your financial situation and your terms, but then you will also need to review the phases of your build. This is often called a Progress Draw Mortgage.

Working with your mortgage professional, you should determine the times at which you need to draw funds to keep your home build moving forward. From an initial Foundation Draw to a Lock-up Draw, to a Drywall Draw and Completion Draw, you need a plan for every step of your build.

We highly recommend starting this conversation with your mortgage broker early.

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