Q + A on mortgages with Sabrina Karley
Sabrina is a Mortgage Agent with Sherwood Mortgage Group and loves to help people find the perfect mortgage fit for them!
We asked her some hard hitting questions and she delivered some amazing tips!
1. What are the differences between a bank, credit union and a broker/agent?
One of the biggest differences would be that a bank or credit union is only able to offer their own products or solutions within their own institution.
A broker/agent is able to offer products and solutions from a variety of different lenders including banks, credit unions, trust companies and mono-line lenders that specialize only in mortgage products. They can essentially “shop” the market for you to determine what would be best option for your needs and situation.
2. What is your advice for First Time Home Buyers or those not knowing where to start?
The first step would be to reach out and start the conservation. One piece of information I provide to my clients is my home buying guide that will outline what a mortgage is all about and how the process will work. You can find this in the FREEBIES tab above.
From there we would go more in depth in the conversation, be prepared to answer questions and provide your personal information such as income, savings/assets, debts/liabilities.
You may be asked to complete an application in order to better provide an accurate view of your current situation in addition to reviewing your credit bureau.
Knowing where you currently stand and what your goals are will help determine the next steps to get you there. This could mean also working with a Financial Advisor to set up a savings strategy to save for your down payment, to reviewing ways to improve your credit score or what debts would be best to pay down first to put you in a better position.
3. How many years of employment do I need to be able to use my income for approval?
The answer to this question can depend on the type of employment you have.
For example:
If you are a full-time salaried employee; a lender would require that you are past any probationary period; provide a current paystub and letter of employment.
If you are a part-time employee without guaranteed hours; a two year history at your current employer would be required by way of T4s, current paystub and letter of employment. If you are part-time with guaranteed hours; a two year history may not be required.
If you are self-employed, typically a two year history of filed T1 Generals and corresponding Notice of Assessments would be required.
If you are unsure of what can be used in your situation, it is best to reach out and go over your employment status to determine what documentation will be required and what can be used.
4. What benefits are there for First Time Home Buyers?
There are some benefits that may be used if you are considered a First Time Home Buyer. All of the benefits are subject to meeting the qualifying criteria and more information can be found on the Government of Canada website.
First-Time Home Buyer Incentive:
The First-Time Home Buyer Incentive can help eligible first-time homebuyers who have the minimum down payment for an insured mortgage with their down payment. They can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.
Home Buyers’ Plan (HBP):
The Home Buyers’ Plan is a program that allows you to withdraw up to $35,000 in a calendar year from your RRSP to purchase or build a qualifying home. The amount will not be subject to withholding tax on the the withdrawal in amounts of $35,000 or less.
You will have up to 15 years to repay yourself back into your RRSP, with your repayment period starting the second year after the year your first withdrew the funds.
Land Transfer Tax Refund:
When you purchase a property or land in Ontario, you will have to pay land transfer tax. First- time homebuyers of an eligible home may be eligible for a refund of all or part of the tax.
5. I want to refinance, how do I start?
In this case, you would want to have all the details of your current mortgage available; most can be found on the copy of your most recent mortgage statement but a few more pieces of information is beneficial to have to determine if it is worth breaking your mortgage and incurring the associated penalty.
The information required would be:
• Today’s balance
• Current interest rate
• Estimated penalty to break
• Maturity date
• Balance at renewal
• Remaining amortization at renewal
From there, calculations can be done to determine if there will be cost savings. If you are interested in consolidating debts or taking out equity for other purposes it may be worth looking into as well.
6. How would it work if I wanted to purchase an investment/rental property when I already have a mortgage on my primary residence?
In your application, all of the details of your primary residence will also need to be included such as providing your current mortgage statement to verify your payment, copy of property tax bill, approx. square footage to determine the heat cost required, and condo fees if applicable.
We then would require the details of the potential property you are interested in, such as estimated purchase price, property taxes, square footage and condo fees if applicable. When it comes to an investment/rental purchase, a minimum of 20% is required for the down payment. As with a purchase of a primary residence, verification of the source of funds will be required.
Potential rental income may be added to your income for the affordability calculation and would require an appraiser completing a schedule A to determine monthly market rents.
7. Is there anything I should consider when mortgaging a mobile home?
If the manufactured/mobile homes is located on rented or leased land, you may be able to reach out to a local credit union or go directly in branch at a bank and they may be able to assist you further. This type of financing is not available through the broker channel.
8. Do I have to pay for an appraisal or does the lender?
This will depend on the type of mortgage you are obtaining and also the lender you will be obtaining your mortgage from. This would be discussed up front of what the potential requirements would be.
9. Between signing the purchase agreement and the closing date of the purchase, what should I NOT do?
Once you have signed the purchase agreement, your application will be sent in for a lender to complete their full review and issue you a conditional approval. Documentation will be required to satisfy the conditions. The lender reserves the right to check on conditions at any time prior to closing.
Below are examples of things that you should avoid:
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1. Do not change jobs, become self-employed or quit your job.
2. Do not buy a car, truck, or any other vehicle.
3. Do not use credit cards excessively or let any of your payments fall behind
4. Do not spend money you have set aside for your down payment or closing costs, get a gift for closing or take out a retirement loan without consulting with your mortgage agent
5. Do not omit debts or liabilities from your loan application
6. Do not buy furniture, appliances or other household items prior to closing
7. Do not co-sign on a loan for anyone or allow authorized users to charge on your credit accounts
8. Do not make any large or ‘cash only’ deposits into your bank account or transfer money between accounts unless you can provide proof via documentation as to the source of the deposit (basically anything that is not payroll related)
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Committing any of the above can dramatically affect your mortgage application; alter your credit score or affordability ratios and can even deny your chance of closing on a home.
10. What sets you apart from other mortgage providers?
My main goal is to ensure you are provided with the right information and knowledge so that you can be confident in where you stand for your mortgage whether it is for a purchase of a property or discussing renewal or refinancing of your existing mortgage. By asking the right questions and reviewing your documentation upfront, we will go through your numbers so that you know how everything works and what options are available.
I will be there every step of the way to guide you throughout the entire process and continue to be available once your mortgage closing date has past.
Answers provided by:
Sabrina Karley, Mortgage Agent
519.635.1124
Skarley@sherwoodmortgagegroup.com
Sherwood Mortgage Group
Ontario Broker Lic. #12176
