Understanding your mortgage options as a home buyer is the first step to home ownership. With millions of lenders that offer millions of solutions, who do you pick. In this presentation, we will help clear some of your options.
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Mortgage Basics
Pre Approval Process
Talking Points
Protecting Your Buyers In Bidding War
Questions
Presentation
Highlights
General Discussion Flow
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MORTGAGE BASICS
Industry Updates
Reverse Mortgage
Staying Up To Date
Bank of Canada
Announcments
https://bankofcanada.ca
https://mortgagebrokernews.ca
https://homeequitybank.ca
5. Qualifying Rules
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Income Money received, especially on a regular, consistent basis, for work through investment or
employment.
Credit The ability of a customer to obtain goods or services before payment, based on the trust that
payment will be made in the future.
Down Payment A type of payment, often in cash, made in the early stages of a purchase of an expensive
good or service. The payment represents a percentage of the full purchase price.
6. Extended Ratios
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GDS - 35/42 TDS - 39/44
The gross debt service
(GDS) ratio is a debt service
measure that financial
lenders use to assess the
proportion of housing debt
that a borrower is paying in
comparison to their income.
The term total debt service (TDS)
ratio refers to a debt service
measurement that financial
lenders use when determining
the proportion of gross income
that is already spent on housing-
related and other similar
payments.
7. Stress Test
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For uninsured home buyers (anyone who qualifies with a down payment of 20% or more) the
minimum qualifying rate is based on either the Bank of Canada’s five-year benchmark rate
(5.14% at the time of writing) or the rate offered by your lender plus 2% – whichever is higher.
Buyers with default insured mortgages (i.e. anyone who makes a down payment of less than
20%) must qualify using either the Bank of Canada five-year benchmark rate, or the rate offered
by your lender (without adding the extra 2%) – whichever is higher.
So if your lender offers a rate of 2.99%, you’ll have to use the 5.14% benchmark rate in your
stress test. If you make a 20% down payment and your lender offers a rate of 3.49%, you’ll have
to qualify using a rate of 5.49%.
9. Reverse Mortgage
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homequitabebank.ca
Reverse Mortgage A reverse mortgage is a type of loan that is secured against your principal residence. This
financing solution gives you access to tax-free cash with no mandatory ongoing payments.
How Does It Work
you live there for at least six months per year
you keep your residence in good order
you remain current with your property tax payments
you adhere to the loan terms
You’ll continue to own and live in your home, and you’ll never be forced to move or sell your
property, as long as:
How Can I Use It
paying off debt
covering everyday expenses
making renovations
supporting your family
paying for in-home care
You can use a reverse mortgage for things like:
10. First Time Home Buyers
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Incentive The First-Time Home Buyer Incentive helps people across Canada purchase their first home.
The program offers 5 or 10% of the home’s purchase price to put toward a down payment.
This addition to your down payment lowers your mortgage carrying costs, making
homeownership more affordable.
Qualifying your total annual qualifying income doesn’t exceed $120,000
your total borrowing is no more than 4 times your qualifying income
you or your partner are a first-time homebuyer
you are a Canadian citizen, permanent resident or non-permanent resident authorized to work in
Canada
you meet the minimum down payment requirements with traditional funds (savings,
withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial
gift from a relative/immediate family member)
These are a few criteria to determine your eligibility for the First-Time Home Buyer Incentive:
The Incentive is like a second mortgage on your home. Your first mortgage must be greater than 80%
of the value of the property and is subject to a mortgage loan insurance premium. It also must be
eligible through Canada Guaranty, CMHC or Sagen.
11. First Time Home Buyers
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Additional Fees
Additional legal fees: Your lawyer is closing 2 mortgages so you may be charged higher
fees.
Appraisal fees: To repay your incentive, you may need to have an appraisal done to
determine the fair market value of your home.
Other fees: Additional fees may be incurred throughout the life cycle of the incentive, like
switching your first mortgage to a new lender or refinancing your first mortgage.
Property Insurance premiums: Additional costs may be incurred to account for an
additional mortgage registered on the property.
The Incentive may be associated with additional costs:
Repayment
You go through a break up and you want to buy out the co-borrower. If this requires additional
insured funds, you must pay back the Incentive in full.
Porting your mortgage will trigger a repayment of the Incentive.
A partial release of security is considered a sale and will trigger repayment of the Incentive.
A change in the intended use of the property.
The Incentive must be paid in full – that is no partial payment – after 25 years or when the home is
sold. There are a few ways where changes to the Incentive can trigger repayment:
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Pre Construction Letter
Underwriting
Mortgage Process
CMHC / Genworth
Rent To Own
Better Rate Mortgage
Insurance
Municipal Down
Payment Programs
Mati Verification
RSP Loan
Investors Refi Rental Property
Credit Monitoring Apps
Document Collections
Home in Peel Affordable Ownership Program
Budget Tools
Talking Points
A, B, C, Credit Union
15. Bidding Wars
Pre Qualifications
Have your clients pre approved before
you start looking.
Stay Within Budget
Do not show homes that will be outside
of your Buyers range.
Know Your Numbers
If your client pays the highest for a
home in the neighbourhood, make sure
you can back that price with statistics.
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16. Thank You
The following members of Moe Peyawary Real Estate Team
made significant contributions to this report:
Moe Peyawary | Founder
Zarifa Bahran | Co-Founder
The Moe Peyawary Real Estate Team at RE/MAX Realty One Inc. located at
50 Burnhamthorpe Rd W, Mississauga, ON, L5B 3C2.
