• What’s a sliding scale?

    Lenders typically have sliding scales off which their maximum mortgage amounts are based. A sliding scale will often be higher in a densely populated urban area when compared to a less populated area. It can also be affected by the property type – i.e. condo, townhouse or detached home. Sliding Scale Example: 80% of the first 1.25M and 50% of the balance. If the property is 2M, the max a bank will typically lend is 1 Mil (.8 x 1.25M) + 375K ((2M-1.25M) x .5)) = 1.375M. This is equivalent to 68.75% Loan To Value (LTV).

  • What’s the difference between a live deal and a pre-approval?

    A live deal means you are renewing or refinancing your mortgage. For a purchase, it implies that you have an actual accepted offer and completion date. A pre-app (rate hold) means that you have the intention to purchase, but have not yet found anything or made an offer. Under this scenario, you are looking to hold a rate in the event that they increase prior to finding a place. Read more about what pre-approvals even mean these days.

  • What’s a standard mortgage penalty?

    For a variable rate, you will only ever pay 3 months interest. For a fixed rate, you’ll pay the greater of 3 months interest or the interest rate differential (IRD).

  • What’s the difference between a bank and a mortgage lender?

    We all know what banks are; however, people are less familiar with mortgage lenders (commonly referred to as monolines). They specialize solely in mortgages and generally have more attractive rates and better terms. That being said, they get the majority of their money from the big banks. If you have any concern whatsoever about which institution is lending you money, you have nothing to worry about.  At the end of the day, it’s all kind of coming from the same place anyways.

  • What’s an effective rate?

    Lenders allow their rates to be discounted by different amounts. Often times, we’ll advertise an effective rate of “x” with a contract rate of “y”. Basically, this means we’ve discounted the rate the maximum we can to “y” and are further lowering it to “x”(effectively, that is) by way of a cash back at closing to make up the difference in interest.

  • What’s a full feature vs restricted mortgage?

    A full feature mortgage has maximum pre-payment privileges, is portable, assumable, and has standard discharge penalties and policies. Conversely, a restricted mortgage can impose a variety of limitations on customers, some of which are material. Elevated penalties and unnecessary claw backs are restrictions that don’t make sense for the majority of people, whereas, limited pre-payments are acceptable to most.

  • How often can I pay my mortgage?

    Doesn’t matter to us. You can pay weekly, bi-weekly, semi-monthly or monthly. This decision comes down to what suits you and your employment situation best. Let us know and we’ll happily adjust it. Alternatively, you can contact the lender anytime after funding and they can change it as well.

  • Please explain the magic behind bi-weekly payments.

    When you pay accelerated bi-weekly (different than regular old bi-weekly), you end up making one additional mortgage payment per year. This in turn helps you pay your mortgage down quicker. The secret has now been revealed. The same thing can be achieved through increasing your monthly payments by 1/12 of a regular monthly payment. And, yes, this is relevant for accelerated weekly payments as well.

  • Can I make extra payments on my mortgage? Is there is penalty?

    Ultimately, it depends. Typically, lenders offer anywhere from 5-20% pre-payments per year against the original mortgage amount as well as the ability to increase payments by 5-100%. The importance of this will vary amongst borrowers based on how much extra cash they’ll actually have to pay it down.

  • What’s a standard charge vs a collateral charge?

    Refer to our blog post on this, click here.

  • What’s a full service broker vs a discount broker?

    Refer to our blog post on this. Basically, it’s the terminology “full service” brokers have come up with to dissuade people from pursuing a lower rate.

  • What is the mortgage process?

    The mortgage process is simple, or at least it should be. Click here for a basic run down.

  • Is SPIN mortgage lending me their money?

    Nope. We’re a broker. We leverage our knowledge, relationships and volume to get you the best deal with the lenders. Click here for a link to who we routinely work with.

  • What is mortgage insurance? Why do I have to pay it?

    If your down payment is less than 20%, insurance is tacked on to your mortgage. There is no way around this. The 3 insurers in Canada are CMHC, GE, and CG. The insurance premiums decrease as the down payment increases. You can port this insurance with you should you sell and buy before the end of your mortgage term.

  • What’s the difference between amortization and term?

    Amortization is the number of years it will take to pay off your mortgage. Term is the contract under which you are bound when you sign up for a mortgage – i.e., 5 year variable closed mortgage. The amortization is somewhat irrelevant as you can effectively lower it by increasing your payments. It serves mainly as a means to qualify and a starting point at which your lowest possible payment will be achieved. By starting at a 30 year amortization, for example, you can increase your payments according to the lender’s policy to effectively reduce this number. Moreover, you can increase again but never beyond the payment where you initially started.

  • What is a closed vs open term?

    A closed term has a penalty to discharge it during the term, while an open term does not. Obviously, rates are lower for closed terms. An open term would make sense in a situation where you would be carrying the mortgage for a very short period of time. At a certain point, the interest savings on a closed rate will offset the penalty charged to break it.

  • What’s a job letter?

    It’s a standard letter from your employer that states your position, your time on the job/date you were hired, whether you’re full time or part time, and your salary (or hourly rate and guaranteed hours). It needs to be signed and dated by your employer, on company letterhead, and must include their contact information.

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