The mortgage. It is believed to have originated from a combination of old French, geriatric German, and Latin slang. “Mort” meant death, or dead, in French, derived from the Latin word “mortuus”. “Gage” was an old German word that referred to a pledge or oath taken by one to complete a given task. So a mortgage is a death pledge? Why on earth would you want one of those?
The word mortgage eventually evolved to mean a loan that was taken out by a person, or persons, that they pledged to pay back over time. When the loan (with interest, of course!) was paid back, the pledge “died”. The person or family then owned the property in question outright.
Very, very few of us are in a position to select a house that suits us, drop off sacks of cash for the real estate agent, and walk away with the keys. So we need a mortgage to allow us to purchase a property. We take out a very large loan, and pledge to pay it back over a very long time. In this way, we are able to purchase an apartment, condo or house that we and our family will make into a home.
We’ve all rented an apartment or shared a rental house. Maybe it was back at university, or after we fled the nest and finally left the family home. It was a necessary evil. We worked hard to pay the rent while we pursued our studies or established ourselves as juniors in a firm.
The money we paid in rent provided us with a roof over our heads but not much more. Our cash went to pay our landlord’s mortgage. When we lease a space, we get shelter. But the landlord gets a steady stream of cash that pays his mortgage, increases his equity in the property, and the value of the assets he holds. He gets rich; we stay warm.
Being a renter is a necessity at times. In the long term, it makes no sense. Why work to pay off your landlord’s mortgage when you could be paying off your own?
Are You Prepared For Property Ownership?
A mortgage may not be the “death pledge” implied by the literal translation of the term. It is however, likely to be the largest financial investment you’ve ever made. You are taking on a serious and long term obligation. You are putting down roots. It is one of the most exciting of times, but it’s also a stage in your life when you must exercise sound judgement.
Not doing your homework, or rushing to sign a deal you don’t completely and entirely understand could lead to financial ruin. Having some one you can trust to help you make some of the most important financial decisions ever, is a very big plus. Increasingly, prospective property owners are looking to mortgage brokers for their expertise and experience. Why a mortgage broker? Because they work for you, not the bank.
The Language Of The Lenders, and the Questions that Need Asking
- The Down Payment. It is generally accepted that 5% of the purchase price is the minimum cash down payment that a lender will accept. It may be possible to borrow money for your down payment, but Canada has some pretty strict rules about how and when this can be done. It may be possible to get approval for a mortgage with less than 5% down, or even no money down. Talk to one of Steve Crews mortgage brokers for more information.
- The Principle. This is the amount that you owe the lender and it decreases over time. It is highest when you first assume a mortgage and decreases overtime as you make monthly payments.
- The Interest Rate. The rate of interest you will be paying on your loan can be fixed or variable. Remember too, that time will elapse between the date you apply for a mortgage, and the signing date. If you are concerned over fluctuations in interest rates during the processing period, ask about locking in a certain rate. Be aware there may be a fee to do so. Ask about a lender’s annual percentage rate, or APR of the mortgage interest. This includes associated fees and service charges. It’s generally a higher, but more accurate indicator of the actual rates you’ll be paying.
- Amortization Versus the Term of the Mortgage. Mortgages in Canada typically have a five-year term, with an amortization period of 25 years. The term is the short term agreement that you have with the lender regarding interest rates etc. After the term is finished, the mortgage is renewed. It may be possible to renegotiate a better interest rate or higher monthly payments to pay off the loan faster. Your mortgage amortization period is the actual length of time it takes you to pay your property off. It could range from 15 to 40 years depending on your circumstances.
- Closing Costs. There will be various fees and charges associated with processing your mortgage application once it has been approved. Ask the lender to provide you with a written good faith estimate of what they predict the closing costs will be, as soon as possible. If the company is reluctant to commit their closing costs to paper, be especially careful if you continue to allow the to represent you. Mortgage brokers know what to expect when it comes to closing costs and they’ll take the time to negotiate the best possible deal.
- Qualifying Guidelines What are the lender’s expectations in terms of income, credit history, assets an so on? Will you be expected to provide documents to substantiate the claims you made on the application? Most financial institutions will want to see at least proof of income. Of course, they will run a thorough credit check on you and your partner. The major Canadian banks tend to have a very strict, non-negotiable list of criteria for first-time mortgage applicants. By contrast, mortgage brokers have a long list of potential financial institutions that are interested in earning the trust and business that new clients bring. Not everyone will be right for you. But a local broker is certain to find one that can meet your mortgage needs.
- Time Line. A number of variables will affect how long it takes to accept or decline a mortgage application, and complete the paperwork. One factor is how busy the lender is with other applications. A critical point is that the application is complete, and up to date. Especially for first-time home buyers, making sure a mortgage application is 100% accurate can be a daunting task. A mortgage broker makes sure you get it right the first time, avoiding costly and disappointing delays down the road. He’ll explain things like fiduciary duty. Canada has strict penalties for those involved in mortgage fraud.
- Mortgage Insurance. Lenders want to be protected against the losses they could suffer should a borrower default on their loan. If you are putting up less than a 20% down payment you can be fairly certain that the lending institution will require that you take out a private mortgage insurance policy. In some cases the lender will have their own insurance policy on your mortgage. They will of course, incorporate the premiums associated with the policy into your monthly payments. Home mortgage insurance rates are competitively priced, ask your local Calgary mortgage broker for more information.
- Home Mortgage Loans With Bad Credit If you have had financial trouble in the past, or been forced to declare personal bankruptcy, a mortgage broker may still be able to help. Our Calgary team has access to a vast network of financial institutions and experts that are always looking for new clients. The big banks are conservative lenders that will rarely extend you a second chance. There is no harm in trying. But when BMO says “no”, Steve Crews will know where to go. It’s his business to make sure each of his clients gets the respect and the service they deserve.
- Home Equity Mortgage Rates Over time you pay off the mortgage that you borrowed to purchase your property. As the amount left owing (the principal) decreases, your equity increases. In a sense, you own a greater percentage of your home. This equity is an asset that can be used to secure additional loans or even a second mortgage. Visit mymortgagebroker.com for the best professional advice in the city.
Big Banks or Mortgage Broker?
It used to be that the big banks were the only place we could go for financing our first home. They are, however, notoriously tight fisted when it comes to extending loans (especially large ones) to new customers. They want to see collateral. High value items or investments that they can take from us in the case of default. They want to see we have been collecting a steady income for a long time. The banks want a lot from us in exchange for a mortgage. Not all of us are in a position to meet such stringent demands.
Thankfully, things have changed. Mortgage brokers have connections with a wide variety of financial institutions. Home Trust Mortgage is one of the many financial institutions that Steve Crews team of brokers has worked with in the past.
Getting The Lowest Rates Available
Let him do the legwork. He’s got the connections and decades of experience negotiating the absolute best possible interest rates. His team will be in contact with their colleagues at Home Trust. Mortgage rates can fluctuate wildly. Steve Crews will shop around to get each and every client the lowest rate there is. A quick visit to will give you a general idea of the going rates.
You may choose to go with a fixed or variable interest rate. A mortgage broker can help you decide which route will save you the most money. Don’t worry about being locked in forever when you sign! The interest rate can be established as either variable or fixed when you first sign the mortgage. But at the end of each term (usually every five years) you can renegotiate the details of the original mortgage agreement.
A fixed-rate is pretty much how it sounds. You are locked in to a set rate of interest for the first term of the mortgage. Some people prefer this because they know exactly how much they will be paying every month. Budgeting may be easier as you don’t have to worry about an increase in your monthly payments.
Variable rates mean that your interest rate will be set according to what the going prime rate is, plus or minus a percentage agreed to by you and the lender. You may save money (if interest rates fall) Alternatively, you could end up paying more if interest rates begin to rise. Your broker understands the current economic climate and will be happy to discuss your options.
Questionable Credit? Limited Down Payment? They’re Not Show Stoppers.
Home mortgage loans with bad credit are rarely possible should you approach one of the big banks. Fortunately other financial institutions are more forgiving. They understand the need to be flexible in order to attract you as a client. What is retail banking? It may be many things, but one thing it’s not is a shining example of excellent customer service.
Nowadays, mortgage brokers have built relationships with individuals at any number of financial firms. Each has it’s own terms and each is willing to accept varying degrees of risk to win new clients. A high credit score may help offset a low down payment. On the other hand, if you recently came into some money and can put 10 to 15% down on a purchase, you may not need a long or established credit history. A local Calgary broker can point you in the right direction. Why waste time approaching lenders who are not interested in your business?
Calgary is home to a wonderful and wide variety of neighbourhoods. Progressive city government policies have led to several urban renewal projects that are the envy of sustainable urban developers across the country. Calgary’s East Village is an excellent example of an urban renewal project that incorporates sustainability, arts, culture and community. Better still, there are still affordable options for home buyers in this diverse, thriving, downtown neighbourhood.
There is a home for everyone in Calgary. Let Steve Crews and his team find you yours. They’ve been part of the Calgary business community for decades. They know the neighbourhoods, the people and the way the money-lenders work. Who decides which families own their homes? And who gets left to rent? Ask them. They know.
Getting you the maximum housing bang for your mortgage buck is why they’re in this great city. Meet with one of Steve’s expert mortgage brokers today to discuss the variety of mortgage options available to you. He guarantees that he can help you negotiate the best deal on the biggest buy you’ll ever make. You will have full confidence signing the seemingly endless legal and financial agreements that will get you into your home. Looking for the best affordable housing Calgary has to offer? Don’t worry, Steve and the gang will impress you with a show of beautiful spaces that won’t break the budget. And he can work the mortgage magic to make one of them yours.