Our in-house mortgage broker and realtor Devin March has answered some common mortgage questions and has offered some tips to help you with your condo search.

What is the difference between a Pre-Approval and Pre-Qualification?

A pre-approval will include the same calculations from a pre-qualification but will add in additional layers of verification by way of document review (i.e. pay stubs, employment letters, bank investment statements, etc.) A broker or lender should provide a list of risks that coincide with your specific pre-approval, if any.

A pre-qualification typically entails a rough calculation based on data provided by a borrower which factors income, debt, and down payment to establish a rough budget. No documentation is verified.

What Documents do I Need for a Pre-Approval?

1. Personal

• Identification
• Credit Report

2. Self-Employed (Sole-Proprietor)

• Latest 2 years notice of assessment
• Corresponding T1 General Fillings

3. Employed (Income)

• Pay Stub
• Letter of Employment

4. Currently Own a Property?

•  Mortgage Statement

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is a fully amortizing loan in which your lender commits to a specific contract rate for the term of your mortgage. In Canada, the most popular term is typically for a 5-year period after which the loan will be subject to renewal at the current prevailing rates.

Advantages: Since the lender commits to a specific rate for the entire term, you can rest assured knowing that the payment won’t change, despite changes in the economy.

Disadvantages: The price for gaining the certainty of a fixed-rate mortgage is inflexibility. If a borrower needed to sell their property during the 5-year term, the lender penalties can be significant.

What is a Variable-Rate Mortgage?

A variable-rate mortgage is a fully amortizing loan in which your lender commits to a specific discount (or premium) on the lender’s prime lending rate – which is influenced by the Bank of Canada’s overnight rate. Say for example that your lender commits to a .5% discount off of their prime rate for 5 years, if the prime rate increases from 3% to 3.5%, the underlying contract rate increases from 2.5% to 3%. The same applies in the opposite direction if the lender’s prime rate drops.  Variable-rate mortgage terms are typically for a 5-year period after which the loan will be subject to renewal at the current prevailing rates.

Advantages: In many cases, you can save money on interest since, historically, variable rates tend to be lower than fixed ones.

If a borrower needs to break a variable mortgage during the term, the lender penalty amounts to just 3 months interest (based on the prime rate).

Disadvantages: For the increased flexibility and sometimes lower interest rate, a borrower is taking on more risk with a variable rate since the rate can change based on the current economic situation.

What features should you look for when evaluating a potential mortgage product? 

1. 20/20 Prepayment Privileges
2. Refinance Options
3. Early Renewability
4. Early Payout Options
5. Portability
6. Assumability
7. Penalties

What are some of the biggest obstacles to get financed?

1. Minimum Trade Lines
2. Credit Score
3. Income 
4. Debt

What are the current rates?

As of April 12, 2021 our 5-year fixed Condo Dork rate is 1.84%. The 5-year fixed bank rate is 2.34%. The 5-year fixed Broker rate is 2.04%.

All figures are approximate, assumed to be accurate and for illustration purposes only. Rates are subject to change without notice. Devin March, Mortgage Broker FSCO #10530

Mortgage Calculator

Condo Dork members have access to an exclusive Condo Dork Mortgage Rate available by applying through the Mortgage Calculator on Unit pages across CondoDork.com.

See a unit you love? Adjust the terms to match your financial picture, click apply now and sit back and wait for a member of our team to help you secure your dream condo!

Watch the video below to learn how to navigate the Mortgage Calculator and submit an application right on the website.

Some helpful resources to bookmark:

https://www.consumer.equifax.ca/personal/ 

https://borrowell.com/ 

If you have any other mortgage questions reach out to Devin March.

devin@digirealty.com