Have you ever heard of the term “rate-hold”? If you have ever worked with a mortgage broker then you probably have heard of a rate-hold!

Rate-holds are something that the majority of lenders offer to potential clients purchasing a new home who need a mortgage. Rate-holds are generally not given out for people refinancing their mortgage or looking to transfer it from one lender to another.

120 days is the longest rate-hold available with lenders. Once you have created an application with a mortgage broker, they can submit it to an available lender offering rate-holds on an interest rate you want to take advantage of – all without a property attached.

This rate-hold does not commit you to work with any lender or mortgage broker, nor does it hurt your chances of receiving an approval down the road (assuming you and your mortgage broker have not submitted multiple rate-holds and plan to use a third or fourth lender).

For example, day one you submit your application to a lender for a fixed interest rate of 3.24% for 5-years, and on day 60 that interest rate moves to 3.54%, as long as your mortgage closes in the next 60 days, you are protected and can keep your 3.24% rate. If rates go down, not up, you can also take advantage of the lower interest rate.

Once the 120 days expires, there is nothing stopping you from submitting another rate hold, it will just be subject to current interest rates the day of submission. If you have any questions, contact a Dominion Lending Centres Mortgage Professional who can help.

Many people go through challenging events in their life that affect their finances. Divorce, job loss and health issues top the most common reasons. I commend you on getting your finances sorted out and back on track. The moment you FILE that consumer proposal or bankruptcy is the time to start rebuilding your credit history. YES, there are companies that can help with that. Too often I see people waiting YEARS to pay off their debt program before getting credit again, which sets you back two years.

Mortgage Lenders/Banks view Bankruptcy, Consumer Proposal and Debt Programs all the same… bad credit management.

When will it come off my Credit Bureau?

Consumer Proposal Programs:
Transunion and Equifax state that it will take three years for a consumer proposal to fall off your credit score after it has been completed. So if your proposal takes you four years to pay, then your score will be damaged for seven years in total. If you are able to pay off your proposal quicker then your credit rating will get better a lot faster afterwards. The key is that it will stay on your credit bureau for three years from completion.

Bankruptcy

The first bankruptcy will affect your credit score for six years from the date of your discharge.
A second bankruptcy will take 15 years.

TEN SECRET “To-Do’s” you should absolutely adhere to:
A mortgage is something most people will have for a very long time. The rules for mortgages have tightened up in the past few years A LOT.
Once you have filed a debt program… you MUST adhere to these 10 rules to have a chance at qualifying for a traditional mortgage.
Excuses don’t fly with Lenders.
You need to prove to THEM you are financially capable.
They owe you nothing and they will do everything in their power to mitigate any negative risk when lending their money.

1. If you go bankrupt or file a consumer proposal while you have a mortgage, the Lender will see this when they review for your renewal and could deny your renewal and you will need to prepare to look for another lender/bank or they charge super high renewal rates. If you are considering either option or are currently in a proposal, please contact me to review your options far in advance of your renewal.
2. No NSF charges on your bank accounts. Get yourself an overdraft to protect yourself.
3. No missed mortgage payments – EVER.
4. No late payments on anything that reports to your Credit Bureau; credit cards, car loans, student loans or cell phone bills.
5. No collections for any reason. You feel as though you shouldn’t HAVE to pay for it? Pay that issue and sort it out later.
6. Double Bankruptcies or one Consumer Proposal and a Bankruptcy will make it difficult to get a mortgage. You can’t get around this anymore. It would be mortgage fraud. Lenders can look this up easily via the Bankruptcy Records Search.
7. If you have a Bankruptcy that has property included, it will be VERY difficult for you to get a mortgage without at least 25% down payment (for a purchase) or equity (refinance). On top, you will likely be in an Alternative mortgage for a very long time with higher rates and fees.
8. Get two tradelines. Credit Card, Car Loan or Line of Credit. You need to have two years of history and two of them with spending limits of at least $2,500.
9. Don’t spend to the limits. Only use a max 50% of available credit.
   Use a Mortgage Broker who specializes in Credit Repair; who can review your file with you on a semi-annual basis to keep you on track as mortgage rules change.
10. You need to look “squeaky clean” until your Bankruptcy or Consumer Proposal is removed from your credit bureau.

Contact a Dominion Lending Centres mortgage professional to be your partner once you have filed… or if you’re just in contemplation and the Banks have said NO to your debt consolidation, we will have solutions for you.

With the importance of real estate in Canada, it is vital to understand how the various professionals in this sector operate when buying a home.

Sooooooo… what is the difference between a Mortgage Specialist & a Mortgage Broker? At the surface, they sound the same;
• They both arrange mortgages
• They both can offer advice and help you select a mortgage, right?

WRONG!!! There are many differences… Let’s check some of them out!

• A Mortgage Broker works for you! Their role is to act as a link between you and the lenders so that you do not have to spend your valuable time learning about mortgages and shopping around for the perfect mortgage. Mortgage brokers do the legwork and negotiate on your behalf for lenders. They are your point of contact for everything related to you financing your home.
o Bank specialists are employed and paid by the bank and work on the bank’s behalf.

• A Mortgage Broker can work with many different lenders across Canada – Big banks, Credit Unions, Trust Companies, Monoline Lenders (broker only banks) and private lenders – rather than working for one financial institution. Therefore, Mortgage Brokers can offer you more choices with competitive rates and terms.
o Usually, Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners could end up with a higher interest rate than what they could have gotten at other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you.

• A Broker must successfully complete a Provincially regulated Mortgage Broker course and exam.
o Bank specialists are not licensed and require no formal training. There are no standards for educational requirements (although most Lenders do provide some in-house training).

• Because Mortgage Brokers don’t work for a specific lender, you get unbiased third-party advice about a variety of lenders.
o A bank specialist can only offer their own institutions products, good or bad.
o Specialists don’t have access to other lenders, so they won’t recommend another lender’s product offerings.  They want your business whether it’s in your best interest or not.

• Mortgage Brokers use their knowledge and experience to negotiate the best possible terms and rates for you from a variety of lenders, based on the best fit for your situation.
o When you see a bank specialist, the mortgage negotiating is typically left up to you.
o Will the bank specialist negotiate on your behalf or on the bank’s behalf?

• For conventional financing, the services of a mortgage broker are generally FREE to you. If there is a cost, you will be advised of those costs up front. Brokers get a finder’s fee from the lender once they place your mortgage. Therefore, brokers are motivated to get the best terms and rates for their clients.
o Bank specialists are paid by their bank.
o Some banks offer bonuses if specialists get their clients to pay higher interest rates or sign up for other bank services.

• Mortgage Brokers work on a referral basis and are self-employed. Most of their business is done through word of mouth referrals, therefore a Dominion Lending Centres Mortgage Broker is motivated to ensure their clients are extremely happy and satisfied to keep their business growing.
o A bank specialist is generally an employee of the bank, generating business mostly through the bank’s existing customers.

• Most Mortgage Brokers are available for appointments or at least some sort of correspondence outside banking hours (nights, weekends, holidays) at their client’s convenience.
o Bank specialists are generally only available during regular banking hours.

• Mortgage Brokers are focused on your mortgage.
o Specialists are trained and rewarded on cross-selling. Some will push you to consolidate all your banking services with them when getting a mortgage (credit cards, insurance, RRSP, lines of credit, etc.)

Would you ask Tim Hortons, “What’s the best cup of coffee for me to drink today?” and expect them to name of some delicious latte from Starbucks? Not likely…  So why would you ask a Mortgage Specialist at a bank to tell you which mortgage product is best for your situation?

Are you in the market for a new home? If you are but you don’t already have a pre-approval from your mortgage broker, be sure to read on.

Pre-approvals are very important for two reasons.

They give you confidence in knowing that a specific amount of financing is available for you.
A pre-approval can put you in a positive negotiating position against other home buyers who aren’t pre-approved.
Not all pre-approvals are the same, though. There are essentially three different kinds.

• The first occurs when you meet with a mortgage professional and tell them how much you make. They’ll say something along the lines of “Great, you’re pre-approved.” The mortgage professional has only looked at your income. There is no real pre-approval.
• The second kind is when a mortgage professional asks you how much you make and then pulls your credit bureau. This allows a mortgage professional to lock in your mortgage rate for up to four months. This pre-approval still isn’t a sure thing.
• The third kind of pre-approval – and the one that we do – is a lot more encompassing. We get all of your papers prepared right off the bat, which allows us to eliminate any unforeseen issues with your approval. Sure, it’s more work up front – but we do this because it’s the right thing to do.  It’s going to have to be done before you get your final approval anyway so staying ahead of the game keeps the process as smooth and stress-free as possible for you.

If you’d like to get a pre-approval, contact a Dominion Lending Centres mortgage professional! We’re here to help.