JOY CHO MORTGAGE
Frequently Asked Questions
What is the difference between a mortgage broker and a mortgage specialist?
In Canada, a mortgage broker is someone who connects customers to banks, rather than someone who is viewed negatively. There are many specialized banks that focus solely on mortgages in addition to the typical banks that one might encounter while walking down the street. Unlike mortgage specialists who can only assist with their affiliated bank's mortgage programs, mortgage brokers can help customers who may have been disappointed with regular banks in a variety of ways, even those who may have been turned down for a mortgage elsewhere. Mortgage brokers are professionals who have completed the required educational courses and hold certifications that must comply with government regulations.
How much can I get on a Pre-Approval?
For employed individuals, it is possible to receive about 4.5~5 times their annual income with pre-approval. This is assuming there are no large expenses such as car payments, Line of Credit, or student loans. For business owners, it is best to consult with a professional as they may report lower income on their tax returns in order to reduce taxes, often by including additional expense details on their tax reports.
How can I get the best interest rate for a mortgage?
How to get the BEST Mortgage Rate in Canada
Check your credit score
If you want to get the best mortgage rate in Canada, one good tip is to check your credit score. The reason for this is that if you can convince a lender that you are a low risk, you will score a low rate. By checking your credit score, you can take steps to raise it like repaying certain debts to achieve a lower debt-to-income ratio. Remember: lenders are only interested in borrowers repaying mortgages. With a credit score hovering around 700-750, your lender would feel comfortable enough to give you a better deal.
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Consider your present length of employment
Having the same employer for two years or more is the best time to apply for a mortgage—and not before. It should be noted that lenders will treat you more favourably if you’re employed by a company rather than if you are a freelancer or self-employed, for instance. For this reason, if your spouse is employed by a company and you are not, you will likely receive a far better rate if the mortgage is taken out in your spouse’s name and not yours.
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Put down at least 35% of the home’s cost
While mortgages do exist that require a smaller down payment—in the area of 5% for homes worth less than 1M, for example—you can lower your interest rate if you put down at least 35% of the price of the property. Your interest rate could be lower, but you could be on the hook for mortgage default insurance, or CMHC insurance, if your down payment is under 20%. This decision could ultimately increase your total cost. When you can put down more than 35%, there's good chance that you can get a lower rate.
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Decrease your debt-service ratio
Your debt-service ratio is the percentage of your gross income each month that you use to repay your debts. When you borrow money, lenders use your debt-service ratio to evaluate the risk you carry. For this reason, you should keep your Gross Debt Service—which is your housing costs covered by your monthly household income—under 39%, and your Total Debt Service below 44%.
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Use cash reserves
To make sure you have enough money saved up to pay your mortgage in the event you lose your job, lenders will look at your savings account. To make sure you are less of a risk, lenders prefer seeing multiple months worth of mortgage payments saved in your bank account. It will also signal to lenders that you are responsible financially. It is a good reason to save for up to four months’ worth of mortgage payments—and ensure that you get a good mortgage rate.
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Increase your income stability
Lenders will see that you are less likely to default on your mortgage if you have increased income stability. To improve your income stability, you can give yourself an assessment of how much you spend each month versus how much money you earn. By doing this, you will be able to see more clearly various ways you might earn more and spend less. Requesting more hours at your current job, seeking out freelance or part-time work, and cutting out needless spending are all ways to increase your income stability—and make you more attractive to lenders.
My bank disappointed me,
do I have other options?
Yes, there is a way! Most large banks, where our customers commonly open checking and savings accounts, each have their own specialized programs and they generally don't want to engage in risky transactions. For such cases, there are specialized mortgage banks available.
If you find that the amount you reported on your tax return is not enough to receive a sufficient mortgage, if your credit score is too low, if you have unrealistic expectations for the amount of mortgage you can receive, or if you need to receive a mortgage in just a few days... for a variety of reasons, when you feel overwhelmed, please contact us and we will find a solution together.
My credit is bruised, can I still get a mortgage?
If you find that your credit score is lower than expected while going through the mortgage process, in most cases, the mortgage application itself is declined. However, I can help you to quickly recover your credit score, and there are many ways to proceed with a mortgage even with a low credit score. Don't give up, please contact me.
You don't have to wait after filing for Consumer Proposal or Bankruptcy. Many banks offer No Credit programs.
Is it possible to finance a Lease Hold or Float(or Mobile) Home?
Not all leasehold properties are eligible for a mortgage, but if the property is located in a well-known area like UBC or SFU and owned by a reputable company, it may be treated similarly to a regular mortgage. If you provide the address of the property you have in mind, I can check the possibility for you.
As for float homes, not all banks offer mortgages for them, but there are some that do. Please contact me for more information.
When should I get mortgage insurance?
If your down payment amount, which is your own contribution, is less than 20% of the home value, you can still receive a mortgage up to 95% by taking out mortgage insurance. Of course, you can only receive up to the maximum amount that your income can support. Usually, you need to have been employed in the same occupation for at least 2 years to be eligible.
If you have not worked for 2 years but have a stable income and it takes too long to save for the down payment, there is a way to receive government support. You can receive 5-15% of the down payment amount in subsidies from the government when you have saved at least 5% of the down payment. In this case, the percentage of the subsidy belongs to the government, and you need to repay the government that percentage of the sale price when you sell the house. Although not many banks are implementing this program yet, we can help you find one.