28 Aug FAQs You Must Ask Your Mortgage Broker

Searching for a mortgage is quite similar and complex, just like shopping for a new home. Given how long you want your mortgage term to be, you should plan ahead of time and gather all relevant information before deciding between a bank and a private lender.

To make sure you end up making the right choice, it’s advised to ask the below questions to your Abbotsford mortgage broker when shopping for a mortgage deal.

What are my loan options?

Your broker may be able to provide various mortgage options based on your income, credit score, debt history, and personal financing requirements. Some lenders provide open, closed, fixed, variable, reverse, and adjustable mortgages among other options.

What are the terms of the loan?

The loan terms normally include your payment schedule, interest rate, amortization duration, and any additional details such as prepayment allowances or penalties. You can get better loan terms by raising your income, credit score, or debt repayment history. You can also improve your terms by making a higher down payment, which reduces the risk for your lender.

How much can I borrow?

Although getting pre-approved might provide you an accurate idea of your maximum loan amount, you are not necessarily required to borrow the entire amount approved for. A mortgage broker may be able to advise you on the optimal range to keep within the limits of your loan.

What are the closing costs?

Closing fees include appraisal charges, legal fees, and property transfer taxes, which are paid at closing before you begin paying down your mortgage. In some cases, you may be able to roll a portion of this amount into your mortgage, allowing you to spread the payments over a longer period of time rather than paying it all at once.

How long is the loan term?

The average loan length is five years. At the end of a loan term, you must renew your mortgage with your current lender or refinance with new terms and conditions. These terms are repeated until the end of your mortgage amortization period, which usually lasts 25 to 30 years.

What is the fee associated with the loan?

Aside from your closing costs, your loan may also include a number of extra fees. While the majority of these charges are listed in your closing disclosure, asking your lender about them early on in the process is always a good idea.

Are there any special programs or incentives?

You can discuss a variety of unique programs and incentives with your mortgage broker or lender. If you can’t afford a down payment, the Canada Revenue Agency’s Home Buyers Plan (HBP) could be a great choice. The Home Buyers Plan allows you to take up to $35,000 from your Registered Retirement Savings Plan (RRSP) tax-free, as long as you use the money to buy a property and repay it within 15 years. Another excellent program is the first-time homebuyer’s incentive. Through this program, the Canadian government can provide first-time buyers with 5% of the purchase price of an existing home or 5-10% of the purchase price of a newly constructed home.

For more queries, feel free to contact Satbir Bhullar, a licensed mortgage broker specializing in residential mortgages in Abbotsford.