I have been employed with Dominion Lending Centres for over half a year now and after months of promoting what I can do for my clients, I was asked by a friend the other day, “What do you actually do”? I was surprised by that, but it’s a really good question. It occurred to me that people know that I’m involved in the mortgage world but don’t know exactly what I do. So, this is what I do.

To put it simply,  I help my clients secure a mortgage that is right for them. I don’t work for any individual lender like banks (CIBC, TD, etc…), credit unions (Meridian, First Ontario, etc…) or monoline lenders (lenders who only offer mortgages). I have access to a majority of lender rates and programs (115 lenders to be exact) which gives me more options for my clients. This also allows me to have an unbiased opinion because I have no affiliation with a specific lender.

The historical way to get a mortgage is for a person to walk into a bank and seek out financing through a specialist that works there. The specialist will offer a couple of mortgage products and all of them are funded by the bank and because the specialst works for the bank, they’re obligated to suggest these products which in essence may reduce your options.

Dominion Lending Centre agents like myself not only have more options, we’re committed to getting you the best mortgage product, no matter where they come from, if they’re right for you.  We’re committed to exceeding your expectations with service and results so that we get your repeat business and you refer us to others. This also drives me to work outside of the typical 9-5 work schedule that so many salaried jobs follow. My clients can contact me at anytime during the week!

Theres a stigma that independent mortgage agents only specialize in clients that aren’t A-side; clients that have poor credit or low income where we have to get creative and find out-side-of-the box mortgage solutions. This is one aspect of our job but in fact most of the mortgage products that I have access to are for A-side clients that are looking to get the best rates and the lowest fees. 

Dominion Lending Centre agents like myself do everything a bank can do but with more options and around the clock care!

“What’s my credit score?” or “How is my credit score calculated?” are some of the questions that I often hear as a mortgage agent. Credit score also goes by “beacon score” and “FICO” score depending on the agency that calculates the score. There is a certain cloud of mystery when it comes to credit score and how these credit bureaus calculate that score. Amid the mystery, credit scores are one of the most important factors when a lender is considering a borrower for a mortgage. The entire premise of credit scores can be confusing but to be honest they might be one of the most simple concepts. Credit score is just a calculation that measures an individual’s ability to pay debts, thus establishing a risk level.

Credit scores are calculated from a range of 300 to 900, 300 being the lowest possible score and 900 being the highest possible score. The lower the score the more risky the borrower is to the lender. This risk level also determines what lender will be willing to take on a certain borrower and what rate that lender can offer. As stated in an earlier blog, a credit score above 660 will be enough to get a mortgage with an A-side lender, allowing the borrower to receive the best rates on the market (providing the rest of the application is strong). A credit score below 660 is handled in a case by case situation as different lenders have different guidelines. A general rule is, the lower the credit the higher the rate and additional fees the client will be paying; however, there are ways to get around poor credit and high rates depending on income, equity and other factors. It gets complicated when explaining this aspect of the mortgage world so if you have a unique situation feel free to reach out with any questions.

In Canada there are two credit agencies: Equifax and TransUnion. Each lender will use at least one of these companies to decipher a credit score for their clients or potential clients. Both of these agencies will show different scores for the same client proving that their algorithms to generate a score are slightly different. Although there is a slight difference, both algorithms have the same core factors that calculate score:

1. Credit Mix (10%): Having multiple types of credit such as credit cards, personal loans, line of credits , mortgages , etc
2. New Credit (10%): looks at how many new forms of credit an individual is taking on in a certain time period. Not just having one credit card for years and no other forms of credit.
3. Credit History (15%): How long credit accounts have been open (the longer the better as long as payments are being made)
4. Credit Utilization (30%): How much of a balance is drawn compared to the limit. Don’t go over 50% of the limit. For example; if you have a credit card with a limit of $5,000 then you shouldn’t exceed a balance of $2,500.
5. Payment History (35%): Late or missed payments, overdue accounts, bankruptcies and any written-off debts will all lower your credit score.

As seen above, payment history and credit utilization controls the largest portion of the credit score.

At the beginning of the blog I stated that credit “might be one of the most simple concepts”. I’m not saying credit scores are a simple concept because I’m in the mortgage industry or because I work with credit every day. Credit scores are a simple concept because I tend to not overthink them. It’s very normal to take on debt; almost everyone has or will take out a loan or use a credit card. Just don’t take on more debt than you can afford and make sure to pay off the debts when you take them on. The best advice I can give to raise a credit score is to use more than one form of credit every month and pay it off by the end of every month. If you can’t do that, set up minimum payments and don’t exceed 50% of available credit.

Don’t let credit scores get you confused or stressed out! If they do, reach out to me.  I’m happy to help you figure out a solution

I was going to title this blog “insured, insurable and uninsured mortgages” but the title “blah, blah and blah mortgages” may have been equally enticing to a reader. My interest in mortgages isn’t always met with the same enthusiasm; however, whether mortgages excite you or not these blogs can help you gain an understanding of the process and make you feel like you aren’t overwhelmed when you begin the process of getting financing for your dream house.

I often hear people quote rates that are the absolute rock bottom market rates. This often gives people an unrealistic view on what rates they can actually qualify for. When you google “mortgage rates” and look at the first set of advertised rates, that doesn’t necessarily mean that you will qualify for the lowest rates. The rate you can actually qualify for depends on a number of things.

1. Fixed vs Variable: Fixed mortgages are set payments with set interest rates; if rates go up or down the client pays the same monthly payments until the term is over. Variable mortgages are fluctuating payments that follows the market trend (better if you know rates are going down). Variable rates are currently advertised as lower with some exceptions depending on the lender and term. Make sure to know the difference before getting excited for a 1.34% variable rate when you actually want a fixed rate.
2. Term: This is the amount of time the client is committed to specific parameters (lender, rates and other conditions). Term is not to be confused with amortization which is the amount of time it takes to fully pay off the loan. The amount of years within the term determines what kind of rates are paid. Lenders normally offer 1,2,3,4,5,7 and 10 year terms but other types of terms can be found depending on the lender. Traditionally, the lowest rates are a 5 year term which also makes it the most popular. Be sure to know what type of term you’re interested in before expecting a certain rate.
3. Limited: Certain mortgage rates have limits to them or are only available for a limited time. One example is Bona Fida sale clauses: this clause within a mortgage blocks you from refinancing with another lender when your term is over and either has extremely high breakage fees or simply wont allow you get out of your mortgage. Quick close mortgages are another example: these mortgages are only available for a limited time and require the closing date to be within a specified time period. There are other clauses and programs that offer low rates just like the two listed above that home buyers should be carful about. Make sure to read or have a mortgage agent read over the commitment before you get into something that might not benefit you in the long term.

The listed items above are very simple explanations of how certain aspects of a mortgage could confuse someone with regards to rates; however, to throughly explain all of the details would require a much longer post. If you want to find out more, please reach out.  I’d love to talk with you about your plans.

If you’re not already teeming with excitement about rates and how to remain confident in a market with hundreds of mortgage programs, here’s the grand finale that determines what type of rate you can get: Insured, insurable and uninsured mortgages! Yes, the exclamation mark was necessary. It’s just that important. I find myself quoting those three words everyday to figure out what type of rate I can get for my clients. Let’s go through them!

Insured mortgages or high ratio mortgages offer the lowest rates because they are least risky to the lenders. They require the borrower to pay an insurance premium that protects the lender if the borrower were ever to default. This type of mortgage is mandatory when the down payment is under 20%. They also have a maximum 25 year amortization, raising monthly payments and lower borrowing power because the client wouldn’t be able to stretch payments over 30 years. Also, if the client requires a mortgage on a rental property, refinancing or for a property above a million dollars they would not be eligible for an insured mortgage. I often hear people quote insured rates because they’re the lowest. Even though they’re the lowest, make sure you can qualify for an insured mortgage and make sure the added premium/restrictions are viable for you.

Insurable mortgages normally offer rates higher than insured mortgages but lower or similar to uninsured mortgages. They also require mortgage insurance and are less risky to the lender. However, the insurance premium is paid by the lender and not the borrower to protect themselves. Insurable mortgages follow all of the same guidelines as insured because they’re not available to clients wishing to purchase a rental property, get a refinance or purchase a property over a million dollars. The only difference is that down payment has to be over 20% and no insurance premium is paid by borrower.

Insured and insurable mortgages are restricted to clients purchasing a property over a million dollars; however, if a property was purchased for under a million dollars and that property appreciated in value over the first term of said mortgage the client would be allowed to stay in their insured or insurable mortgage until the end of the term.

Uninsured mortgages offer the highest rates because they aren’t insured and as a result riskier to lenders. This mortgage allows for everything that insured and insurable mortgages allow and have less restrictions. Rental purchases, refinances and properties above a million dollars are all uninsured deals. They also allow amortization up to 30 years, giving clients more borrowing power and a 20% down payment or more is required.

In summary, mortgage rates depend on a multitude of factors and it’s more important to fully understand your mortgage than disregarding a mortgage product simply because it’s rate is not rock bottom.