Mortgage FAQs

These are the questions I get asked most, answered the way I would answer them on the phone. If yours is not here, ask me. There is no basic question in my office.

Does it cost me anything to work with a mortgage agent?

In most standard residential situations, no. I am paid by the lender once your mortgage funds, so my time, the comparisons, and the advice cost you nothing. There are exceptions, mainly private lending and some credit-challenged files, and if your situation is one of them I will tell you before we go any further rather than at the end.

Is a mortgage agent actually different from my bank?

Yes, and the difference is choice. Your bank can offer you its own products and its own rates. That is the whole menu. I work with dozens of lenders, including banks, credit unions, monoline lenders, and alternative lenders, and I put your file in front of the ones most likely to say yes on good terms. If your own bank turns out to have the best offer, I will tell you that too.

Will shopping around hurt my credit score?

No. I pull your credit once and use that single pull for every lender I approach. Multiple mortgage inquiries within a short window are also treated as one event by the credit bureaus, because they know people shop for a mortgage. What hurts is applying separately at four banks over four months.

How much can I borrow?

It depends on your income, your existing debts, your down payment, and the property. As a rough guide, lenders want your housing costs under about 39 percent of your gross income and your total debts under about 44 percent, tested at a rate roughly two percent above the one you are actually offered. My calculators will give you a realistic number in a couple of minutes, and a conversation will give you an accurate one.

What is the stress test and does it still apply?

It is a rule requiring you to qualify at the greater of your contract rate plus two percent, or 5.25 percent. It applies to insured mortgages and to switches between lenders. Staying with your current lender at renewal generally avoids it, which matters if your income has changed since you first qualified.

I am self-employed. Is this going to be harder?

Different rather than harder, though it feels harder if nobody explains it. Lenders look at the net income on your tax return, which is the figure left after your accountant has done a good job reducing it. There are lenders built specifically around business-for-self borrowers, and there are ways to qualify on declared income supported by bank statements. It is one of the files I do most.

My mortgage is renewing. Should I just sign the letter?

Not without comparing it. That letter is an opening offer, priced on the assumption that most people sign it. Renewal is also the one moment you can move lenders without a penalty, which makes it the natural time to roll in debt, change your amortization, or add a line of credit. Start about four months out.

Can I use my home equity to pay off credit cards?

Usually yes, if you have equity and can qualify. Lenders generally allow borrowing up to 80 percent of your home value on a refinance. The saving is real, often somewhere between 800 and 1,200 dollars a month for a family carrying meaningful card debt. The catch worth naming out loud is that you are securing previously unsecured debt against your house, so it works when the freed-up cash flow gets used deliberately.

How much down payment do I need?

Five percent on the first 500,000 dollars, ten percent on the portion between 500,000 and 1.5 million. Under 20 percent down means default insurance, which is added to your mortgage rather than paid upfront. Twenty percent or more avoids the insurance and opens up refinancing later.

How long does an approval take?

A pre-approval can often be done in a day or two once I have your documents. A live approval on a purchase usually takes a few business days, sometimes same day with the right lender. The part that takes longest is almost always waiting on paperwork, which is why I ask for it early.

Do you only work with people in Barrie?

No. I am based in Simcoe County and I work across Barrie, Oro-Medonte, Orillia, Collingwood, Muskoka, and cottage country, and I have clients elsewhere in Ontario and across Canada. My practice runs online, so where you are matters much less than it used to.

What if my credit is not great?

Then say so early and we will work with it. There are lenders for credit that is rebuilding, and there are often quick fixes that lift a score enough to change what you qualify for. The worst version of this is finding out at the offer stage. The best version is finding out now, when there is time to do something about it.

Still wondering something?

Send it over. I would rather answer a question early than have someone talk themselves out of a move because of something they were not sure about.

Book a free 15 minute chat, call 705-881-2780, or email lfenn@dominionlending.ca.

Lora Fenn, Mortgage Agent Level 1, Lic. #M25003153. Dominion Lending Centres YBM Group, FSRA #11129.