5 Questions you Need to ask your Mortgage Specialist

1. What are the fees associated with your services?

Every deal is different. We offer competitive rates that are tailored to each client based on the complexity of the deal and the lender involved. We disclose all of our fees upfront to ensure all parties are informed of the full cost of obtaining a mortgage.

The fees associated with our service will depend on a variety of factors, but we are committed to offering the most competitive rates possible without sacrificing the quality of our service. Generally speaking, depending on the nature of the deal, the broker can be compensated by either the lender or the borrower, or a combination of the two.

2. Which is better, a fixed or variable rate mortgage?

A fixed-rate mortgage implies that your mortgage rate and payment will remain the same for your mortgage term, which is typically around five years. A fixed-rate mortgage will make the most sense for first-time homebuyers, as it is a low-risk option. It does come with a higher initial rate, however, so be sure to get all the fine print from your broker.

On the other hand, a variable rate mortgage can have your mortgage rate and payment fluctuate or change at any point during your term. If you happen to hit the market at a great time, your payment will go down when rates go down, and, vice versa, if the market rates go up. Variable mortgages will have a lower rate, but get your brokers advice on if any change in the rate makes sense for your needs.

Ultimately, the mortgage you decide to go with depends on your personal situation and the level of risk you're willing to undertake.

3. How do I get approved?

After you've been pre-approved, it's time to work with a realtor to figure out where you'd like to live. After accepting an offer, your mortgage broker will decide on the lender to submit your mortgage application. 2 to 3 days after submitting your mortgage application is when you should expect the initial approval. You are then able to secure the mortgage rate and term, and the legal process to help with closing will begin.

4. Is there any prepayment deal for this mortgage?

Pre-payment is great because it helps you become mortgage free faster. Check if your lender offers a good pre-payment privileges, such as increasing your regular payment and making a lump sum payment. Different lenders will have different rules on how often the payments can be made and if they can be doubled up, so be sure to check on that as well.

5. What's the penalty for breaking my mortgage?

It's not an uncommon situation for a borrower to end the mortgage early. If you're looking for a mortgage refinance or decide you want to sell your home, then you may face a penalty.

The penalty, which occurs if you break your mortgage before your renewal date, can vary greatly depending on your rate. In Ontario, for variable rate mortgages, the penalty can be around three months' interest. Fixed-rate mortgage penalties are tricky to calculate, as they involve the interest rate differential or IRD. This amount is calculated on the postage rate when you sign your deal, which is usually a little higher than the rate you actually get. Simply put, it can result in a higher penalty than a fixed rate mortgage if you decide to break the agreement.

Every lender uses a different method to calculate penalties, so be sure to discuss rates and terms with your mortgage broker in case you decide to refinance or sell. There is sometimes a fee associated with pre-payment, so that's another important question for your mortgage broker as well.