How much can I afford to pay for a home?

To determine ‘affordability’ you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation. Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders’ usual guidelines. In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don’t leave yourself house poor. Structure your payments so that you can still afford simple luxuries.

What is a home inspection and should I have one done?

A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection. A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

What is the minimum down payment needed for a home?

A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. In addition to the down payment, you must also be able to show that you can cover the applicable closing costs (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable). Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or a gift from a family member. It cannot be borrowed. Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor. Where the mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC), the gift money must be in the your possession before the application is sent in to CMHC for approval. Mortgages with less than 20% down must have mortgage loan insurance provided by either CMHC or GE.

What is mortgage loan insurance?

Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums, ranging from .50% to 3.75%, are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.

What is a conventional mortgage?

A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price, a loan to value of or less than 80%, and does not normally require mortgage loan insurance.

How does bankruptcy affect qualification for a mortgage?

Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing.

How will child support affect mortgage qualification?

Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for. Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

Can I get a mortgage to purchase a home?

Subject to qualification, yes. In fact, even purchasers with 5% down may qualify to buy a home and make improvements to it. For high-ratio financing, both Canada Mortgage and Housing Corporation and GE Capital, insured mortgages are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or improvements that the purchaser may wish to make to the property. This option eliminates the need to finance the renovations or improvements separately. Some conditions apply. Where the improvements are cosmetic, the mortgage loan insurance premium is unchanged from the standard schedule. Where the improvements are deemed to be structural, the mortgage loan insurance premium is increased by .50% over the standard schedule. For information on mortgage loan insurance premiums see high-ratio home mortgage financing.

Can I use gift funds as a down payment?

Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. where the mortgage requires mortgage loan insurance, Canada mortgage and housing corporation requires the gift money to be in the purchaser’s possession before the application is sent in to them for approval. where mortgage loan insurance is provided by GE Capital this is not a requirement. See ‘what is mortgage loan insurance?’ for further information.

What is a pre-approved mortgage?

A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually up to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like ‘written employment and income confirmation’ and ‘down payment from your own resources’, for example. Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range. In summary, a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.

Should I wait for my mortgage to mature?

Lenders will often guarantee an interest rate to you as much as 120 days before your mortgage matures. And, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well. Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always investigate the possibility of a lower interest rate with the lender or another lender. If you don’t you may end up paying a much higher interest rate on your renewing mortgage than you need to.

What is a down payment?

Very few home buyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage the first step in a potentially long-standing relationship. But even with a mortgage, you will need to raise the money for a down payment. The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting. The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings.

How can you acquire a home with as little as 5% down?

Most lenders now offer insured mortgages for both new and resale homes with lower down payment requirements than conventional mortgages – as low as 5%. Low down payment mortgages must be insured to cover potential default of payment, and their carrying costs are therefore higher than a conventional mortgage because they include the insurance premium. With all low down payment insured mortgages, you are responsible for: :appraisal and legal fees :an application fee for the insurance :the payment of the mortgage default insurance premium (although the amount of the premium may be added to the mortgage amount).

How can you pay off your mortgage sooner?

There are ways to reduce the number of years to pay down your mortgage. You’ll enjoy significant savings by: Selecting a non-monthly or accelerated payment schedule Increasing your payment frequency schedule Making principal prepayments Making Double-Up Payments Selecting a shorter amortization at renewal

How can you use your RRSP to help you buy your first home?

A longer-term mortgage is worth considering if you have a busy life and don’t have time to watch mortgage rates. Our 4, 5 and 7-year mortgages let you take advantage of today’s rates, while enjoying long-term security knowing the rate you sign up for is a sure thing. If you want to keep your mortgage flexible right now, you can explore a shorter-term mortgage that usually allows you to take advantage of lower rates and save.

What is a fixed rate mortgage?

The interest rate on a fixed-rate mortgage is set for a pre-determined term – usually between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected.

What is a variable rate mortgage?

A mortgage in which payments are fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest. Open variable rate mortgages allow prepayment of any amount (with certain minimums) on any payment date.

Glasslake sails west: Supporting Western Canada’s non-bank mortgage sector

Advertorial By:Glasslake Funding

Coming up as a leading player in small commercial lending, Glasslake is charting a new course as part of its strategic expansion. Recognizing the growing demand and potential in the non-bank mortgage sector, Glasslake aims to bring its successful model from Ontario to Western Canada, starting with Alberta and British Columbia.

Concentrating on small commercial businesses, a niche yet rapidly growing market segment, this expansion will enhance opportunities for brokers to service the non-bank sector and provide funding to credit-worthy borrowers who typically fall into the self-employed and seasoned investor category.

Continuous and diversified funding is what sets Glasslake apart. Their regional expansion empowers brokers in the West with confidence and support to navigate the complexities of this rapidly evolving small commercial sector.

West Coast welcomes Glasslake: Changing the lending scene

Since its launch to the mortgage broker network in January 2023, Glasslake has proven to be a dependable source of funding for small commercial and residential mortgage loans in Ontario. The company has excelled in catering to the needs of those in secondary markets, highlighting its dedication to providing inclusive financial services.

Driven by the desire to serve niche clientele such as seasoned investors, and self-employed clients in various regions, the company is expanding westward into both primary and secondary markets, to help reach lending needs beyond major urban areas.

Harnessing unexplored opportunities in small commercial lending

At the core of Glasslake’s business model and high-priority list is a focus on small commercial lending. The company has pinpointed a significant market gap where the needs of small commercial scenarios are largely unmet. While the majority of lenders concentrate on residential or large commercial sectors, Glasslake identifies untapped potential within the small commercial sector. This sector is the mainstay of its operations, and it has consciously chosen a simplified approach to serve this segment.

The opportunity in this area is vast for both brokers and clients. With lending thresholds starting as low as $200,000, and as high as $3 million, Glasslake provides an accessible gateway for those seeking to invest in the small commercial arena.

For brokers, this unveils a new client base that may already be in their databases including eager investors who have been overlooked due to the industry’s emphasis on larger commercial ventures. By shifting the focus to small commercial lending, brokers can diversify their portfolio and extend their reach. With its prioritizing on small commercial lending, Glasslake not only fills a market void but also fosters a win-win situation for brokers, clients, and the company itself.

Serving Western Canada’s non-bank clients in secondary markets

Expanding into Alberta and British Columbia (BC) marks a significant turning point in Glasslake’s growth and commitment to providing specialized funding solutions for non-bank markets.

A 2023 Statistics Canada report unveiled that over 32% of condos and houses outside of the urban areas in BC are owned by investors, the highest amount of all the provinces included in the research, highlighting the vast untapped potential for capital in BC’s secondary markets. This statistic emphasizes the importance of alternative lending solutions for investors who might not fit the mold of conventional borrowers. By catering to this substantial investor segment, Glasslake can play a crucial role in supporting and fostering the growth of unconventional borrowers in the region through the mortgage broker channel.

By offering solutions tailored to the unique needs of brokers and borrowers, the company is proud to expand West to continue its support of Canadian mortgage brokers. This approach cultivates a symbiotic partnership within the non-bank lending landscape by empowering brokers to more effectively serve their small commercial clientele —a mission that holds significant importance for the company.

Expanding to empowering brokers with inclusive & sustainable non-bank funding optionsThe British Columbia and Alberta expansion unlocks a wealth of advantages for brokers and their clients, transforming the lending environment in several ways. By providing access to alternative lending options, an additional funding option addresses the needs of those who may have been overlooked by traditional lenders, effectively bridging the funding gap for small businesses and residential mortgage loans. This innovative approach empowers brokers to better serve their clients.

Glasslake’s commitment to a simplified approach to underwriting helps brokers to present straightforward solutions that cater to their clients’ specific needs. With multiple qualifying options and a flexible product collection, brokers can help clients achieve improved outcomes, fostering a more collaborative and successful partnership. The expansion paves the way for brokers to expand their networks and forge meaningful relationships with fellow industry professionals.

We are enthusiastic about forging meaningful relationships with brokers looking to broaden their commercial product offerings in the alternative lending arena. As we expand into Western Canada, brokers and their clients will undoubtedly reap the benefits of our sustainable and diversified funding, filling a crucial gap in the current alternative market.”

– Glasslake’s President, Mike Forshee

Glasslake: Challenging convention with human-centered funding

By keeping simplicity top of mind, Glasslake sets itself apart in the market by embracing a smooth and simple approach to underwriting, in contrast to most lenders who rely on cookie-cutter policies and bloated qualifying processes.

The company’s commitment is to return to the fundamentals in their approach, products, and service, placing human smarts at the core of their operations. This strategy ensures a smooth and straightforward deal completion experience for both brokers and clients, setting them ahead of their competition.

As part of this expansion, Glasslake has planned exclusive launch events across the region in July. The company is also planning more events to further showcase their innovative solutions and services, reinforcing their commitment to the lending sector and helping brokers stay competitive.

Brokers interested in exploring new opportunities with Glasslake are encouraged to connect with a Regional Sales Representative.

Visit glasslake.ca/contact/ to work with Canada’s get-it-done lender.

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