AM Financial Services Ltd.

What do I qualify for?
Should I have a home inspection and what is it?
What minimum down payment is needed to buy a home?
What is an insured mortgage?
What is a high-ratio mortgage?
What is a conventional mortgage?
Why use a AM Financial Mortgage Professional?
How much will it cost to use a AM Financial Mortgage Professional?
Is applying online secure?
Does paying my mortgage bi-weekly really save money or reduce my amortization?
Does bankruptcy affect my ability to qualify for a mortgage?
Will child support and alimony affect my qualifications?
Can I use gift funds as a down payment?
What is a pre-approved mortgage and how do I get one?
Is it necessary to wait for my mortgage to mature?

What do I qualify for?

Qualification is based on your Gross Annual Income, along with the amount of any outstanding debt. Usually, a maximum of 32% of your income may be applied towards all of your mortgage payment, property taxes, heating and maintenance costs; however, there are certain lenders who will entertain higher payment ratios. In addition, your total monthly obligations towards the above housing cost considerations as well as any outstanding debt obligations must usually be within 42% of your monthly income. Again, there are certain lenders who will entertain higher payment ratios. The lesser of the first or second calculation will determine the maximum mortgage obligation your income will support, and depending on the current mortgage rate, your subsequent maximum mortgage amount. 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 rich and cash poor. We can help you structure your payments to maximize your cash flow. To calculate what you qualify for, contact a Mortgage Professional today. Call us at 604.925.9006.

Should I have a home inspection and what is it? A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector will 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 home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

What minimum down payment is needed to buy a home? Until recently, a minimum down payment of 5% from non-borrowed funds was required to purchase a home. But now, for applicants with excellent credit scores, this 5% downpayment may also be financed (subject to CMHC approval and increased premium rate). In addition to the down payment, you must also be able to show that you can cover the applicable closing costs being 1.5% of the purchase price (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable). By means of a personal line-of-credit or other credit facility which will be considered as part of the applicant's total monthly obligations, an applicant may now borrow either one or both of the down payment and closing cost monies. Alternatively, these monies may be donated as a non-repayable gift to the applicant by a close relative.

What is an insured mortgage? Mortgage Loan Insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and Genworth Mortgage Insurance Company, an approved private corporation. This insurance is required under the Bank Act to insure lenders against default on mortgages with a loan to value ratio greater than 80%.. This insurance to the lenders removes the need for them to charge higher interest rates to compensate their increased risk for financing greater than 80%. The insurance premiums range from 0.50% to 2.90% for principal residence financing, (more for rental properties), are paid by the borrower and can be added directly onto the mortgage amount.

What is a high-ratio mortgage? A high ratio mortgage is one where the amount to be borrowed by way of a mortgage is greater than 80% of the purchase price, or the appraised value, whichever is less. High ratio mortgages require mortgage loan insurance provided by either Canada Mortgage and Housing Corporation (CMHC) or Genworth. The mortgage loan Insurance premium is paid to CMHC or GE and protects the lender in the event the mortgage is not repaid and the bank has to take back the property. The benefit to the borrower is that it allows them to purchase a home with less than 20% down payment, without interest rate discrimination due to the higher loan to value. The insurance premium is paid by the borrower and can be added directly onto the mortgage, to be repaid over its amortization. High ratio mortgage loan insurance premiums range from .50% to 2.90% of the mortgage amount and increase with the loan to value. For instance, borrowers with a 5% down payment requiring a loan to value of 95% financing, would pay a premium of 2.90% while those with a 20% down payment requiring a loan to value of only 80% financing, would pay a premium of 1.00%. Under the new CMHC Flex Down program, buyers who qualify to borrow their 5% downpayment, and are essentially obtaining 100% financing, would pay a premium of 3.40%.Back to top

What is a conventional mortgage? A conventional mortgage is one where the down payment is equal to 20% or more of the purchase price (or appraised value, whichever is lower). A loan to value equal to or less than 80% does not normally require mortgage loan insurance, but may in certain lending areas.

Why should I use a Mortgage Professional? The best rates. The best in ongoing service. AM Financial Mortgage Professionals analyze all the variables, structuring your mortgage to best meet your needs. Remember, a AM Financial Mortgage Professional works for you! Financial institutions can only offer their own products to the public. As a result, they are not able to provide unbiased advice or selection since by doing so they risk losing your mortgage to a company whose product may provide more value to you. Contrastly, an AM Financial Mortgage Professional can offer a wide variety of mortgage products and services, from a variety of lenders, including banks, trust companies, insurance companies, credit unions and private lenders. Thus, they can be totally objective in their recommendations as to the mortgage that offers the best product, rate and terms for your particular needs. Best of all, this superior service is usually free! Lastly, when you deal directly with a financial institution and your mortgage application is declined, for whatever reason, you must begin the process all over again with another lender. This costs much time and patience. Alternatively, when you deal with a AM Financial Mortgage Professional, the application can be quickly redirected to another lender, or several other lenders, for further consideration. For more information on how AM Financial can help you to best meet your mortgage financing needs.

How much does it cost to use a AM Financial Mortgage Professional? The vast majority of mortgage clients do not pay a fee for the services of a AM Financial Mortgage Professional. To gain a larger market share, the majority of financial institutions pay a finder's fee to Mortgage Consultants and at the same time offer them their best discounted rates and fast approvals in order to gain their business. This allows the Mortgage Consultant to shop among the various financial institutions for the mortgage rate and product that best suits the needs of the client and, in almost all cases, at no cost to the client. In situations where traditional lenders will not approve a mortgage because of poor credit or insufficient income for traditional qualifications, and where the application must be placed with a private or non-traditional lender, a brokerage fee may be charged to the client. This cost must always be disclosed to the client up front and must be authorized in writing by the client before it can be charged.

Is applying online secure? Very. Your private personal and financial information is not sent anywhere without your expressed permission and written authorization. You can fax our Application Form directly to us at 604-925-9961 rather than submit it online,if you prefer.

Does paying my mortgage bi-weekly really save money or reduce my amortization? Payment frequency is not the major factor in reducing the amortization period of your mortgage. Principal reduction is! But what about all the talk of bi-weekly payments taking five years off your amortization period? Only by choosing the accelerated bi-weekly payment option, which is the equivalent of 13 monthly payments each year, will the amortization be reduced. Although you will save some interest making your payment more frequently, ultimately it is the fact that your total payments each year are higher (13 instead of 12) that results in the significant reduction in amortization. For instance, when a client chooses an accelerated bi-weekly payment of $500 over a monthly payment of $1000, in fact they are choosing to pay an extra $1000 annually. Alternatively, a client can choose to have more frequent payments but keep the amortization at 25 years, in which case the bi-weekly payment would be $461.54. This will allow the forced mortgage payment to be the lowest possible, with the option to put extra money towards the mortgage at any time with most lenders. Give us a call and we would be happy to go through the numbers with you personally.

Does bankruptcy affect my ability to qualify for a mortgage? Depending on the circumstances surrounding your bankruptcy, and the extent to which you have re-built your credit history, generally most lenders will consider providing mortgage financing. If you are a previously discharged bankrupt, the best way to determine whether or not you qualify at this time is to discuss your situation with a AM Financial Mortgage Professional.

How will child support and alimony affect my 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 will 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 use gifted funds as a down payment? Most lenders will accept down payment funds that are a gift from close relatives 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. Along with proff that the monies have been depositied to your account.

What is a pre-approved mortgage and how do I get one? A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is subject to certain conditions being met before the mortgage is finalized. Conditions including: property assessment, an employment letter and income confirmation, and confirmation that down payment is from your own resources. Most realtoes 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.

Is it necessary to wait for my mortgage to mature? No. Have a AM Financial Services Mortgage Professional begin shopping around for an interest rate at least 120 days before your mortgage matures. If interest rates are lower, it may even save you money to renew early. An AM Financial Mortgage Professional can determine this for you. With a rate promised well in advance of your maturity date, any worries of facing higher interest rates are minimized. And if rates drop before the actual maturity date, the new lender will 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 may not be the best one. Always consult a AM Financial Mortgage Professional to 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.