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September 21, 2017

Frequently Asked Questions

Frequently Asked Questions


Mortgage terms refers to the span of time that you and the bank agree you will pay a certain rate or in the case of variable mortgage, how long the rate will fluctuate. Usually at the end of a term, you sit down to refinance your mortgage – at which point you can also change from a fixed to a variable rate or vice-a-versa.

The amortization period is the number of years it takes to repay your mortgage in full. Often when you first get a mortgage it is amortized over 25 years. This means that if you maintained those terms and payment periods, your mortgage would be paid off in 25 years. However, in most cases the amortization period changes because different borrowing terms, interest rates and payments against the principal amount at each renewal vary the length of time required to pay off the mortgage. For example, going with a shorter amortization period – say 15 years for example – will result in higher payments per period, but save you money in interest by enabling you to retire your mortgage sooner.

An open mortgage gives you the most flexibility in making extra payment on your mortgage principal. It even lets you pay off your mortgage entirely whenever you wish to. The closed mortgage however offers little to no privileges in paying off your mortgage early. Lenders charge you a prepayment penalties if you do so. But take note, not all closed mortgages are created equal. Check with your mortgage consultant as to how your prepayment penalties are calculated.

A mortgage for more than 75% of the property value. Whenever you need a mortgage loan that is greater than 76% to 90% of the current market appraised value of your home it is considered a high ratio or insured mortgage. If you are a first time home buyer then you can borrow up to 95% value and only need to come up with a 5 percent minimum down payment. The Canada Mortgage and Housing Corporation (CMHC) insures the lender in case you default on your loan. You must pay for this insurance premium which is usually tacked on top of your loan. If the mortgage lender feels that you are still a risk for default even though you have paid more than 25% down the lender can insist that you insure the mortgage anyway. However, in this situation a mortgage consultant would probably shop this mortgage to a lender that didn’t insist on insuring. The fees for CMHC can be as high as 2.5% of the mortgage principal but is often not noticed by a borrower because of being added to your mortgage principal. Rates for a high ratio loan vary widely between lenders so it is best to use a mortgage consultant to explore the best options for you.

A Co-signer is placed on the mortgage and is registered on the title. A Guarantor signs a document that personally guarantees the mortgage. Most banks will do both. Some banks prefer that co-signer live on the property.

A second mortgage is simply an additional mortgage resgistered against the title of you home. Some lenders call it a “Home Equity Loan” or “Home Equity Line of Credit” and since these types of loans are registered against the title of your home as a second charge – they are all second mortgages.

The purpose of a pre-approval is to confirm in writing the maximum amount of money that you can rely on for mortgage purposes. When interest rates are fluctuating, it’s an advantage to know what your borrowing limit is before you start house hunting. With a pre-approval, a lender will guarantee you for a specific mortgage amount for a period of time. If the mortgage interest rate drops before the lender advances the funds for a mortgage, you are given the lower mortgage rate. If the rates rise, you are given the rate at the time you had the mortgage pre-approved.

No. The lender is not under any obligation to mortgage renewal. It does not ‘automatically’ renew. In fact if you have ‘missed’ or been late with any payments the lender could use this as an excuse not to renew with you. A loss of a job or a divorce may be another reason. But, in truth, no excuse is necessary for the lender to call your loan. This can not be understated. For example, it is common for businesses to find their commercial mortgages NOT renewed for any reasonable reason at the end of term. And this may be no fault of the business that paid their mortgage payments on time. A bank could refuse to renew because they don’t like the economic climate of a particular geographic area or even a type of industry a business operates in. Think about the hardships suffered. For this reason alone it is critical for businesses and homeowners to obtain a quote from a mortgage consultant 60 to 90 days before their current mortgage matures. This way if your current lender does not offer you a renewal you have a backup lender in the wings. If you use a mortgage consultant you will often benefit with a lower rate anyway.

Often a lender will attempt to charge a renewal fee or tempt you to renew without a fee if you sign within a certain ‘time offer’ at their posted rates. Please keep it mind that if you use a mortgage consultant it is very, very rare for you to ever pay a renewal fee. For all conventional residential mortgages there will not be a fee because the mortgage consultant will shop the market for you and find a lender that doesn’t charge a fee AND will beat your current lender’s mortgage renewal rate!

Yes! A decent general guideline is whenever making a change will bring about a 2% – 3% interest rate saving. This is popular to the point that it even has a name -the ‘break and run’ technique in the lending business. The enhanced rate change will assimilate any prepayment charge throughout the following 5 years in any switch when the spread between the old rate and the new mortgage rate is great enough. Check with a mortgage consultant as frequently he or she can discover extra motivating or arrangements that repay a few or the majority of your prepayment penalties. If you switch and keep your mortgage loan amount the same there are usually no legal fees involved – just a simple ‘no fee’ switch with the new lender.

No. If you switch from one lender to another at your renewal date there will not be any penalties whatsoever. If you switch before your maturity date or renewal time there may be a penalty. If you have an open mortgage there probably will not be any charge. If you have a closed mortgage you will most likely have a cost. It is important to consult with a mortgage consultant so that you can determine whether or not a ‘break and run’ strategy will work for you. Often your penalties can be minimized when a mortgage consultant finds a new lender anxious for your business. A new lender will often assist with incentives to lure you over to them. Sometimes the incentive can be as high as a 3% cash back offer that can be used towards any prepayment penalties.

The usual thinking is that you should take a longer-term to lock in low interest rates; when interest rates are higher, you should look to a shorter term – 6 mos. or 1 year. Whenever the interest rate spread between short term and a long-term mortgage rates are significant it is always better to take the shortest term possible. Currently, rates are historically very low, so most people are locking in for terms of 5 or even 10 years.

Fixed mortgage interest rate charges a set rate of interest that does not change throughout the life of the loan. While the Variable Mortgage interest rate changes based on the market condition but the mortgage payment remains unchanged.

Your Guide Towards a Speedy Approval
Getting a mortgage in Canada can be a time consuming process so an organized approach can help to speed up the process towards a successful approval. The good news is that there are a number of mortgage resources available for first time home buyers and experienced home owners See more

What is OFSI?
The Office of the Superintendent of Financial Institutions Canada (OSFI) is an independent agency of the Government of Canada, established in 1987 to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks. See more

Mortgage Supporting Documents
What is B20 and how it has changed the mortgage industry in Canada since the beginning of the economic slowdown in 2008. For this reason Lenders and Mortgage Default Insurers are requiring more supporting documents prior to approving your final mortgage application. It is best to gather as much documentation upfront as possible to ensure a smooth and accurate mortgage process. The following are examples of documents that may be requested to support your mortgage application.
See more

What identification is needed for a Mortgage in Canada?
In order to satisfy Canada’s anti-money laundering regulation governing the opening of a mortgage account lenders require two pieces of valid identification. See more

A credit report is a summary of your financial reliability a history of how consistently you pay your financial obligations. This is created when you first borrow a money or apply for credit and is built over time. To understand more on credit report, click HERE.
Here is a sample consumer credit report. For more information or to get your credit report visit Equifax or Transunion.

A credit score is a number that illustrated your financial health at a specific point in time. This is used by mortgage professionals to assess your credit risk at that time. To understand your credit score click HERE


Yes. We at Cashin Mortgages and Refresh Financial can help you rebuild your credit score and change your financial future. Click HERE HERE for more information on how we can help you.

Reverse Mortgage FAQs


A reverse mortgage is a way for people age 55 and older to turn up to 50% of the equity in their home into tax-free cash. It’s a loan secured against the value of your home that does not require monthly payments for as long as you live in your home. Click Here to learn more.

A Reverse Mortgage is a tool that many seniors should consider using when creating additional income is important. This is a special type of home loan that allows the homeowner to borrow against the equity built up in the home. These loans are only available to individuals over the age of 55. With this type of loan, the homeowner can choose to receive regular payments from the lender. The benefit of these loans is that the homeowner is not required to repay them during their lifetime.Even if the equity in the home has been used up, the lender does not have to be repaid as long as the homeowner still lives in the home. Some new reverse mortgage products have been introduced into the Canadian market that no longer has the age restrictions and you can be any age.

A Reverse Mortgage application typically takes 30-45 days from inception to completion and consists of five essential components. However, the decision-making process leading to the application is the most time-consuming part of the Reverse Mortgage process.

There are one time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as our fee for administration, title insurance and registration. With the exception of the appraisal fee, these fees are paid for with funding dollars.

Reverse Mortgage is exclusively designed for Canadian homeowners 55 years old and above. To qualify you and your spouse must be 55+. Your home is your principal residence. Any loans secured by your home must be less than funds available from CHIP.

To be qualified for a Reverse Mortgage, you do not need to have a certain minimum credit score. Lenders’ primary concern is whether or not you can pay the ongoing expenditures of maintenance for the house. However, lenders will investigate whether you have any overdue tax obligations.

The procedure is easy. To get a quick estimate and get any questions you might have about Reverse Mortgages answered, get in touch with one of our professional agents at Cashin Mortgages by clicking here. We will gather some details about you and your house if you’re interested in learning more. It takes roughly 15 minutes to do this.Our agent will call you to discuss the outcome once this procedure is finished.
If your application for a Reverse Mortgage is granted, our agent will send you a Commitment Letter outlining your available funds, the main terms and conditions, and important details you should be aware of.

Every client considering a Reverse Mortgage is required by law to seek independent legal counsel from an attorney first. The majority of the time, the lawyer’s fees are subtracted from the proceeds of the Reverse Mortgage. When you’re prepared to proceed, your attorney will assist you in signing the necessary mortgage forms. You will select a delivery date for the money as well as the bank account where it should be deposited.

You have obligations and responsibilities with a Reverse Mortgage loan, just like with many other sorts of loans and legal contracts, and you must fulfill them to remain on the right side of your Mortgage agreement. These obligations include:

  • keeping the status of primary residence
  • paying real estate taxes
  • upkeep of the property
  • obtaining insurance

It is based on the borrower’s age, on the one hand. Also, it is subject to the home’s evaluated worth. You can access up to 55% of the value of your home.

A pre-qualified Mortgage is merely an estimate, unlike a pre-approval. It utilizes your basic financial data to determine the size and interest rate of the Mortgage you are eligible for. Meanwhile, a pre-approved mortgage is a more precise version of a pre-qualification. It is supported by voluminous paperwork, and the lender will give you a formal pledge. A Mortgage pre-approval also allows you to lock in the interest rate for up to 120 days, whereas a pre-qualification is just an estimate.

The amount you are entitled will depend on your age, your spouse’s age, your home value, type of property and location of your home.

No, because you do not make monthly payments. Cashin Reverse Mortgage does not require income verification or credit checks.

No. There are no payments required unless you move or sell your home.

No. You will remain the owner of your home. You and/or your spouse can stay in your home as long as you wish. We only require you to pay your property taxes, home insurance and keep your property well maintained.

We will first pay off your existing mortgage and then give you the remaining proceeds.

Yes, but a prepayment charge may apply. 10% of the amount owing can be paid once per year provided the payment is made within 30 days of your anniversary date without a prepayment charge.

Some lenders may provide recourse loans as an additional risk-reduction strategy.
In the event that a borrower misses a recourse loan, the lender may take possession of a sizeable percentage of the borrower’s assets, including those that were not specifically included as collateral in the loan agreement.

A loan secured by collateral, typically real estate, is referred to as a non-recourse mortgage. Even if the collateral’s value is less than the debt, it is customary that just the collateral can be recovered in the case of the debtor’s bankruptcy.

Any recourse loan carries risk for the borrowers. The borrower will also be obligated to pay the full amount if the asset that is mortgaged loses value. However, borrowers who truly need the money and want to return it in full shouldn’t be concerned about the recourse condition. These loans are easy to secure because the lender is not exposed to risk and can seize whatever asset they see appropriate.

There are many advantages to reverse mortgages. It permits you to continue living in your current house; the lender cannot compel you to leave or sell it. Flexible payments: You are not required to make monthly payments, and you are even free to wait and pay off the entire loan when you sell your house in the future. Additionally, it significantly boosts your cash flow, dramatically altering your retirement way of life.There are a few drawbacks that need to be considered in terms of the disadvantages. The potential for extremely high-interest rates is one of the downsides of a reverse mortgage. Costs mount up each month that you must repay. As a result, when it comes time to repay the loan, you might find that you have less money than you anticipated. However, you have no influence over how interest rates may fluctuate. You may end yourself paying more than you anticipated due to fluctuating interest rates. This is especially true if you postpone payment for a long time.

HELOC FAQs


A Home Equity Line of credit is a type of loan that allows you to withdraw funds from an account as needed, up to a certain credit limit. This operates similarly to a credit card; a credit card is frequently supplied by the lender to allow you to draw on the line of credit. The credit limit is specified in the loan agreement and is decided by the equity available in your home’s appraised worth. A home equity line of credit is a type of secured financing in which your house serves as security.

Instead of borrowing a flat sum, a HELOC allows you to borrow money as needed. Even if your overall credit line is large, you only pay interest on the cash you spend. In most cases, you have ten years to withdraw money and pay interest only on the amount you withdraw. Then you have another 20 years to repay the principal plus interest. HELOC interest rates are often flexible, so they move with the market.

To qualify for a bank’s home equity line of credit, you must demonstrate your ability to make payments at a qualifying interest rate, which is often higher than the actual rate in your contract.
Lenders normally require at least 15% to 20% equity in your home to qualify for a home equity loan or HELOC. A strong credit score is also necessary. A typical home equity line of credit requires a credit score of at least 620. A good credit score can also qualify you for a lower interest rate. In general, the better your credit, the lower your interest rate. A total loan-to-value ratio of 80% or less is also required by most lenders, as is a low debt-to-income ratio.

A home equity line of credit may allow you to borrow up to 65% of the purchase price or market value of your house. This does not imply that you must borrow the entire amount. Borrowing less money may make it easier to manage your debt. During the draw time, you can use HELOC money with specific checks or a draw card.

A home equity loan enables you to borrow a lump sum of money against the equity in your property. A HELOC, like a home equity loan, leverages the equity in a property but allows homeowners to apply for an open line of credit. You can then borrow up to a predetermined amount on an as-needed basis.

The equity in your property serves as collateral for a home equity loan. An unsecured personal loan is what a home improvement loan is.
A home equity loan has a larger loan amount, a longer term, a lower interest rate, and typically takes longer to obtain than a home improvement loan.

A financial institution must make an application for a home equity line of credit in Canada. Before asking for a loan, make certain that you have paid off any outstanding debts on any existing loans. The optimal form of a line of credit program for you will depend on whether you’re borrowing the maximum amount, how much accessible credit you have, and if you prefer a fixed or variable interest rate.
You’ll need to know how much your house is worth, as well as have paperwork proving your household income, social security number, and any outstanding balances. A mortgage statement, a property tax bill, and a copy of your homeowner’s insurance policy will also be requested by lenders.

A HELOC is divided into two phases: the draw time and the payback period. During the draw term, which is normally 10 years, you borrow money as needed, with necessary monthly payments covering only the interest. You cannot borrow money during the payback period, and you must repay both the principal and the interest over 20 years.

In general, the interest rate on your HELOC might change as frequently as once each month. Your lender, on the other hand, will notify you when rates may change, and you will be able to view the changes on your statement before your payment due date.
If you want to convert a variable HELOC to a fixed interest rate, you need first determine whether this is an option. Not all lenders permit this, but if they do, the process is rather simple. You will have the option of converting all or a portion of your balance to a fixed interest rate throughout the draw period.

You can lock in a portion of your debt at a set rate with the fixed-rate HELOC advance option. These are a subcategory of your principal HELOC and can be paid off at any moment, releasing funds from your line. A fixed-rate advance HELOC provides you with flexibility by allowing you to lock in the interest rate for the duration of the loan. If you want the predictability of knowing what your monthly payment will be and the security of a fixed rate in a rising interest rate environment, a fixed-rate advance could be the ideal answer for you.

Lenders impose annual membership/account maintenance fees to keep your home equity line of credit operational. These can range from as little as $5 to as much as $250 for annual account maintenance.

When you apply for a HELOC, the lender will examine your credit, which could also temporarily reduce it. However, if you haven’t lately applied for additional credit, the impact will be modest. It’s critical to manage your credit because a HELOC often has a considerably higher debt than a credit card.

The interest on a HELOC is often tax-deductible. There are, nevertheless, some guidelines for deducting interest. To deduct HELOC interest, you must spend the money on renovating or repairing the property used to secure the loan.
You can even buy an Airbnb property using HELOC financing secured by your principal residence. The interest on the HELOC is deductible against your rental revenue in this circumstance. In contrast, if only a portion of the HELOC was used to buy the investment property, only a portion of the interest is deductible.

You can apply for a new home equity line of credit with your existing lender or another bank to refinance your HELOC. The procedure is similar to the first time you open a HELOC. You’ll need to fill out an application and supply information regarding the equity in your home, your credit score, your job, and your revenue.
A balance transfer can be used to pay off your home equity loan.

You will have a few options when it comes to withdrawing funds from your HELOC. You can often remove funds from a HELOC using the following procedures: Credit card, check, cash withdrawal from a bank branch, online account transfer, or phone request for account transfer. When you take up a HELOC, some lenders will require you to withdraw a minimum amount of cash upfront, while others will not. You will be unable to make withdrawals once your credit line has been exhausted.