Frequently asked questions There are a number of questions when it comes to mortgage financing. We have the answers to all those questions.

What are the different types of mortgages? There are two types of Mortgages: · Conventional Mortgage (Uninsured) and  Hi-Ratio Mortgage (Insured)

What is the Conventional Mortgage (Uninsured) The mortgage amount (loan to value ratio) does not exceed 75% of the property's value. A minimum of 25% of the property's value is supplied by the purchaser as a down payment. But from April 2007 minimum down payment required  is changed from 25% to a minimum of 20%  of the property value.  Same way LTV does not exceed 80% of the property value.

What is the Hi-Ratio Mortgage (Insured) The mortgage amount exceeds 80%, but not 95% of the property's value. Down payment is less than 20% of the property value. The purchaser is supplying a minimum of 5% as a down payment. If down payment is less than 20% mortgage is required to be insured. (for default purposes) C.M.H.C., Genworth Financial Canada (formerly GE) and AIG united Guaranty are three Mortgage Insurance firms in Canada.

What is Mortgage Insurance? Regulations state that a maximum loan to value can’t exceed 80% of the property value. In case down payment is less than 20% mortgage need to be insured for default purposes. Mortgage Insurance provides protection for the lender in case of default.

What does C.M.H.C. stand for? What role does C.M.H.C. play? Canada Mortgage & Housing Corporation. A government run program insuring mortgages under the National Housing Act.

What, when, and how much is Mortgage Insurance? If your down payment is less than 20% of the purchase price, an insurance premium on the mortgage amount is required (this premium may be added to the mortgage amount). C.M.H.C./Genworth Financial Canada/ AIG United Guaranty also charges a premium based on the following loan to values: 75-80% = 1.00% 80.1-85% = 1.75% 85.1-90% = 2.00% 90.1-95% = 2.75%

What is G.D.S.R. (Gross Debt Service Ratio), and how does it effect? The total of your principle, interest, taxes, heat, 1/2 condo fees, and payments shouldn’t exceed 32% of gross family income.

What is T.D.S.R. (Total Debt Service Ratio), and how does it effect? The total of your G.D.S. payments plus any personal loans and outstanding credits card payments shouldn’t exceed 40% of gross family income.

What is "Term" of a mortgage? What does Amortization mean with regards to mortgages? Length of time that your mortgage agreement covers & for which your interest rate is guaranteed (6 months -25 years) usually it is 3 or 5 years term.  Actual number of years it takes to pay off the entire mortgage. Or it is the life of the loan.

What is the minimum requirement for a Down Payment on? It is required to be a minimum of 5% of the purchase price of the home.But we have some Financial Institutions to provide 100% financing.

What is an Appraisal and who should conduct it? It is required by the lenders to ensure the property is sufficient security for the mortgage advance. It is completed by independent, accredited appraiser.

Why a House Inspection is recommended? House Inspection is suggested to have conducted if the house you are purchasing is older, or if newly constructed by a builder who is not under a warranty program. A House Inspection must be completed by a Building Inspector.

What about all the Legal Fees involved?  The Legal Fees includes Lawyers' fee for service plus any disbursements & G.S.T. required to register your mortgage, including Sheriffs Certificate, search on title etc.

What is Land Transfer Tax? This is a tax based on purchase price, on every purchase and collected upon closing by the Lawyer.

What is Title Insurance? Title insurance is an insurance policy that insures the property is properly and accurately registered and it is free of any unknown claims or liens against its title.

What is Property taxes? Purchaser is responsible for paying the property taxes for the portion of the year which he/she own the property.

What is a Home Insurance? Purchaser is responsible for arranging insurance on the new home in the event of fire or other damage.