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Frequently Asked Questions

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Below are answers to the most frequently asked questions about mortgages at GN Mortgages. Don’t see your question? Call us to speak with a mortgage specialist.

Q. What is a fixed rate mortgage?

A fixed rate mortgage comes with a fixed interest rate for a specific term. This type of mortgage allows you to ‘lock-in’ your interest rate for the entire term of your mortgage, so that you don’t have to worry about interest rate fluctuations. You’ll know what to expect, including:

  • The interest rate of your mortgage
  • The amount of your mortgage payments
  • The segment of your payment that goes toward principal and interest
  • The time it will take you to pay off your mortgage

Q. What is a variable rate mortgage?

Unlike a fixed rate mortgage, a variable rate mortgage does not come with a rate guarantee for a specific term. With a variable mortgage the interest rate fluctuates based on the RBC Prime Rate. Depending on the course of the RBC Prime Rate, a variable mortgage could help you save dollars in interest over your mortgage’s life.

Q. What’s the difference between closed and open mortgage terms?

A closed term mortgage is an ideal choice if you do not have plans to pay off your mortgage in the short term. You will have to pay a prepayment charge if you wish to pay off your mortgage balance before the end of its term or renegotiate your interest rate. For closed mortgage terms, the interest rates are generally lower than open mortgage terms.

Open term mortgages are an ideal choice if you have plans to pay off your mortgage in the near future. This type of mortgage can be repaid either in part or in full without any prepayment charges. You can also convert open mortgages to any other term, at any time, without any prepayment charge. Interest rates for open mortgage terms are generally higher than closed mortgage terms because of their pre-payment flexibility.

Q. What is the difference between refinancing and renewing?

Refinancing is the process of arranging a new mortgage for an increased amount before the end of your term. Often homeowners re-finance to access some of the equity they’ve built up in their home to take the funds to renovate or consolidate debt.

Renewing is when your mortgage enters the end of its term. You can either choose to pay it off fully or partially without any penalty, or you can renew your mortgage for another term of your choice.

Q. How do I choose the right mortgage for me?

Choosing the right mortgage involves understanding the range of features and options available to you, as well as your situation, budget and goals. The more you understand, the more comfortable you will be choosing the right mortgage for your unique needs.

While there are many things to consider, such as fixed or variable rate, open or closed, short– or long–term, we’re here to offer sound advice on the various features and options, some of which may help you to save thousands of dollars in interest cost over your mortgage’s life.

If you’re a first time home-buyer and need guidance, speak with one of our mortgage specialists.

Q. How much money should I afford to pay for a home mortgage?

Taxable income has to be determined in order to calculate the mortgage amount. Monthly payments and outstanding debt is also taken into consideration. On an average, you should dedicate 32% of your income towards mortgage duties and property taxes. It is also recommended that you dedicate 40% of your taxable income towards credit card payments, car loans and other insignificant debts. Lender’s guidelines better help understand the exact amount required to pay off mortgage. Always ensure that you are able to afford general necessities and simple luxuries of your life.

Q. What is a home inspection and how important is it?

Home inspection services include a detailed visual inspection of your potential property. It helps determine the condition of the home in full detail from a qualified home inspector. The inspector checks the entire home including attics, rooms, bathrooms, flooring, wooden work, electrical, heating, water proofing, plumbing and much more. It gives the buyers a fair idea about the general quality of home furnishings. The detailed report is provided within 24 hours. You can very well estimate the cost of home repairs, if any.

Q. What is the minimum down payment required to purchase a home in GTA region?

Regardless of the area, lenders require you to pay a minimum down payment of 5%. But this can further depend on the maximum price restrictions. Besides the down payment, you must have the money to cover closing costs, appraisal fee, disbursements and other related expenses.

5% down payment can also come from family members as gift. In case of non-resident Canadians, the minimum down payment accepted is 10%.

Another important facet is that mortgages where less than 20% down is provided, there must be a CMHC, Canada Guarentee or Genworth approved mortgage loan insurance with the application.

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