Get Pre-Approved!

This is a very important step before you even starting to look for a home. Many people get excited about buying a home and want to start looking around as soon as possible. You may even hook up with a real estate agent and start considering different properties, but you need to know what you can afford before you get started. There is nothing worse than finding a home you want and not being able to afford it. Of course now you will have to look at lower priced homes and your enthusiasm fall like a rock because you are still thinking about all of those nicer homes.

Getting pre-approved not only helps you know what you can afford, but it also can save you a significant amount of interest. Most pre-approvals are good for 90-120 day rate hold. This means that you can hold the rate you have been pre-approved for this long. If the rates happen to go up and you end up buying a home in this time frame, then you are guaranteed the rate you were originally pre-approved for, not the higher rate at the time. Also, if rates happen to fall in this period, you will get the lower rate.

Getting pre-approved is a fast and easy process with no cost and no obligation. Although having a written pre-approval holds the rate for you, it is not guaranteeing you the mortgage. Once you have found a property and make an offer, the deal becomes live and will be sent in for approval. Final approval is based on satisfying special requirements like employment verification, down payment (if you have one) etc., so always make sure to put subject to financing in the mortgage contract just in case.


Make sure you deal with a professional who specializes in residential mortgages. The mortgage industry is extremely complicated with hundreds of options and choices. Using an expert can make the difference between getting into a home or your choice or having to rent forever and paying off someone else’s mortgage!

Mortgage "SMARTS" Can Save You Money

If you are shopping for a house, you may have heard of some new mortgage products on the market, with amortization periods of up to 30, 35 and 40 years. While they can mean an attractive smaller monthly payment, you should be aware of the potential consequences - such as the amount of interest you would have to pay, over the years.

Do the math and know your options before signing a mortgage contract

The Financial Consumer Agency of Canada (FCAC) recently released an update to its suite of on-line mortgage tools. FCAC's mortgage qualifier calculator and mortgage payment calculator are designed to help consumers determine, first, if they qualify for a mortgage - given their current income level and debt load
- and then how to calculate their optimum schedule of payments. FCAC's mortgage calculator can show you how many years and how much money you can save by making pre-payments on your mortgage.

These tools, together with the Agency's FCAC's on-line mortgage quiz and its publication The ABC's of Mortgages, can help you better understand your rights and responsibilities as a consumer, as well as the terms and conditions associated with the different mortgage products that are available.

Despite knowing the extra costs involved, you may still have a good reason to opt for a 30- or 40-year mortgage product. A longer amortization period may be the only way you can afford a house in today's expensive housing market. However, if you are thinking about a long-term mortgage, you should consider making accelerated bi-weekly payments. By doing so, you can save tens or even hundreds of thousands of dollars in interest over the years.

You can find more information on mortgages by consulting FCAC's Frequently Asked Questions (FAQ) database, which contains answers to a number of mortgage-related questions - from penalty calculations, to insurance products, to interest rates. To view the Frequently Asked Questions, visit the Agency's Web site at: www.fcac.gc.ca and go to the "For Consumers" section.

To obtain a free copy of The ABC's of Mortgages, call FCAC, toll-free, at:
1-866-461-3222 or visit their website at www.fcac.gc.ca.

FCAC is a federal government agency that protects consumers' rights and provides them with information about the financial products and services. - News Canada

Recently I have seen a lot of people choosing longer amortizations to take advantage of lower payments. Although amortizations are available up to 40 years with a number of lenders so far I am seeing more 35 year options. If you choose to take a longer amortization you should really consider trying to make lump sum payments throughout the year. Even a $100 every so often would help save on total interest costs. Lump sum pre-payments can range from 10% to 20% per year of the mortgage amount depending on the lender.