Mortgage Basics - Questions?


Here are some frequently asked questions about getting a mortgage.
Welcome to the FirstLine Mortgages FAQ the best starting point for your frequently asked questions about Mortgages. When you have a question, the answer is most likely on this page.
 
  1. How do I take equity out of my existing home for personal reasons? Are there any restrictions?
  2. What does a mortgage broker do?
  3. What are the costs of using a mortgage broker?
  4. What are the advantages in using a mortgage broker?
  5. What are the benefits of applying for a preapproved mortgage?
  6. What is mortgage default insurance?
  7. How can I pay off my mortgage faster?
  8. Where can I get information on the types of mortgage security (standard or collateral charges)?


How do I take equity out of my existing home for personal reasons? Are there any restrictions?
 
Provided you have a minimum of 15% equity instead of 20%, you can take equity out of your home. If there is less than 20% equity, an insurance premium will be added and an insurer must approve the deal. If you want to discuss this FirstLine option with one of our brokers, please click How to get a FirstLine Mortgage on the left menu bar.
 
What does a mortgage broker do?
 
A mortgage broker works on your behalf to provide insight and knowledge with respect to many lenders' products and policies. A mortgage broker is aware of market trends and present mortgage rates and can provide you with a mortgage product best suited for your individual needs.
 
What are the costs of using a mortgage broker?
 
In today's environment a typical mortgage broker is paid by a lender for an applicant that meets the lender's underwriting guidelines. The costs of a mortgage broker's services should be minimal, if not zero.
 
What are the advantages in using a mortgage broker?
 
A mortgage broker can save you not only time, but also heartache. With the experience and knowledge gained by specializing, the mortgage broker will ask you all the right questions to present your application in its best possible light. By giving the information to the mortgage broker, he then can present it to the lender in a form the lender will accept, in turn making the mortgage application experience less stressful.
 
What are the benefits of applying for a preapproved mortgage?
 
A preapproved mortgage is a preliminary approval of your application to a maximum amount at a fixed rate. It tells you exactly how much you can afford to spend on your home and what your payments will be. Your rate is fixed for a certain period which means that if rates go up during that period, you keep your fixed rate but if they go down at time of your purchase, you get the lower rate.
 
What is mortgage default insurance?
 
If your downpayment on your purchase is less than 20% of the value of the property, your mortgage must be insured against payment default by a government agency or approved private insurer. You will have to pay a one-time premium which can be added to the principal amount of your mortgage.
 
Information on Mortgage Default Insurance
 
How can I pay off my mortgage faster?
 
There are a couple of options available to you:
  1. take advantage of all prepayment privileges allowed by your lender
  2. increase your payment frequency, i.e. weekly instead of monthly
  3. choose the shortest possible amortization period
Where can I get information on the types of mortgage security (standard or collateral charges)?
 
For general information on the types of security that can be taken by a lender for a mortgage loan or real estate- secured line of credit, please visit The Canadian Bankers Association website for information on standard charges and collateral charges:
Information on Mortgage Registration Types

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