We’ve helped thousands of people set up their mortgages and there are common trends and mistakes that people often make. Here are some of them and our advice on how to avoid making them yourself.
Mistake 1: Assuming you’ll get approved for a new mortgage even if you already have one
This mistake is most common for people who are moving from one home to another (buying and selling). Most people assume that they can take their current mortgage to their new home and don’t realize they have to requalify for the mortgage on their new home. Changes in employment status, such as going from being a T4 employee to being self-employed, will affect your ability to qualify for a mortgage. To avoid this, get pre-approved! This process is very easy now, as we can collect your information in a secure format online and we even meet you online at your convenience. Super easy!
Mistake 2: Waiting to the last minute
People have different perceptions of time, but in the mortgage world 30 days is last-minute. Many lenders can take up to two weeks to decide on a mortgage approval and issue a full mortgage approval. To avoid this mistake, start early and make sure you have all your info together (don’t worry – we’ll help with that!). It’s important that when you complete your mortgage application, you have all your income documents ready to confirm your income. Two years of income tax returns, recent pay stubs and letters of employment are all standard and are required up-front when you complete the mortgage application. Why? It’s so we and the mortgage lender can get a full understanding of your income and employment situation. Trust us, we hate surprises more than you!
Mistake 3: Taking a fixed rate instead of a variable rate
If your debt-to-income ratio is low, (if you’re not sure what that is, we’ll let you know at your first appointment), you’ll want to consider taking a variable-rate-mortgage instead of a fixed-rate. Why? Even though rates will fluctuate with variable-rate-mortgages, if your income is strong and stable you’ll be able to sustain any increases in the interest rate. Over the long-term you’ll pay significantly less interest on the variable-rate-mortgage. Did you also know that you can lock-in from a variable-rate-mortgage to a fixed at any time without a penalty? We’ll help you avoid this mistake by looking at your individual situation, and finding the right mortgage fit for you with our expert advice and insights.
Mistake 4: Not understanding how to use home equity to build wealth
Your home is one of the largest sources of wealth that you may have, but many people don’t realize that. Avoid this mistake by taking full advantage of the equity you’ve built up in your home! You can easily access the equity through a secured line of credit and use it to invest in the market, or other properties, that help build your wealth. Whenever you use the equity in your home to invest (if it’s not RRSP investments) the interest in most cases on the secured line of credit is tax deductible. We also arrange secured lines of credit at The Mortgage Centre.
Mistake 5: Just looking at the rate of the mortgage
Mortgages are more than just an interest rate – there are so many features in a mortgage that can help you – and also hinder you. Often deeply discounted mortgages have significant pre-payment penalties or are inflexible and won’t allow you to make extra payments when you want. Most people also make the mistake that the lowest rate is also going to give you the lowest payment, which isn’t always the case. We can help you avoid unwanted surprises by explaining the “fine-print” and helping you understand what advantages and disadvantages the mortgage you’re looking at has.
We love helping people with their mortgage. I know you think it’s weird but it’s very fun and rewarding for us to help you get the best possible mortgage available to you and grow your real estate wealth (and pay off your debt!!). Connect with us to book your first appointment – we’ll be sure to guide you past these common mistakes to find the right mortgage for you! /contact-us/