Blog Post

What You Need To Know About Online Mortgage Calculators

Anita Groves • Feb 08, 2023

You’d think an online calculator is a pretty straightforward device, one that you should be able to place your confidence in, and for the most part, they are. Calculators calculate numbers. The numbers are reliable, but how you interpret those numbers, not so much, especially if the goal is mortgage qualification.

If you rely on the numbers from a “What can I afford” or “Mortgage Qualification” calculator without talking to an independent mortgage professional, you’re going to be misinformed.

Don’t be fooled. Even though an online mortgage calculator can help you calculate mortgage payments or help you assess how additional payments would impact your amortization, they’ll never be able to give you an exact picture of what you can afford and how a lender will consider your mortgage application.

While mortgage calculators are objective, mortgage lending isn’t. It’s 100% subjective. Lenders consider your financial situation, employment, credit history, assets, liabilities, the property you are looking to purchase. Then, they will compare that with whatever internal risk profile they are currently using to assess mortgage lending. Simply put, they don’t just look at the numbers.

An online calculator is a great tool to help you run different financial scenarios and help assess your comfort level with different payment schedules and mortgage amounts. However, if you rely on an online calculator for mortgage qualification purposes, you’ll be disappointed.

The first step in the mortgage qualification process is a preapproval. A preapproval will examine all the variables on your application, assess your financial situation, and provide you with a framework to buy a property based on your unique circumstance.

Securing a preapproval comes at no cost to you and without any obligation to buy. It’ll simply allow you the freedom to move ahead with confidence, knowing exactly where you stand. Something a calculator is unable to do.

Please connect anytime if you’d like to talk more about your financial situation and get a preapproval started. It would be a pleasure to work with you.

< Older Post

Newer Post >

Anita Groves

PROFESSIONAL MORTGAGE BROKER

Download My Mortgage App HERE

How To Establish New Credit

By Anita Groves • 18 Sep, 2024

If you’re new to managing personal finance and you want to learn about credit, you’ve come to the right place. Establishing new credit is a bit of a catch-22. To build a credit history, you need credit. But it’s hard to get credit without having a credit history. So, where do you start? Well, the first thing you should know is that building credit takes time. It’s not something that happens overnight. If you’re looking to secure mortgage financing, you will want to have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for at least two years. If you don’t have any credit yet, the best time to get started is right now. However, that may be difficult because, as we've already identified, without a credit history, most lenders won’t feel confident about taking a chance on you. What’s the solution? Consider a secured credit card. With a secured credit card, you make a deposit upfront that matches the amount you want to borrow. A reasonable amount would be $1000 deposited on a single secured credit card. You then use your secured credit card to make household purchases and regular utility payments, paying off the total balance each month. If you default on the money borrowed for whatever reason, the lender will retain the money you put up as collateral. When looking for a secured credit card, be sure to ask whether they report to the two nationwide credit bureaus, Equifax and TransUnion. If the credit card company doesn't report, the credit card account will be useless for your purposes; move on until you find a company that reports to both credit bureaus. Once your secured credit card begins reporting to the credit bureaus, you begin to have a credit score; usually, this takes about three months. Now you can start to seek out a second trade line in the form of an unsecured credit card. Don’t forget to ensure that this card reports to both of the credit reporting agencies. Another option at this point could be a car loan. From here, you simply want to make all your payments on time! But what happens if you’re looking to secure mortgage financing before you have a fully established credit report? Well, if you have someone who would consider co-signing, you can certainly go that route. The mortgage application will depend on their income and credit report, but your name will be on the mortgage. Hopefully, when the mortgage is up for renewal, you’ll have the established credit required to remove them from the mortgage and qualify on your own. Although establishing credit takes a minimum of two years, it really begins with putting together a plan. If you’d like to discuss anything credit or mortgage-related, please get in touch!

New Mortgage Rules and CMHC Updates: A Guide for First-Time Buyers

By Anita Groves • 17 Sep, 2024

In Budget 2024, the Canadian government introduced significant changes to help first-time homebuyers by extending mortgage amortization periods up to 30 years for those purchasing newly built homes. Effective August 1, 2024, this change will help ease monthly mortgage payments, making homeownership more accessible. Key Eligibility Criteria for First-Time Buyers: First-Time Buyer Status: At least one borrower must qualify as a first-time homebuyer, meaning they have either never owned a home, haven't lived in a home they owned in the past four years, or recently went through a marriage breakdown. Newly Built Homes: The property must be a newly constructed home that has never been occupied. These extended mortgages will only apply to high-ratio mortgages (loans covering more than 80% of the home’s purchase price) and are limited to owner-occupied properties. All other mortgage insurance eligibility criteria remain unchanged. CMHC’s New Amortization Rules for Market MLI and MLI Select Programs The Canada Mortgage and Housing Corporation (CMHC) has also introduced changes. As of June 19, 2024, the maximum amortization period for new construction market projects will increase from 40 years to 50 years. Additionally, the maximum period for re-amortization (for default management) will extend to 55 years for loans under the MLI Select Program. These changes aim to encourage the construction of more rental housing units while managing housing affordability. CMHC’s modifications also include updates to energy efficiency criteria, lowering the maximum points from 100 to 50 based on energy efficiency, which means developers may need to shift focus toward affordable units to receive maximum benefits. Changes to "Use of Funds" and Refinancing CMHC has lifted restrictions on how refinanced funds can be used, reverting to pre-2020 rules. This allows non-approved lenders to offer bridge loans, creating more flexibility in financing options. Environmental Site Contamination Policies In response to industry practices, CMHC is reviewing its environmental site contamination policies. For now, projects with known site contamination will be accepted under conditional approval, pending a contamination-free site confirmation. Why These Changes Matter For first-time homebuyers, the ability to spread mortgage payments over 30 years is a welcome relief in today’s housing market, particularly for newly built homes. These changes are designed to improve housing affordability and supply, especially for younger Canadians looking to purchase their first home. Meanwhile, CMHC’s new rules around extended amortizations and energy efficiency adjustments will have a significant impact on developers, especially those focused on building rental properties or using energy-efficient technologies in their projects. If you're considering buying a home or developing a property, these changes could impact your strategy. To fully understand how these updates may apply to your situation, it's important to consult with a mortgage expert who can offer personalized advice. Want to know how these changes could affect your home buying or property development plans? Book a call with a mortgage expert today to explore your options!