August 26th 2022
Mortgages in Canada: 9 FAQs answered by an expert
For both new and seasoned homebuyers, the term can be a lot to unpack. But fear not: with the right experts in front of you, mortgages can be easier to understand than you think. And no question you have about them is too big or too small!
In this rapid-fire mortgage roundup, we asked Properly’s General Manager of Mortgages, Muhammad Rashid, to answer some of the internet’s most asked mortgage questions, and give you a refresher course on this very important piece of the home-buying puzzle.
1. What is the mortgage “stress test”?
“The mortgage stress test is a method used to determine if you'll be able to sustain your mortgage payments in the event that an interest rate hike occurs.”
2. What is a reverse mortgage?
“A reverse mortgage allows a customer to leverage their equity in their home in exchange for a loan or cash advances without the requirement of a monthly payment (which accrues over time).”
3. Are mortgage rates going up in Canada?
“In the current landscape, as the government continues to increase interest rates in an effort to combat inflation, we expect mortgage rates to continue to rise until we see inflation taper off.”
4. How does your credit standing impact the mortgage application process?
“Your credit standing serves as a signal to a lender to help them understand your ability to repay debts. Here at Properly, we have access to a variety of banks, including Alternative Lenders who specialize in providing mortgage financing to customers with bruised credit. We can leverage flexible mortgage products to help place a customer into a mortgage."
5. Mortgage vs. loan: What's the difference?
“A mortgage is a type of loan, typically used to finance a property. A loan is, effectively, gaining access to funds in exchange for a promise to repay the funds based on specified terms over an agreed-upon period of time.”
6. How hard is it to get approved for a mortgage?
“There are a number of factors, like income and credit that contribute to qualifying for a mortgage. In most situations, qualifying for a mortgage isn't difficult, but the amount you qualify for can at times can be challenging, depending on those factors.”
7. What's a bridge loan?
“A bridge loan is a short-term loan typically used to cover the gap between when you've closed on a new home and when your existing home has sold and closed. It allows you to extract the equity available in your current home to use as a down payment on the purchase of your next home.”
“Bridge loans usually don't exceed a 90-day period, and require interest-only payments for the duration of the loan. A firm sale on your existing property is required to obtain one.”
8. Where can I keep up to date on the latest mortgage news?