4 Questions You Should Ask Your Mortgage Lender

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A home is usually one of the largest purchases you make in your lifetime. It requires a large financial commitment. This is why it is important to gain knowledge and understanding at the early stage of your home buying journey.

Whether buying for the first time or refinancing a mortgage, asking the right questions is key. Homebuyers should familiarize themselves with terms like mortgage fees, interest rates, and loan terms. At Cambrian, personalized advice and simplifying banking are top priorities. Rest assured that our advisors will guide you each step of the way.


Questions to ask your mortgage lender

1.      How much home can I afford?

When starting to consider the home buying process, it is important to know your budget and how much your lender is willing to borrow you. Your lender can help you determine how homeownership will affect your expenses.  We advise that your gross debt-to-income service ratio (GDSR) should not exceed 32% of your gross monthly income. That means all costs associated with owning your home (mortgage, property taxes & utilities) must be less than 32% of your gross income before taxes and deductions.

You can take advantage of our Home Affordability Calculator to find out what you can afford to buy and what your mortgage payments would be.


2.      Are there any programs to assist me with my down payment or closing costs?

Depending on where you live, many programs can assist homebuyers with the down payment, especially for first-time homebuyers.

In Canada, first time homebuyers can borrow up to $35,000 from their RRSP without penalty as long as they meet the requirements set by the federal government.

There are also province-specific plans to assist first-time homebuyers. For example, Manitoba’s Rural Homeownership Program helps first time homebuyers purchase a home in select rural areas of the province by providing down payment assistance, land transfer tax rebates and grants. 


3.      Is there a prepayment penalty?

A prepayment penalty is a fee that you have to pay if you pay off your mortgage early or put down a lump sum. When discussing the terms of your mortgage with your lender, it is important that you find out any penalties associated with your mortgage terms. If you plan to pay off your mortgage early to save on interest, be sure to confirm that your lender will not penalize you.

You can also ask your lender about their refinancing process so that you have all the information you need if you decide to change your loan in the future.

At Cambrian, we love helping you save time and money. This is why you can choose to pay up to an additional 20% of your original mortgage balance every year without penalty.


4.      What are the total costs?

When buying a house, the cost of the house is not the only thing you need to consider. Additional costs such as property taxes, mortgage loan insurance (if your down payment is less than 20%, you will need to buy a mortgage loan insurance), home inspection, appraisal fee and legal fees should also be considered.

To be fully prepared financially, consider asking for an estimate of these costs upfront before you apply for the mortgage.


Your Next Steps

We understand that buying a home can be an overwhelming process. This is why our advisors prioritize your needs, provide personalized advice, and walk with you throughout the process. They are experts who live in and intimately know the Winnipeg & Selkirk markets. If you are ready to get started meet with a Cambrian Lending Specialist, to discuss your options.