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Mortgage Questions You Should Ask

We have comprised a list of mortgage questions to guide through the maze of home financing.  This list is a general overview of  question  that each individual should ask themselves. Mortgage Rates are not the only important factor when financing your home, prepayment privilege, penalty calculations, collateral mortgage can  all have consequences that you may not have prepared for.   When specific question arise that need to be addressed in unique circumstance, contact our mortgage brokers for the lasted information on lender guidelines and how it can effect you. This  list is for reference purpose only, use it to comprehend your individual situation when  financing your home.

Use this list to ensure you are asking all the right mortgage questions

 

Income / Personal Questions

 

  • How secure is my income?
  • Do I expect house hold income to increase, decrease, or stay the same?
  • Do I plan on having children or supporting relatives in my home?
  • Will this raise my living expenses?
  • Do I have money set aside for unexpected expenses or emergencies?
  • Do I plan to purchase property with someone else?
  • If yes, how dependent am I on my partner’s financial contribution?
  • Do I plan to generate income from renting all or part of my property?
    • If yes, have I considered:
    • lf the mortgage lender permits rentals?
    • If city bylaws and zoning regulations permit rentals?
    • If the condominium corporation bylaws permit rentals?

Affordability /Mortgage Questions

 

  • How much of a mortgage can I afford ?
  • What is a pre-approved mortgage?
  • Have I spoken with a mortgage broker?
  • What is the benefits of a portable mortgage?
  • Have I compared mortgage rates and features to determine what type of mortgage lender I wish to borrow from?
  •  What are all the expenses I will incur during the purchase transition?
  • Have I completed the mortgage application form, including my net worth statements?

Interest Rate/ Mortgage Questions

 

  • What is the current mortgage interest rate?
  • How frequently is the interest rate compounded?
  • What is semi annul compounding
  • What is the effective annual interest rate?
  • How long will the quoted interested rate be guaranteed?
  • Can you have the guarantee in writing?
  • If interest rates decrease before your mortgage agreement is finalized, will you receive the lower rate?
  • If yes, can you have this assurance in writing?
  • Is the total sum of interest accrued over the duration of your mortgage available from the lender?

Amortization/ Mortgage Questions

  • What is an amortization
  • What options are available for amortization periods from the lender?
  • Request an amortization schedule detailing your monthly mortgage payments?
  • Does this schedule apportion your payments into principal and interest amounts?
  • If you wish to make annual pre-payments on your loan, will your amortization schedule be adjusted?
  • How will the prepayment effects the amortization?
  • How will the payment schedule effect amortization period?

Term of the Mortgage/ Mortgage Questions

 

  • What terms are available for your mortgage loan?
  • What interest rates are available for different mortgage terms?
  • What is the best term for you Fixed . Variable or Open Line of Credit?

Payments/ Mortgage Questions

 

  • Based on your amortization period, how much will your monthly payments be?
  • Can you increase your monthly payments without penalty?
  • What are your options for payment periods, weekly – by weekly – monthly?
  • What payment structure best fits your pay period?

Pre-payment Option/ Mortgage Questions

 

  • Does the lender have pre-payment privileges?
  • What are the terms of the pre-payment
  • What is the Anniversary amount?
  • Double up mortgage payment amount?
  • How long do you have pre-payment privileges?
  • Does this change relative to the type of pre- payment privilege you choose?
  • When does the pre-payment privileges begin?
  • Is there a pre-payment minimum?
  • Can you pre-pay in installments or as a lump sum?
  • Is your pre-payment privilege cumulative?
  • Does last year’s lump sum pre-pay for next year?

Mortgage Assumption Privileges/ Mortgage Questions

  • What is an assumable mortgage?
  • Can the existing mortgage on the property be assumed?
  • Do you require the lender’s approval to assume an existing mortgage?
  • Are there any administrative fees for assumption of an existing mortgage?
  • If yes, how much do it cost?
  • If assumed, will the lender release the mortgage vendor of all obligations under the terms of the existing mortgage?

Portability/ Mortgage Questions

 

  • Can you take your mortgage to another property you wish to purchase?
  • Are there time restraints on transferring an existing mortgage?
  • If yes, what are they?
  • Are there penalties associated with transferring your existing mortgage?
  • If yes, how much do they cost?

Property Taxes/ Mortgage Questions

 

  • How much do property taxes cost for the property?
  • Can property tax payments be made monthly?
  • What is the exemption amount if it is your principle residence?
  • Does your lender pay interest on property tax collect?
  • If yes, what is the interest rate?

Mortgage Transaction Fees and Expenses/ Mortgage Questions

 

  • Is an appraisal required? If yes, how much does it cost and who pays?
  • Is a survey required? If yes, how much does it cost and who pays?
  • Will there be title insurance cost?
  • How much will the fire and earth quake insurance cost?
  • What is Independent legal advice and how can it apply to your mortgage?
  • Is there an administrative or processing fee from the lender?
  • If yes, how much does it cost?
  • Can you choose your own mortgage lawyer or notary?
  • lf the lender arranges a lawyer, does their fee become your cost?
  • Does your mortgage have a renewal fee?
  • Does your mortgage have a discharge fee
  • If yes, how much does it cost?
  • How does the lender calculate penalty cost?
  • What is IRD Penalty?

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