Mortgage Types & Options
The mortgage process can be daunting. If it’s your first time using a Victoria mortgage broker, you have to decipher all the confusing terms; if you’re renewing or refinancing, you need to figure out what’s changed since the last time. And after all that, you still need to find a mortgage that lets you live comfortably within your budget and allows you to reach your financial goals at your own pace. Our team is here to help you do just that.
At Auxilium, we believe that your home is more than a roof over your head. It’s where friends gather, families are raised, and memories are made. While buying a home is a rewarding experience, it’s also an important cornerstone in your financial plan. We don’t simply view a mortgage as debt, but rather an overall piece of the monetary puzzle.
Fixed vs Variable, Open vs Closed: How Do You Choose?
With all of the options available for a mortgage term, how do you know what’s suitable for you?
Fixed Rate Mortgage
Fixed rates never change over the life of the term, so this is a good option for those who enjoy the security of knowing the rate is guaranteed and will not change for the term of the mortgage. A fixed rate is often slightly higher than a variable rate.
Variable Rate Mortgage
Variable rates are best suited to those who are comfortable with rate fluctuations. You may have the flexibility to accept possible increases in your amortization should the interest rate increase; payments will stay the same if the prime rate changes, but more will be paid towards interest, which lengthens your amortization period.
Blended Rate Mortgage
A blended rate gives you the best of both worlds – part of your mortgage has a fixed rate, and part has a variable rate. If the prime rate changes, only the variable portion will change and the fixed portion will remain the same. If you are someone who prefers calculated risks this is the one for you!
The main difference between an open and closed mortgage is whether or not there is a financial penalty to pay off your mortgage before the end of the term.
Open Mortgages can be paid off at any time without penalties. You can also make additional payments without penalties. Open mortgage terms range from 6 months to 5 years, and typically offer variable interest rates that fluctuate with the prime rate. There will still be a minor fee to discharge the mortgage when paying it out or transferring to another lender. The interest rates for open mortgages tend to be higher than they are for closed mortgages, because of the risk to the lender of potentially losing out on a return.
Closed Mortgages can only be renegotiated or refinanced before they mature according to the conditions of the agreement. You cannot pay out a closed mortgage early without a penalty, but you can still pre-pay a percentage of your original principal balance each year; the pre-payment percentage varies from lender to lender. Closed mortgage terms can range from 6 months to 10 years. A closed mortgage is more stable due to its restrictive nature, which is why interest rates are lower than they are for open mortgages.
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Closed Mortgage Pre-Payment Penalties
If you choose to sell your home or refinance your mortgage before the end of the term, you will have to pay a penalty to do so in a closed mortgage. This penalty will be the greater of three months’ interest or Interest Rate Differential (IRD). The three months’ interest penalty is the next three months interest portion of your loan as one payment. Interest rate differential is calculated when today’s interest rate is below the interest rate contracted when you obtained your mortgage. To determine the amount of the penalty, the difference between the two rates is multiplied by your balance and then by the remainder of your term.
Choosing your mortgage is as important as choosing the house itself: you want one that fits your needs, feels secure, and that overall you’ll be happy with in the long run. Sound daunting? It doesn’t have to be! With Auxilium in your corner, you can be assured that the whole process is hassle-free and transparent.
Mortgages When You Are Self-Employed
If you’re self-employed, getting a mortgage is becoming more and more challenging all the time. No two lenders look at self-employment the same way. They have differing criteria on everything from credit scores, to down payment requirements, to income verification, and everything in between. That’s why we have a host of lenders to choose from, enabling us to pair your specific mortgage needs with a lender who can fulfill them.
Outside the Checkbox: Mortgages with Bad Credit
If you have bruised or bad credit, you may have heard that it’s more difficult to get a mortgage. That’s not the case when you work with our team! Our brokers are experienced in working through credit challenges to find a solution that helps you reach your goals.
Whether you can verify consistent employment income or not, have previously filed for bankruptcy or gone through a consumer proposal, of if your situation just doesn’t fit the “checkboxes” required by the big banks, we’ll walk you through every step of the process.
The Right Mortgage at Every Stage of Life: From Buying Your First Home to Retirement
As you go through life, your homeownership goals will likely change – and that means your mortgage should change to match it. Buying a home is one of the biggest financial investments you’ll ever make, and it’s natural to be nervous about signing on the dotted line. But your first mortgage doesn’t have to be a stressful, scary experience if you do your research, take it step-by-step, and have the right people by your side. We specialize in working with first-time home buyers to let you get on the property ladder with confidence.
When it’s time to renew or refinance your mortgage, we make sure you’re still on track and getting the best deal. Since we live mortgages day-in and day-out, our team keeps on top of any changes to the financing rules or regulations that may be new since the last time you took a close look at your mortgage.
And once you’re ready to retire, we look at how your home can support you through your golden years. Whether you want to right-size your home, minimize your payments, or access your equity, our team will look at the big picture to find the best solution for you. We have certified reverse mortgage specialists in-house who can explain this product and will help you compare it to your other options in the marketplace.
Build Your Real Estate Portfolio with a Mortgage for Your Rental Property
Many homeowners dream of also being landlords. Some might have an existing suite in their home, but want to branch out into owning a second property, or even multiple properties.
There are lots of reasons why homeowners desire to become landlords, but the primary one is to build additional assets while creating a positive cash flow.
These days, however, this dream comes with its fair share of challenges, especially obtaining a rental property mortgage through the financing and lending process. At Auxilium, we understand that with ever-tightening mortgage rules, turning the dream into reality is not as easy as it once was, and that’s why we work with you every step of the way. From our initial consultation to help you evaluate if being a landlord is right for you, to securing the rental property mortgage financing, we are here to support your dream of financial freedom.
We know where you’re coming from, as some of our team are landlords themselves and have experienced firsthand the joys and tribulations of being landlords. We are more than willing to impart our experience and wisdom to you. So if you’ve always imagined owning a second, third, or maybe even a fourth property, contact our team today and let’s see if we can turn that dream into a reality!
Make a Property Perfect for You with a Purchase Plus Improvements Mortgage
You’re looking to buy, but every property you’ve seen is either out of your budget, or in shambles. Then, after months of searching for your dream home, you start to think that settling for less-than-perfect is your only option.
But wait, there’s hope for you!
With the Purchase Plus Improvements program you can buy a fixer-upper without worrying about how many years you’re going to have to live in an eyesore or deal with a cracked bathroom floor. This program allows qualified home buyers to purchase a home and include the costs to renovate their new property immediately after taking possession with as little as a 5 percent down payment. Finding your dream home just got a whole lot easier!
Sometimes called an improvement or renovation mortgage, this option covers the sale price of the home, as well as any renovations that would increase the value of the property.
While home buyers can take advantage of the low interest rates associated with a mortgage and pay one monthly payment, there are a couple of extra steps to be approved for the program.
- Make the purchase offer conditional on getting approval for the Purchase Plus Improvements program.
- Get quotes from a contractor to determine the cost of the renovations. The Canadian Mortgage and Housing Corporation (CMHC) will approve a loan of up to 95 per cent of the ‘as improved’ value of the home, provided the money you’re putting into the home does improve the value. These renovations cannot be strictly cosmetic, but must be part of a broader project like changing a bathroom, kitchen or flooring.
Once you’ve moved in and done the work, the lender will send an inspector to confirm that, based on the list of requested improvements, they’ve been done sufficiently. The inspector will then send the report to the lender indicating that everything’s complete and they’ll release the improvement funds to you.
In many cases, this program can offer more benefits than a traditional line of credit.
Mortgages for Military Families
As valued members of our Canadian Forces you face different mortgage challenges. Our team has worked with military families for many years, whether they are coming to Victoria on a new posting or moving to another city, and we aim to make the mortgage process as smooth as possible for you.
We know that you have unique needs, and so we’re familiar with which mortgage products can offer:
- Open pay out at any time subject to conditions of relocation, with only a 3 month interest penalty – NO Interest Rate Differential
- Flexible prepayment privileges
- Interest-only payment options
- Fixed rate terms of 1-10 years
- Cash Back at closing to pay off debts
- Plus much more
Our goal is to work in tandem with the men and women of our armed forces, giving them the tools and knowledge to help them understand the mortgage process and helping them achieve financial success.
Mortgages for New Canadian Residents
If you have recently immigrated to Canada and have dreams of home ownership, our team is experienced in working the the lenders and programs that will let you reach your goal. We work with new Canadians who require insured mortgage financing through CMHC, as well as those who have substantial down payments to make their purchase. We understand that if you are here as a student, a skilled worker, or through a provincial business grant, you may have unique requirements and we’ll work with you to explain the mortgage process and make it as smooth as possible.
The Auxilium Team would be delighted to assist you with the purchase of your first home in Canada. We would consider it a privilege, and we look forward to meeting you.
Whether you’re a first time buyer, are looking to remortgage or refinance, are in a tough credit situation, or are looking for an investment opportunity, Auxilium Mortgage has the innovative and creative solution to meet your mortgage needs. As a team, we are committed to helping you both now and for the long term.
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