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A consumer guide and workbook - page 37 / 79





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Rohinton and Rosemary are careful spenders and careful savers with stable jobs, though they don’t have large incomes. With a total mortgage of $100,000, the couple decided to “split” their mortgage. They locked in $75,000 of it for seven years at 10%, assuring them of no increase in payments for that period of time.

Split or Multiple-rate Mortgage

With this mortgage, you negotiate a portion of your total mortgage loan at one rate and term, and another portion at a different rate and term. In this way you can split your mort- gage into two, three or more terms.

There are many more mortgage options available, such as a convert- ible mortgage. To find out more, talk to your lender.

Where to get a mortgage

Many institutions and individuals lend money for mortgages

These include insurance companies, banks, trust companies, caisses popu-

laires, credit unions, finance companies and pension funds. You can also check your local newspaper classified adver- tisements for a listing of private lenders. If you have a Self-directed RRSP, you may wish to investigate with your lender the possibility of borrow- ing some or all of your mortgage from your Self-directed RRSP.

For the remaining $25,000 of their mortgage, they negotiated a one-year term at a rate of 7%—expecting that rates would remain the same or possibly drop.

This split mortgage means they can anticipate paying off $25,000 of their mortgage as soon as possible—and celebrate a mini-mortgage goal all the sooner.

Mortgage brokers don’t usually lend money but can find a lender for you.

New-house and new-condominium builders may offer lower-than- current market rates by buying down the inter- est rate charged by the lenders so that they can sell their homes faster. (See Interest Rate Buy Down on page 27.)

A buy down is usually only for a short term, and is usually not renew- able at the end of the term..



What a lender wants from you

Lenders want plenty of financial information about you and your co- buyers to assess your ability to repay the loan. This ability is based on your GDS and TDS ratios (see worksheets on page 14) and also on your assets,

liabilities, earnings, employment his- tory and your past record of repaying loans. Specifically, your lender may want the following:

  • personal


marital status, dependents

  • details of employment, including proof of income (T-4 slips, person- al income tax returns or a letter from your employer stating your position)

  • other sources of income, for instance, pensions or rental income

  • current banking information

  • verification of your down payment

  • consent to run a credit investigation

  • a list of assets, including property and vehicles

  • a list of liabilities, for example, credit card balances, car loans— the total amount you owe and your monthly payment amounts

  • fees for an appraisal or for a copy of a valid appraisal report if one was recently done

  • mortgage insurance fees if a high- ratio mortgage is required

  • a copy of the property listing

  • a copy of the Agreement of Purchase and Sale on a resale home

  • plans and cost estimates on a new home

  • the condominium financial state- ments, if applicable

  • a certificate for well and septic, if applicable

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