In order to make sure that every client's file is set-up for success right up to and past closing day, Mortgage Foundations follows a Client Journey. Today, we will discuss the steps involved throughout the Client Journey and explain what happens at each step in the process.

The first step in the Client Journey is the Discovery Call and Mortgage Application step. This is where we learn as much as possible about your mortgage application and ask questions to ensure we are clear about your goals and requirements for your home financing needs. During this step we also answer any questions that you may have in order to find out the benefits of working with a Mortgage Broker, specifically Mortgage Foundations. We will also take this opportunity to give you an accurate idea of what to expect through the home financing process and ensure that you are aware of closing costs and document requirements so there is little room for surprises later.

The next step may not always be required since you may have already secured a property or are looking for home financing options other than purchasing a property; such as a switch or re-finance. If you are actively searching for a property, or planning to shortly, the Mortgage Pre-Approval step is highly recommended as it will allow us to submit your file to a lender that will review everything and ensure that nothing has been missed and it will give them the opportunity to ask any questions ahead of time for further clarity on the file. A pre-approval is also an opportunity to obtain an interest rate hold so that you can shop for a property with the confidence of having a rate in place. The rate hold will protect you from interest rate increases up to the expiration of the pre-approval. If rates end up coming down below your rate hold by the time you secure a property, you will receive the lower rate. Pre-approvals are conditional, and since they have been generated based on some unknowns, such as the property, a condition of financing is always recommended, even with a pre-approval.

While you are shopping for your next home, we will be sure to keep in contact and always recommend that you run any potential properties by us so that we can check the qualifying using the actual figures for the property. During this time, it is also important to keep everything as-is in regards to employment, liabilities, bill payments, and your credit profile overall. Unexpected changes to these things could end up affecting your qualification when you do find a property and we submit for a commitment.

Speaking of a commitment, that is the next step in the Client Journey. Once you have obtained an accepted offer on a property, we can then re-work the file and update any information that needs to be and then submit for what is commonly referred to as a live submission. At this point, the lender will review the file completely, including the property information, and also ensure that it meets the insurers' guidelines if it will be an insured or insurable mortgage. Once the lender confirms everything is good and that they are in a position to approve the mortgage they will issue a commitment. The commitment will include any conditions that need to be met by a certain amount of time ahead of closing day. We always strive to get as much documentation up front; however, it is usually at this step where we request additional documents in order to satisfy the lender's conditions. Once you have received the commitment, reviewed it, and are comfortable that you will be able to meet the conditions, we arrange to have the commitment and other documents signed and returned to the lender. This is also where we discuss the importance of having coverage such as Mortgage Protection Plan, or MPP in place, since anything can happen and you will want to ensure that you and your family are protected. Coverage can even start ahead of closing while we are working on clearing the conditions of your mortgage.  

Working together to get the conditions satisfied well ahead of time is imperative to make sure that the lawyer, or solicitor, can get to work on their side nice and early, since the lawyer getting instructed by the lender is the next step once we are broker complete or close to. Your lawyer will receive all their documents with instructions on what needs to be done for the lender to supply the funds to close the mortgage on closing day. We will be there to assist your lawyer with anything they may need from us to make for a seamless process for them.

Once your lawyer has everything prepared for your closing, they will reach out to set a date and time with you to perform the final signing and will also let you know how much funds you will need to supply them in order for the mortgage to close. This amount will be comprised of your down payment, legal fees, registration costs, land transfer taxes, title insurance and any other adjustments, taxes or fees that apply. It is also important that you make sure to take up to date valid identification to your meeting with the lawyer since they are required to confirm your identity.

After the signing is complete and everything is ready to go, we proceed to the biggest and most exciting step, which is the closing day. This is the day where everything happens, and all the money moves around between the lender and the lawyers, and the final registrations are taken care of. Once the seller's lawyer confirms that they have received the funds to complete the sale, you will receive the keys to your new property. If the transaction was a switch or re-finance, it is very much the same; money just moves in different directions.

Now that your mortgage is closed and you have received your refinance funds or are settling into your new home, our job is far from over. We will follow-up with you shortly after closing to make sure that everything went smoothly, remind you of when to expect your first payment to come out, and answer any questions that you may have. After this, we will continue to remain in contact, including on your annual mortgage anniversary, where we will update you with property information and can work with you to review your mortgage to ensure that it still fits your goals and is suitable for any potential future changes. As your dedicated mortgage professional, we are always there for any advice or to answer any questions you may have since the client journey is ongoing.

When it comes to understanding a mortgage for a self employed individual it is critical to recognize that the core principles of the mortgage remain the same whether you are self-employed or employed as a traditional employee. The process of securing a mortgage for a self-employed individual can be a bit different due to the nature of their income. Unlike a traditional employee who receives a steady pay cheque, self-employed workers typically experience variable income streams that can fluctuate widely from month to month or year to year. This can make it slightly more challenging for a lender to assess the clients' ability to repay the loan.  In order to obtain financing for a self-employed individual, the job of a Mortgage Broker is to work with the client to gauge how best to demonstrate their financial stability and reliability to lenders. Every lender will have different policies on which type of self-employed clients they will work with and how they assess the client's income as presented. This is why many self-employed individuals may find it challenging to obtain a mortgage, even from their bank they have dealt with for many years. Many times there will be additional documentation required beyond the standard requests for someone that is self-employed. Lenders will often look for documentation such as the companies financials, 2 to 3 years of tax returns with N O As, 6 to 12 months of bank statements and ownership documentation to show at least 2 years of self-employment, like the Master Business License or Articles of Incorporation for an incorporated business. The down payment required for a self-employed individual can be as little as 10% depending on the structure of the clients self-employment; however, we traditionally see a mortgage for a self-employed individual requiring a down payment of 20% due to the client's income structure. The source of the down payment is also important with a self-employed individual as lenders may not allow gifted down payment and require that the down payment be fully from the client's own resources. There are many mortgage programs available for a self-employed individual, the availability of the different programs mainly comes down to how the client pays themselves from their business. The simplest way to calculate the clients' income is by looking at the client's verifiable income; this is how much is shown on the client's tax return and in many cases it does not provide much qualifying power as their net income may be low. The reason for this is that self-employed individuals have a different way of declaring their income due to advantages provided by write-offs and other tax benefits; especially if the individual is incorporated. An individual that is incorporated or owns an incorporated business has a few options when it comes to paying themselves from the business, and may even pay themselves only enough to cover their personal expenses while electing to keep money within the business. The benefit to this is a lower taxation expense; however, the trade-off is that there may be issues qualifying for a mortgage based on the clients' income; this is where a 'stated' or 'declared' income mortgage product comes in. These mortgages may require the client to declare their income and the lender will use different methods to verify and ensure that the declared income is realistic and will provide an opportunity for the client to repay the mortgage. These mortgages may feature slightly higher interest rates and have fees; although, when compared with the tax savings, the higher interest and fees make much more sense than paying more tax to the Government. It is always recommended that clients discuss their financial situation with their accountant and financial advisor, as well as their mortgage broker; in order to structure their finances in such a way that provides the most benefit to the self-employed individual. Having professionals in each field involved in the process and providing feedback is crucial. More and more people in Canada are choosing to be self-employed and lenders are responding with different mortgage products and programs in order to provide these individuals with an opportunity to obtain financing for a dream home for them and their families. In conclusion, a mortgage for a self-employed individual is the same as a mortgage for a client that is employed in a traditional manner, the difference comes down to how the client's income can be calculated. There are different options available, however, some of these options may not be available based on the client's verifiable income. It is important that a self-employed individual work with a Mortgage Broker in order to review the different mortgage products available to them and ensure they have the most suitable option in place for them and their family. Feel free to reach out at (905) 440-5392 with any questions on self-employed mortgages or anything else mortgage related!

A common term and form of advertising to hear in the mortgage industry is that "in most cases, my services are free". While it may come across that Mortgage Brokers are doing the work for nothing, in reality, it really comes down to who pays us, and more often, it is the lender, not the borrower. 

For a typical, well qualified mortgage file that is done on the Prime, or A lending side, a Mortgage Broker is paid by the lender as a form of commission, or finder's fee. I will discuss broker fees shortly; however, it is important to note that most Prime lenders do not allow Mortgage Brokers to charge any fees, such as a broker fee, to the client. If you are having a mortgage done by a Broker where a broker fee is being charged, and it is with a Prime lender, it is recommended to discuss this with the broker and lender to ensure everything is being done properly. 

A finder's fee is paid to the Mortgage Broker by the lender after the mortgage has funded, also known as the closing day, and is generally a percentage of the mortgage amount. A typical percentage is one percentage of the funded amount; however, it varies amongst lenders and is higher or lower depending on the length of the term.

On top of the finder's fee, a Mortgage Broker may also receive other incentives, such as Volume Bonuses from lenders that a Mortgage Broker uses commonly or Efficiency Bonuses from lenders to award Mortgage Brokers that send quality files or promotions that are offered by lenders from time to time.

Another form of commission that a Mortgage Broker may make from a lender are trailer fees. A trailer fee is a form of commission that is paid over time rather than all up front. A finder's fee is still paid shortly after closing the mortgage; however, it is smaller than normal since a portion of it is paid out annually. This method of getting paid is preferred by some brokers as it stretches out their income stream and may allow better control of funds.

When a Mortgage Broker works on a file that is suitable for an alternative, also known as a B lender, or a private lender, they may charge a broker fee, which is a fee for their services that is paid for by the client and is normally processed on closing day and collected by the client's lawyer and then sent to the Mortgage Broker.

The reason that a broker fee may be charged on these types of files is that some of these lenders do not pay a finder's fee to the Mortgage Broker directly; or they offer a lower finder's fee than normal.

It is important to note that a broker fee may not be charged on alternative files since the lender may offer a suitable finder's fee to compensate the Mortgage Broker. If a broker fee is being charged, it could be that the lender does not pay a finder's fee or there was a substantial amount of work put into the file, or a combination of both. Most private mortgages will feature a broker fee as the majority of private lenders do not pay the Mortgage Broker any compensation.

Whether a mortgage is being done with a prime, alternative, or private lender, a Mortgage Broker should always be transparent about their method of compensation and be open to explaining who is paying them for their services, the lender, the client, or both? A Mortgage Broker is also required to disclose how they get paid directly to the client on the Disclosure To Borrower document that is given to the client during the mortgage process. If your Mortgage Broker is not transparent or has not disclosed this information to you, it is recommended to ask why and get more information to ensure you are protected.

There is nothing wrong with asking your Mortgage Broker if there is a different product available to you that would pay the Mortgage Broker less money in order to save you more money over the course of your mortgage. In fact, Mortgage Brokers are regulated to ensure that the mortgage product offered to the client is in the best interest of the client, and recommendations were made without weighing the broker's compensation above the client's interests.

It is also important to note that a Mortgage Broker is not paid directly by the client, and all compensation must go through the mortgage brokerage that the Broker represents, no matter what type of compensation it is. If your Mortgage Broker or Agent is requesting payment directly, you should discuss this with the Principal Broker of the brokerage or the regulator, the Financial Services Regulatory Authority of Ontario.