Talk to the Mortgage Experts in Calgary...

About Us

As part of Craig's service team in Calgary, Penny & Steven Donnan have a wealth of
mortgage knowledge to offer you. Steven has been in the mortgage industry
for nearly 25 years having worked for CMHC, lenders and now as a mortgage
associate.  Penny spent 20 years at CMHC. She has been licensed as a
mortgage associate for three years. Their team approach ensured that you get
twice the service. They are licensed in Alberta and are part of the Mortgage
Architect national network; they can co-broker a mortgage in all provinces.

You are unique and your situation is unique. What you can afford based on
mortgage calculations may not reflect how you want to live. No one wants to
be house rich but cash poor. Designing a mortgage that's right for you is
our specialty.

Some Mortgage Terms and Definitions

There are many terms and definitions to become familiar with when qualifying
for a mortgage. It's an exciting time and it's stressful especially when you
are purchasing your first home. To help you, here are a few terms and their
definitions:

Amortization: The period of time, often a maximum of 25 years, required to
reduce the mortgage debt to zero when all regular blended payments are made
on time and provided the terms (payment and interest rate) remain the same.

Closed Mortgage: A mortgage that cannot be prepaid or renegotiated before
the term's end unless the lender agrees and the borrower is willing to pay
an interest penalty. Many closed mortgages limit prepayment options such as
increasing your mortgage payment or paying lump sum prepayment (usually up
to 20% of your original principal amount each year).

Closing Costs: Costs in addition to the purchase price of the home, such as
legal fees, transfer fees and disbursements, that are payable on the closing
day. Closing costs vary and the lender and/or  insurer will want 1.5% of the
home's selling price to be in your bank account prior to taking possession.

Conventional Mortgage: A mortgage loan up to a maximum of 80% of the lending
value of the property. Typically, the lending value is the lesser of the
purchase price and market value of the property. Mortgage loan insurance is
usually not required for this type of mortgage.

Credit Report: The main report a lender uses to determine your credit
worthiness. It includes information about your ability to handle your debt
obligations and your current outstanding obligations.

Deposit: Money placed in trust by the purchaser when an Offer to Purchase is
made. The sum is held by the real estate representative or lawyer/notary
until the sale is closed and then it is paid to the vendor.

Down Payment: The portion of the home price that is not financed by the
mortgage loan. The buyer must pay the down payment from his/her own funds or
other eligible sources before securing a mortgage. It generally ranges from
5% to 20% of the purchase price but can be more.

High-Ratio Mortgage: A mortgage loan higher than 80% of the lending value of
the property. This type of mortgage may have to be insured - for example by
CMHC or a private company - against payment default.

Mortgage: A mortgage is a security for a loan on the property you own. It is
repaid in regular mortgage payments, which are usually blended payments.
This means that the payment includes the principal (amount borrowed) plus
the interest (the charge for borrowing money). The payment may also include
a portion of the property taxes.

Mortgage Loan Insurance: If you have a high-ratio mortgage (more than 80% of
the lending value of the property) your lender will probably require
mortgage loan insurance, which is available from CMHC or a private company.

Term: The term of a mortgage is the length of time that the mortgage
conditions, including the interest rate you pay, are carried out. Terms are
usually between six months and ten years. At the end of the term, you either
pay off the mortgage or renew it, possibly renegotiating its terms and
conditions.

The Mortgage Process

The mortgage application process begins with determining if you qualify for
a mortgage before giving confidential information and signing an application
form.

You should know your annual gross income (before taxes) and have two
paystubs to confirm this income. If you are self employed, have your last
two years Notice of Assessments and other income tax information as the
lender and/or insurer will request copies.

Where is your downpayment coming from? If it is from your savings or
investments, the funds will need to be proven on the last three months
statements. You can get a non repayable gift from an immediate relative or
withdraw from your RRSPs (there is a special program for first time
homebuyers using their RRSPs for the downpayment of their new home).
Borrowing the downpayment is acceptable in certain circumstances and of
course, you may have just sold your home and the sale proceeds will be used
to purchase the new property. There are Cash Back Mortgages that can be used
for the downpayment up to $25,000 - some restrictions apply.

There is a requirement to have an additional 1.5% of the purchase price for
closing costs. Closing costs vary depending on the property and can include
legal fees, appraisal, inspection, title insurance to name a few. It's
important to include 1.5% into the total cost of purchasing a new home.


The other important part of the mortgage application process is reviewing
your credit history and score. Here are some things to keep in mind when
applying for credit: Have a minimum of two credit items reporting on your
bureau such as a credit card and loan. It's beneficial to have credit with a
minimum of $1,500 on each item reporting on your bureau for two years. This
creates your repayment history. All credit is to be paid on time with no
late payments or collections. If you believe that there are blemishes on
your credit, we are happy to review your situation and put together an
action plan to get you back on track and into your new home as quickly as
possible.

The Mortgage Steps

1.      It's a good idea to obtain a mortgage pre-approval. This will
involve providing your job letter and permission to access your credit
bureau.
2.      When your pre-approval is in place, you can start shopping with
Craig for your new home.
3.      If you find a property you like, be sure to contact Penny and Steven
to get an updated list of required documentation for the lender and/or
insurer. The Offer to Purchase needs to have a mortgage financing condition
and Craig will help you with all these details.
4.      Your mortgage application is submitted to the lender and/or insurer
when there is an Offer to Purchase. The lender will return a Mortgage
Commitment Letter which you will sign and this confirms that you agree with
the terms the lender is offering and they can begin to organize the mortgage
documents for your lawyer.
5.      You will visit your lawyer the week of possession to sign all the
legal mortgage documents. Having photo identification is required.

Mortgage Tips

It's important to let us know if anything changes in your situation before
moving into your new home. Important things such as changing jobs or
purchasing a new vehicle as this could change your mortgage approval. It's
best to keep everyone informed of significant changes that occur before you
take possession.

We believe that the more information you have the better decisions you will
be able to make. Please call or email us any time!

http://www.DonnanMortgage.ca

Penny@DonnanMortgage.ca

Steven@DonnanMortgage.ca