We have laid out some frequently asked questions about the mortgage process here:

You can ask us anything regarding the mortgage process, we will make sure to answer all your questions.


Frequently Asked Questions
How much will my mortgage payments be?

The most important question to answer as you start to plan a budget for buying your first home is ‘How much will my mortgage payments be for my home?’ It is crucial to know what to expect your monthly or bi-weekly mortgage payments to be, as well as property tax payments, condo fees (if applicable), and utility payments.

I'm new at this mortgage thing. Where do I start?

The first thing to do is relax and take a deep breath. Buying a home – especially your first home – is a big deal. Exciting and scary at the same time. Me and my team will help take out the scary, and help you focus on the exciting.

When you’re ready, the first step is to become ‘pre-approved’ to purchase a house – and you can start that process right here, right now. The pre-approval process in hand, you can go into the marketplace with confidence and spend many weekends at open houses!

What kind of home can I afford right now?

This is the most frequently asked question that we hear on a daily basis, and it should be! In order to properly and carefully work with each one of our clients to determine the correct answer that question, we must complete our pre-approval process. We thoroughly consider all of your personal employment information, your personal credit history, current debt obligations and perform some specific mortgage calculations to determine your overall debt service ratios.

Buying and owning your own home is fantastic, however being mortgage poor is not! We need to ensure that you can easily afford all the payments involved in home ownership, only one of which is the mortgage payment. We must take into consideration the mortgage payment, property tax payment, utilities, condominium fees (if applicable), as well as home insurance, repairs and maintenance, and more, to ensure that these new payments will not jeopardize your overall lifestyle.

You can trust that we will take the proper care to ensure that the home that you purchase is appropriate to your individual financial position and you can still decorate and furnish it to your liking!

How does a mortgage work?

Through the pre-approval process, we will work with you to understand your financial capacity. We will look at your employment history, credit history, debt patterns, and other numbers to figure out your price range. Yes, you want to get the best house you can afford right now, but you have to make sure that you can furnish the house, feed and clothe yourself, and maybe even go to a movie once in a while. No sense being mortgage-poor if you can’t enjoy the house! We’ll help you make a sound decision. Remember! If you take good care of your house, its value will probably increase over time as you pay down the mortgage. And that will help you purchase your next house!

What will my legal fees be?

In Manitoba, you can estimate that your legal fees will reflect 2% of the purchase price. Keeping this in mind will help you make sure that you have enough money available to bring to your lawyer’s office to close the deal.

How much should my down payment be?

It used to be that you needed to put down 25% of the purchase price order to qualify for a mortgage. That has changed over the years and the Canadian government and the three mortgage insurance companies continue to work together to find ways to make home ownership easier and more affordable for all Canadians.

If you can provide just a 5% down payment you can usually qualify for the best interest rates and mortgage options available.

Our clients have sourced their down payments from persona savings, RRSP savings, investment proceeds, gifts from family, and proceeds from the sale of another home.

Mortgage companies and mortgage insurance companies will require proof as to where your down payment originated. For example, savings in the bank must be proven with 90 days’ worth of bank statements to show an accumulation of the savings over time.

Under the Home Buyer’s Program, the Canadian government allows you to withdraw up to $25,000 of your RRSP savings (per person on title) with no tax consequences if you have not owned any property in the last five years. It is a great way to use your RRSP savings for your down payment as you will have approximately 17 years to repay your RRSP withdrawal.

A financial gift from a family member is also a common way to make a down payment. In this case, the family member must complete a gift letter and ensure that the gifted money is deposited to your account at least 15 days prior to your possession date.

I'm ready to buy a home. How do I get approved?

Having the right mortgage is vital to your financial well-being! Just as you would consult a professional to manage your investments, you should have a professional manage your mortgage financing – and Castle Mortgage is the right place to start.

Before making an Offer to Purchase, it is very important to know what type of mortgage financing you are qualified or pre-approved for. Our pre-approval process considers your total financial picture in order to assess the borrowing limit for your new home. This will include a credit check. Rest assured that the process is highly confidential and we treat your personal information with absolute discretion.

At the end of the process (which does not take very much time at all), you will get a Letter of Pre-Approval that can be shared with the realtor and the seller of the home you want to buy. The letter gives everyone the confidence to proceed (and could also give you the edge in a bidding war!).

As part of the process, we will be able to provide you with an interest rate that will hold firm for three or four months so you can take your time knowing that your rate is secure.

What kind of documents do I need to show you?

To help us move toward your pre-approval, we’ll need a current pay stub to show your current gross and net pay; recent T4s or T4As to show your earnings from last year; an employment letter so that we can learn about your total compensation and the nature of your employment; a Canada Revenue Agency Notice of Assessment; your T1 General Tax Return; and 90 days of bank statements. To see sample of these documents, click here.

What do these mortgage terms mean?

Registry System: A condensed history of the title to a parcel of land. The abstract consists of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording.

Mortgage payments which are made every 2 weeks for a total of 26 payments per year. Not to be confused with semi-monthly mortgage payments.

The actual number of years it will take to pay back your mortgage loan. In Canada the amortization does not generally exceed 25-35 years.

An estimate of the value of the property, conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

A transaction between unrelated entities where a willing seller (the seller is not compelled to sell) transacts with a willing buyer (the buyer is not compelled to buy).

Allows the buyer to take over the seller’s mortgage on the property.

A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.

The number of times per year in which the interest rate is compounded. In Canada, mortgages are generally compounded semi-annually, which is twice per year.

A common payment among owners which is allocated to pay expenses associated with the development.

A mortgage loan issued for up to 80% of the property’s appraised value or purchase price, whichever is less.

The buyer’s cash payment toward the property. This is the difference between the purchase price and the amount of the mortgage loan.

The difference between the price for which a property could be sold less the total debt registered against the property.

This is the actual interest rate paid on a loan or mortgage. In Canada, mortgages typically have a higher effective interest rate because of the fact that interest rates are compounded semi-annually or twice per year.

The first mortgage in the mortgage agreement that is considered to be in first place and will have first claim on assets in the event of default.

A mortgage in which the rate of interest has been fixed for a specific period of time. This specific period of time is generally known as the term.

GDS RATIO (Gross Debt Service Ratio):
The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes and sometimes include secondary financing, heating, condominium fees or pad rent.

A mortgage that exceeds 80% of the home’s appraised value or purchase price, whichever is lower. These mortgages must be insured by CMHC, Genworth Financial, or AIG Unity for payment.

The value charged by the lender for the use of the lender’s money expressed as a percentage.

A fee paid to the municipal and/or provincial government for transferring the property from seller to buyer.

The ratio of the loan to the appraised value or purchase price of the property, whichever is lower.

The end of the term, at which time you can pay off the mortgage or renew it.

The party who advances the funds for a mortgage loan i.e.- the lender.

Applies to high ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.

Pays off the mortgage if the borrower dies.

One who gives a mortgage as security for a loan i.e.- the borrower.

An interest rate which does not necessarily correspond to the effective interest rate. In Canada, these two rates do not correspond.

Allows partial or full payment of the principal at any time, without penalty.

OSB (Outstanding balance):
The amount of principal which is still outstanding at the end of the term.

A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.

Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend in order to make a ‘firm’ offer when you find the right home.

Voluntary payments in addition to regular mortgage payments.

The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.

Paying off the existing mortgage and arranging a new one, or renegotiating the terms and conditions of an existing mortgage.

Renegotiation of a mortgage loan at the end of a term for a new term.

Mortgage payments which are made on the 1st and 15th of the month, or twice per month (24 payments per year). Not to be confused with bi-weekly mortgage payments (26 payments per year).

Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.

TDS RATIO (Total debt service ratio):
The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as car loans and credit cards.

The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.

Legal ownership in a property.

A mortgage with fixed payments, but which fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.

When the seller provides some or all of the mortgage financing in order to sell their property.

Feel free to contact us via phone or email for any of your concerned questions or queries. We will be happy to answer.