Frequently Asked Questions
Straight answers on affordability, qualifying, the purchase process, and renewals — from a broker based right here in the Shuswap.
Getting Started
In the large majority of residential mortgage transactions, no — we’re paid a commission directly by the lender once your mortgage funds, so there’s no cost to you for our services.
The exception is certain private or alternative lending situations, where a lender fee or broker fee may apply because of the additional complexity involved in arranging financing outside traditional bank guidelines. If a fee ever applies to your file, we’ll tell you upfront, in writing, before you commit to anything — there are never any surprises at closing.
A bank can only offer you its own mortgage products, at whatever rate and terms it decides to offer you that day. A mortgage broker works independently — we compare products from dozens of banks, credit unions, and alternative lenders, and bring you the option that actually fits your situation, not just whatever a single institution has on the shelf.
Because brokers work with so many lenders side by side, we also tend to have a clearer read on which lender is the right fit for less-standard situations — self-employment, past credit issues, or unusual income — where one bank might decline a file that another lender would happily approve.
In Canada, minimum down payment requirements are set federally and scale with the purchase price:
5% on the portion of the price up to $500,000, 10% on the portion between $500,000 and $999,999, and 20% on any home priced at $1,000,000 or more (homes at this price point no longer qualify for a low-down-payment insured mortgage at all).
Any purchase with less than 20% down is considered a “high-ratio” mortgage and requires mortgage default insurance (commonly called CMHC insurance, though Sagen and Canada Guaranty also provide it). This premium is calculated as a percentage of your mortgage amount and is typically added directly onto the loan rather than paid upfront in cash.
Self-employment, credit history, or being new to Canada can sometimes affect the down payment a specific lender requires — this is exactly the kind of thing we sort out early in a conversation, before you’re house hunting.
Lenders use two ratios to determine what you can afford: GDS (Gross Debt Service), which caps your housing costs — mortgage payment, property tax, heat, and half of any condo fees — at roughly 39% of your gross income, and TDS (Total Debt Service), which caps housing costs plus all other debt payments at roughly 44%. The lower of the two figures is what actually determines your maximum mortgage.
On top of that, your mortgage amount is sized using the federal stress test rate, not your actual contract rate — so the number a lender approves is often lower than what your monthly budget alone would suggest.
The most accurate way to see where you land is to run your numbers through our mortgage qualifying calculator, which applies these same ratios and the current stress test rate. From there, we can walk through your specific income situation and debt load together.
Qualifying
Purchase Process
British Columbia charges Property Transfer Tax (PTT) on most real estate purchases, calculated on a tiered scale based on the property’s fair market value. It’s separate from — and in addition to — GST and any legal or closing costs.
BC’s First-Time Home Buyers’ Program can fully or partially exempt eligible buyers from PTT, provided you’re a Canadian citizen or permanent resident, have lived in BC for at least a year (or filed two BC income tax returns in the last six years), have never owned an interest in a principal residence anywhere, and the property falls under the program’s price threshold and will be your principal residence.
Because both the tax brackets and the exemption threshold are periodically updated by the province, we always confirm the current figures against the latest BC government guidance before finalizing numbers for your specific purchase.
Yes — most lenders accept down payment funds gifted from an immediate family member (parent, sibling, grandparent, or spouse). You’ll need a signed gift letter from the donor confirming the money is a true gift and not a loan that needs to be repaid.
If your mortgage requires default insurance (down payment under 20%), the gifted funds typically need to be in your bank account before your application is submitted for insurer approval. Non-residents and newcomers to Canada sometimes face a higher minimum personal contribution requirement, so this is worth flagging early if it applies to you.
Budget for more than just the down payment. Common closing costs include: legal fees and disbursements, a home inspection, an appraisal fee (sometimes covered by the lender or broker), BC’s Property Transfer Tax, mortgage default insurance premium plus PST if you’re putting down less than 20%, title insurance, and property tax or utility adjustments owed to the seller.
A common rule of thumb is to budget 1.5% to 4% of the purchase price for closing costs on top of your down payment — the exact figure depends heavily on your specific transaction, so we’ll walk through a full breakdown for your situation before you make an offer.
A pre-approval gives you a solid estimate of the maximum mortgage you qualify for, along with a rate guarantee — typically for 90 to 120 days — that protects you if rates rise while you’re house hunting. It’s based on your income, credit, and down payment information at the time, before a specific property is involved.
A pre-approval isn’t an absolute guarantee of funding — your final approval is still subject to the property itself (appraisal, condition, type) and confirmation that nothing in your financial picture has changed. That said, most realtors won’t take you house hunting seriously without one, and it’s the single best way to shop with confidence and avoid falling in love with a home priced outside your qualifying range.
Renewing or Refinancing
The penalty depends on your mortgage type. For a variable-rate mortgage, the penalty is typically a flat three months’ interest, calculated on your current balance and rate.
For a fixed-rate mortgage, the penalty is the greater of three months’ interest or the Interest Rate Differential (IRD) — a calculation based on the difference between your original contract rate and the current rate a lender could charge for the time remaining on your term. IRD penalties can be substantially larger than three months’ interest, especially earlier in a term or in a falling-rate environment, and the way individual lenders calculate the IRD can vary meaningfully.
Before breaking any mortgage early, it’s worth getting an exact penalty quote from your current lender and having us run the numbers on whether breaking and switching actually saves you money once the penalty is factored in.
A renewal happens when your existing mortgage term ends and you sign a new term — either with your current lender or a new one — for the same outstanding balance and remaining amortization. It’s a natural, penalty-free transition point in the life of your mortgage.
A refinance happens when you increase your mortgage balance before your term ends — commonly to consolidate higher-interest debt, access home equity for renovations or investments, or change your mortgage structure. Because a refinance breaks your existing mortgage contract early, it typically involves a prepayment penalty, and refinance rates tend to run slightly higher than renewal rates.
You can start shopping for your mortgage renewal as early as 120 days (about four months) before your maturity date — even before your current lender sends you a renewal offer. Lenders are only legally required to send that offer 21 days before your term ends, which doesn’t leave much time to compare options if you wait for it.
The renewal rate your current lender offers first is often not their best rate — it’s frequently based on posted rates with a modest “discount” designed to feel like a deal. Starting early gives us time to shop the full market on your behalf and bring you a genuinely competitive offer, rather than whatever shows up in your mailbox.
Still Have Questions?
Every situation is a little different. If you didn’t find your answer here, the fastest way to get a straight answer is to just ask.
The information above is general in nature and provided for educational purposes. Down payment thresholds, tax rules, stress test rates, and program eligibility are subject to change by federal and provincial authorities — figures should be confirmed against current government guidance and your specific circumstances before making a financial decision. This page does not constitute financial or legal advice.