Question 1

What's the minimum down payment in Canada?

Accepted Answer

In Canada, the minimum down payment depends on the purchase price. For homes up to $500,000, you need at least 5%. For the portion between $500,000 and $999,999, you need 10%. For homes $1 million or more, you need 20%. For example, a $600,000 home requires $30,000 (5% of first $500K) + $10,000 (10% of remaining $100K) = $40,000 total.

Question 2

How long does a pre-approval last?

Accepted Answer

Most pre-approvals in Ontario are valid for 90 to 120 days, depending on the lender. During this time, your rate is typically held (if you lock it in), and you have a clear budget for house hunting. After expiry, you'll need to reapply with updated income and credit documentation.

Question 3

Can I use RRSP Home Buyers' Plan funds, and how does repayment work?

Accepted Answer

Yes! The Home Buyers' Plan (HBP) lets you withdraw up to $35,000 from your RRSP tax-free for a down payment (or $70,000 for a couple). You must repay the amount over 15 years, starting the second year after withdrawal. If you miss a repayment, that amount is added to your taxable income for the year.

Question 4

What closing costs should I budget for in Ontario?

Accepted Answer

Plan for 1.5% to 4% of the purchase price. This includes legal fees ($1,500–$2,500), land transfer tax (varies by price and location—Toronto has an additional municipal LTT), title insurance ($200–$400), home inspection ($400–$600), appraisal (if required, $300–$500), and adjustments for property taxes and utilities.

Question 5

Fixed vs variable—how should a first-time buyer think about this?

Accepted Answer

Fixed rates offer payment stability and protection from rate increases, which is great for budgeting. Variable rates can be lower initially and may save money if rates drop, but payments can increase if the prime rate rises. First-time buyers often prefer fixed for peace of mind, but your comfort with risk and market outlook matter too.

Question 6

Can gifted down payment funds be used (rules and documentation)?

Accepted Answer

Yes, gifted funds from immediate family (parents, siblings, grandparents) are commonly accepted. You'll need a signed gift letter stating the amount, that it's a true gift (not a loan), and the relationship. The donor may also need to show proof of funds. Lenders want to ensure the gift doesn't create hidden debt.

Question 7

Do I need mortgage default insurance (CMHC, Sagen, Canada Guaranty)?

Accepted Answer

If your down payment is less than 20%, yes—mortgage default insurance is mandatory in Canada. It protects the lender if you default. The premium (typically 2.8% to 4% of the loan amount) can be added to your mortgage. With 20% or more down, you avoid this cost.

Question 8

What credit score do I need to qualify?

Accepted Answer

Most traditional lenders look for a credit score of 650 or higher. Scores above 700 typically unlock better rates and terms. If your score is lower, you may still qualify through alternative lenders, though rates and fees will be higher. Building credit history and paying bills on time are key.

Question 9

Refinance vs switch/transfer vs early renewal—what's the difference?

Accepted Answer

A refinance changes your mortgage amount (often to access equity), which requires a new application, appraisal, and legal work. A switch/transfer moves your existing balance to a new lender at maturity with minimal cost. An early renewal extends your term before maturity, sometimes with a penalty. Each has different costs and purposes.

Question 10

What's the typical max LTV for refinances in Canada?

Accepted Answer

For educational purposes, refinances commonly allow up to 80% loan-to-value (LTV) of your home's appraised value. So if your home is worth $500,000, you could refinance up to $400,000. The remaining 20% is your equity. Specific limits depend on lender policies and your financial profile.

Question 11

What is an IRD penalty vs 3-month interest?

Accepted Answer

If you break a fixed-rate mortgage early, you'll pay the greater of three months' interest or an Interest Rate Differential (IRD), which compares your rate to current rates for the remaining term. Variable-rate mortgages typically only charge three months' interest. IRD penalties can be substantial, so it's important to calculate before refinancing.

Question 12

When is an appraisal required and who orders it?

Accepted Answer

An appraisal is almost always required for a refinance to confirm your home's current market value. Your mortgage broker or lender orders it, and you typically pay the fee ($300–$500). The appraiser inspects the property and compares it to recent sales in your area.

Question 13

HELOC vs refinance—pros and cons?

Accepted Answer

A HELOC (Home Equity Line of Credit) is revolving credit secured by your home, offering flexibility to borrow and repay as needed, often with interest-only payments. A refinance replaces your mortgage with a new one, consolidating debt or accessing equity in a lump sum with fixed payments. HELOCs are great for ongoing needs; refinances suit one-time consolidation or major expenses.

Question 14

How long does a refinance take in Ontario?

Accepted Answer

Typically 3 to 6 weeks from application to closing. This includes appraisal scheduling, underwriting, legal document preparation, and final funding. If you need funds urgently, let your broker know—some scenarios can be expedited.

Question 15

Will refinancing hurt my credit score?

Accepted Answer

Refinancing involves a credit inquiry, which may cause a small, temporary dip (usually 5–10 points). However, if you use the refinance to consolidate high-interest debt and improve your credit utilization, your score can improve over time. The long-term impact is typically positive if managed well.

Question 16

How does consolidating debts into a mortgage work in Canada?

Accepted Answer

You refinance your mortgage to access home equity, using the funds to pay off high-interest debts like credit cards, car loans, or lines of credit. This rolls everything into one lower-rate mortgage payment. You'll need sufficient equity (typically up to 80% LTV) and must qualify based on the new mortgage amount.

Question 17

Will consolidation help or hurt my credit over time?

Accepted Answer

Initially, your score may dip slightly due to the credit inquiry and closing of accounts. However, paying off high-balance revolving credit improves your utilization ratio, and consistent mortgage payments build positive history. Over 6–12 months, most people see their score improve if they avoid re-accumulating debt.

Question 18

Should I close paid-off credit cards after consolidating?

Accepted Answer

Not necessarily. Keeping cards open (with zero balances) maintains your available credit and credit history length, both of which help your score. However, if you're tempted to overspend, closing some accounts may be wise. Discuss your habits and goals with your broker to decide what's best.

Question 19

What debts can I consolidate into my mortgage?

Accepted Answer

Most unsecured debts can be consolidated: credit cards, personal loans, lines of credit, car loans, student loans, and even tax debt. Secured debts (like a second mortgage) may require special handling. Your broker will review your full debt picture to create a consolidation plan.

Question 20

How much can I save by consolidating?

Accepted Answer

Savings depend on your current interest rates and balances. For example, if you're paying 19.99% on $30,000 in credit card debt, consolidating into a mortgage at 5.5% could save you hundreds per month in interest. Your broker can run scenarios to show exact savings and break-even timelines.

Question 21

What if I don't have enough equity to consolidate all my debt?

Accepted Answer

If you can't access enough equity through a refinance (up to 80% LTV), you might consider a second mortgage or alternative lending options. These have higher rates but can still provide relief. Your broker will explore all options and recommend the best path based on your situation.

Question 22

What is a second mortgage and how does it sit behind my first?

Accepted Answer

A second mortgage is a loan secured by your home equity, subordinate to your first mortgage. If you default, the first mortgage is paid first from sale proceeds, then the second. Because of this higher risk, second mortgages have higher interest rates (typically 8%–15%) but offer faster access to funds without refinancing your first.

Question 23

Interest-only vs amortizing: what's the difference?

Accepted Answer

Interest-only second mortgages require you to pay only the interest each month, with the principal due at maturity (often 1–2 years). Amortizing second mortgages include principal and interest, gradually paying down the balance over the term. Interest-only keeps payments lower but requires a plan to repay or refinance the principal.

Question 24

What are common exit strategies for second mortgages?

Accepted Answer

Most people exit by refinancing their first mortgage to pay off the second (once equity or credit improves), selling the property, or renewing the second mortgage if needed. Second mortgages are typically short-term (1–3 years), so planning your exit strategy upfront is essential.

Question 25

How much can I borrow with a second mortgage?

Accepted Answer

Combined with your first mortgage, you can typically borrow up to 80%–85% of your home's value (some private lenders go higher). For example, if your home is worth $500,000 and you owe $300,000 on your first mortgage, you might access $100,000–$125,000 through a second mortgage.

Question 26

What are the costs and fees for a second mortgage?

Accepted Answer

Expect lender fees (1%–3% of the loan amount), appraisal ($300–$500), legal fees ($800–$1,500), and possibly broker fees. These costs are often added to the loan amount. While more expensive than refinancing, second mortgages avoid breaking your first mortgage and paying penalties.

Question 27

Who typically qualifies for a reverse mortgage?

Accepted Answer

You must be 55 or older, own your home (or have significant equity), and live in it as your primary residence. There's no income or credit requirement. The amount you can borrow depends on your age, home value, and location—older homeowners and higher-value homes typically qualify for more.

Question 28

Do I keep ownership and stay on title?

Accepted Answer

Yes! You retain full ownership and remain on title. You can live in your home as long as you wish, and you're responsible for property taxes, insurance, and maintenance. The loan is only repaid when you sell, move out permanently, or pass away.

Question 29

Are monthly payments required?

Accepted Answer

No monthly payments are required with most reverse mortgage programs. Interest accrues and is added to the loan balance over time. You can make voluntary payments if you wish, but there's no obligation. This makes reverse mortgages appealing for retirees with limited income.

Question 30

What costs should I expect?

Accepted Answer

Costs include an appraisal ($300–$500), legal fees ($1,500–$2,500), Independent Legal Advice (ILA, $300–$500), and setup/administration fees (varies by lender). Some lenders also charge higher interest rates than traditional mortgages. Your broker will provide a full cost breakdown.

Question 31

Will my family owe beyond the home's value?

Accepted Answer

Most reverse mortgage programs in Canada include a no-negative-equity guarantee, meaning your estate will never owe more than the home's fair market value at the time of sale. However, this is program-specific, so confirm with your broker and review the terms carefully.

Question 32

Can I still leave my home to my children?

Accepted Answer

Yes. Your heirs can choose to repay the reverse mortgage and keep the home, or sell the home and keep any remaining equity after the loan is repaid. Reverse mortgages reduce the equity available to heirs, so it's important to discuss your plans with family.

Question 33

What happens if I need to move to long-term care?

Accepted Answer

If you move out permanently (e.g., to a long-term care facility), the reverse mortgage becomes due. You or your family will need to repay the loan, typically by selling the home. Some programs allow a grace period (6–12 months) to arrange the sale.

Question 34

What counts as self-employed income?

Accepted Answer

Self-employed income includes earnings from sole proprietorships, partnerships, corporations (if you own 25%+ or are a key decision-maker), and contract/freelance work. Lenders typically look at your net income (after expenses) from tax returns, though some programs consider gross income or bank statements.

Question 35

Two-year average vs most-recent year—how do lenders look at it?

Accepted Answer

Most traditional lenders average your net income over the past two years of tax returns (Notices of Assessment). If your income is declining, they may use the lower recent year. If it's growing, they might give more weight to the latest year. Consistency and upward trends help your case.

Question 36

What is an 'alt-doc' or 'bank-statement' approach?

Accepted Answer

Alternative documentation (alt-doc) programs let you qualify using bank statements, contracts, or other proof of income instead of full tax returns. These are educational options for self-employed borrowers with strong cash flow but lower reported income. Rates and down payments are typically higher, and not all lenders offer this.

Question 37

What documents do I need as a self-employed borrower?

Accepted Answer

Expect to provide: two years of personal tax returns (T1 Generals) and Notices of Assessment, two years of business financials (T2s for corporations, or T2125/partnership returns), year-to-date profit & loss statement, business bank statements (3–6 months), and proof of business registration. Your broker will guide you through the checklist.

Question 38

Can I add back certain expenses to increase my qualifying income?

Accepted Answer

Yes, some lenders allow add-backs for non-cash expenses like depreciation, amortization, and certain one-time write-offs. This can boost your qualifying income. Your broker and accountant can identify eligible add-backs and present them to the lender.

Question 39

Do I need a larger down payment as a self-employed borrower?

Accepted Answer

Not necessarily. If you meet traditional income verification requirements, you can qualify with the same minimum down payment as salaried borrowers (5%–20%, depending on price). However, if you use alternative documentation, some lenders may require 10%–20% or more.

Question 40

What's the down payment for a non-owner-occupied rental property?

Accepted Answer

For a property you won't live in, you typically need at least 20% down. If you're buying a property with a legal suite and living in part of it (owner-occupied), you may qualify for as little as 5% down, depending on the configuration and lender.

Question 41

How is rental income treated—add-back vs offset?

Accepted Answer

Lenders use rental income to help you qualify, but the method varies. Some add a percentage (often 50%–80%) of the gross rent to your income. Others offset the rental income against the property's carrying costs (mortgage, taxes, condo fees). Your broker will explain which method applies and how it affects your qualification.

Question 42

What documentation is needed for rental income?

Accepted Answer

You'll need a signed lease agreement (if tenanted), or an appraisal with market rent estimates (if vacant). Some lenders also want to see rental income reported on your tax returns (if you already own rentals). Bank statements showing rent deposits can strengthen your application.

Question 43

Can I buy multiple investment properties?

Accepted Answer

Yes, but lenders have limits on the number of financed properties (often 4–10, depending on the lender). Each additional property requires you to re-qualify, and lenders will assess your overall debt servicing and portfolio risk. Strong income, credit, and equity help you scale.

Question 44

What's the difference between 1–4 units and 5+ units?

Accepted Answer

Properties with 1–4 units (single-family, duplex, triplex, fourplex) are typically financed as residential mortgages. Properties with 5+ units are considered commercial and require commercial financing, which has different qualification criteria, rates, and down payment requirements (often 25%–35%).

Question 45

Are short-term rentals (Airbnb) treated differently?

Accepted Answer

Yes. Short-term rental income is often viewed as business income and may require different documentation (tax returns showing rental income, booking history, etc.). Some lenders are cautious about short-term rentals due to regulatory risks and income volatility. Discuss your plans with your broker early.

Question 46

What are typical closing cost items in Ontario?

Accepted Answer

Closing costs include legal fees ($1,500–$2,500), land transfer tax (varies by price and location), title insurance ($200–$400), home inspection ($400–$600), appraisal (if required, $300–$500), property tax and utility adjustments, and mortgage default insurance premium (if applicable). Budget 1.5%–4% of the purchase price.

Question 47

How is Ontario Land Transfer Tax calculated?

Accepted Answer

Ontario LTT is tiered: 0.5% on the first $55,000, 1% on $55,000–$250,000, 1.5% on $250,000–$400,000, 2% on $400,000–$2 million, and 2.5% above $2 million. First-time buyers get a rebate up to $4,000. Toronto has an additional municipal LTT with similar tiers. Use a calculator for exact amounts.

Question 48

What is Independent Legal Advice (ILA) and why is it common?

Accepted Answer

ILA is when you consult a separate lawyer (not the lender's lawyer) to review and explain the mortgage terms, especially for high-ratio, private, or second mortgages. It ensures you understand your obligations and protects both you and the lender. The cost is typically $300–$500.

Question 49

Do I need a home inspection?

Accepted Answer

While not legally required, a home inspection ($400–$600) is highly recommended. It identifies potential issues (roof, foundation, electrical, plumbing) before you commit. Lenders don't require it, but it protects your investment and can be a condition in your offer.

Question 50

What are property tax and utility adjustments?

Accepted Answer

At closing, you reimburse the seller for any prepaid property taxes or utilities (e.g., if they paid taxes for the full year but you're closing mid-year). Conversely, if taxes are owing, you may receive a credit. Your lawyer calculates these adjustments and includes them in your closing statement.

Question 51

Can closing costs be added to my mortgage?

Accepted Answer

Mortgage default insurance premiums (CMHC, Sagen, Canada Guaranty) can be added to your mortgage. However, most other closing costs (legal, LTT, inspections) must be paid upfront from your own funds. Plan to have 1.5%–4% of the purchase price in cash, separate from your down payment.

Question 52

Why is the qualifying payment higher than the contract payment?

Accepted Answer

In Canada, lenders use the stress test to ensure you can afford your mortgage if rates rise. You must qualify at the higher of your contract rate + 2% or the Bank of Canada's benchmark rate (currently 5.25%). This means your qualifying payment is calculated at a higher rate than what you'll actually pay, ensuring a safety buffer.

Question 53

How do GDS/TDS estimates work?

Accepted Answer

GDS (Gross Debt Service) is the percentage of your gross income spent on housing costs (mortgage, taxes, heat, condo fees). TDS (Total Debt Service) adds all other debts (car loans, credit cards, etc.). Lenders typically want GDS ≤ 32%–39% and TDS ≤ 42%–44%, though limits vary by lender and program.

Question 54

What does the amortization schedule show?

Accepted Answer

An amortization schedule breaks down each mortgage payment into principal and interest over the life of the loan. Early payments are mostly interest; later payments are mostly principal. It also shows your remaining balance after each payment, helping you see how extra payments or lump sums accelerate payoff.

Question 55

How accurate are online mortgage calculators?

Accepted Answer

Online calculators provide helpful estimates but use assumptions (rates, fees, taxes) that may not match your exact situation. For precise numbers, speak with a mortgage broker who can access real-time rates, factor in your credit and income, and account for all costs and fees.

Question 56

Can I use calculators to compare fixed vs variable rates?

Accepted Answer

Yes! Many calculators let you input different rates and terms to compare total interest paid and monthly payments. However, variable rates can change over time, so projections are estimates. Your broker can run scenarios and discuss the trade-offs based on your risk tolerance and market outlook.

Question 57

How quickly do you usually respond?

Accepted Answer

I typically respond within 1 business day, often sooner. If you reach out on a weekend or holiday, I'll get back to you the next business day. For urgent matters, feel free to call or text 647-200-2246.

Question 58

What areas of Ontario do you serve?

Accepted Answer

I serve clients across Ontario, including the Greater Toronto Area (Toronto, Mississauga, Brampton, Vaughan, Markham, Richmond Hill), Hamilton, Burlington, Oakville, Milton, Kitchener-Waterloo, Guelph, London, Ottawa, Kingston, Windsor, Barrie, Niagara, Durham, Peel, York, and Halton regions. If you're elsewhere in Ontario, reach out—I'm happy to help!

Question 59

Do you coordinate with my Realtor and lawyer?

Accepted Answer

Absolutely. I work closely with your Realtor to ensure financing aligns with your offer and closing timeline, and with your lawyer to coordinate document signing, funding, and closing. Clear communication among all parties makes for a smooth transaction.

Question 60

How do you protect my information?

Accepted Answer

I take privacy and security seriously. All documents are transmitted via secure, encrypted channels. I comply with Canadian privacy laws (PIPEDA) and Mortgage Architects' privacy policies. Your information is only shared with lenders and partners as needed to process your application, and never sold or misused.

Question 61

Do you quote rates?

Accepted Answer

Rates vary daily and depend on your credit, income, property, and lender. I provide educational rate ranges and can share current rates once I understand your situation. All rates are subject to qualification and change without notice. I'll always work to secure the best rate and terms for your needs.

Question 62

What documents should I bring to our first call?

Accepted Answer

For our initial conversation, no documents are needed—just your questions and goals! Once we decide to move forward, I'll provide a checklist tailored to your situation (typically income verification, credit consent, property details, and ID). I'll guide you through every step.

Question 63

What is your brokerage and license information?

Accepted Answer

I'm Stephanie Karulas, Mortgage Agent Level 1 (License #M24000537), working with Mortgage Architects (Brokerage #12728). Mortgage Architects is one of Canada's largest and most respected mortgage brokerages, giving me access to a wide range of lenders and programs to find the best fit for you.

Question 64

Do you charge fees for your services?

Accepted Answer

In most cases, I'm compensated by the lender, so there's no cost to you for my services. For certain scenarios (private lending, complex files), there may be a broker fee, which I'll disclose upfront. Transparency is key—you'll always know what to expect.

Mortgage FAQ (Ontario)

First-Time Buyers

Refinances

Still need help?

Debt Consolidation

Second Mortgages

Still need help?

Reverse Mortgages (55+)

Self-Employed

Still need help?

Investment Properties

Costs & Closing (Ontario)

Still need help?

Calculators & Tools

General & Compliance

Ask a Question

Explore More Resources

Mortgage Calculators

Mortgage Guides

Contact Stephanie

Book Your Free Consultation