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Mortgage Refinance

Clover Mortgage Can Help You Refinance Your Mortgage At Great Low Rates With The Best Lenders In The Industry!

What is a mortgage refinance?

A mortgage refinance is a new mortgage that is taken out either to replace a current mortgage. It is a term loan that a homeowner can apply for in the same amount as an existing mortgage or a greater amount. A homeowner may also apply to combine a first and second mortgage into a single first mortgage at a lower overall interest rate, or as a second mortgage that is in addition to a current first mortgage. As with a new purchase mortgage, a home refinance is secured against your home. A qualified mortgage broker can help increase your chances of getting your mortgage refinance application approved at the lowest rate available to you.

Homeowners can refinance their mortgage on a home or commercial property with the help of an experienced and qualified Clover Mortgage broker to guide you through the process. When refinancing your mortgage, you may be able to get a lower interest rate, better terms, longer amortization, or use the extra cash for a number of different reasons. Through refinancing your mortgage, you can gain access to much needed cash for many different purposes. Since that cash can go directly into your savings accounts or chequing accounts, you can use it for whatever needs you may have.

Mortgage brokers have access to a wide variety of lenders, and can help you get great refinancing rates at a bank, or through alternative lenders in the event that your credit is bad or less than ideal, you have too many revolving debt on cards, your income is low, or you are self-employed and have a non-traditional was of reporting your income.
Whether you are looking to refinance your current mortgage to take out extra money from the equity you have in your home for personal use, to consolidate debts or pay off higher interest debts, to renovate your home, to finance a car, or for any other reason, the experts at Clover Mortgage can help you get the best deal that’s right for you.

A mortgage refinance allows a borrower to alter the terms of their current mortgage agreement for something that better suits their financial situation and needs.

If your income and credit score has improved since you first took out your mortgage, or since your most recent mortgage renewal or refinancing, you might be interested in refinancing to secure a better interest rate and lower monthly payments. On the other hand, if you are in a tough financial situation, or need extra cash to pay for home renovations or home improvements, fund other expenses like university tuition and education financing, pay for divorce costs, or anything else that you need, you might want to refinance your mortgage and borrow additional funds using the equity you have available in your home. This will allow you to use that extra money without having to take out a second mortgage or private mortgage.

When should you refinance your mortgage?

Here are some of the reasons why a homeowner may decide to refinance their existing mortgage:

 

  • Mortgage refinance for consolidating debt using the available equity from your home or commercial property: If you have high interest debts, such as a credit card debt or other loans, that are piling up, then using the equity that is available in your property for refinancing your mortgage and taking the extra money to put it towards paying off your existing debts such as back taxes. An equity loan that uses your home equity for refinancing your mortgage for the purpose of debt consolidation using your property’s available equity can help consolidate all of your higher interest loan payments into one single lower monthly payment. This can make it much easier on your cashflow dues to not having to make high payments every month. Bad or high debt accounts for a large portion of poor credit scores in Canada.Consolidating your debts, such as credit cards which usually have maximum interest rates, overdue accounts and bills, and other bad debt accounts can help you with your cashflow management problem during your retirement years or during tough points in your life. By using a mortgage refinancing to withdraw cash from your home’s available equity can help you if you feel like you are running low on funds in your chequing account at the end of every month.Since mortgage rates tend to be much lower than credit card rates and other high interest rate debts, you can use part of the money you have left over at the end of every month to pay off the outstanding principal balance of your debt at a faster rate. If you are thinking to consolidate your debt in the form of a home mortgage refinance can also help you with credit repair. It is important to know that depending on your situation and the lender, you may be required to completely cover and close some of your credit card accounts.A poor credit history and score can be improved if you play your cards right by reducing your remaining balance on a credit card and re-establishing yourself as a good borrower can go a long way now in today’s current banking world when looking to borrow for a mortgage or refinance. The market is hungry for good borrowers. When you compare your credit limit to the remaining balance owing, the more debt you owe on credit cards in comparison to your credit limit can account largely for a bad credit score. Your mortgage lender will deposit the extra money directly into your chequing bank account or savings account, and you can use that money to pay off the maximum amount of your debts that you can. An improved credit score can help you qualify for lower mortgage rates in the future.Mortgage brokers can help you find ways to minimize your balances on cards and other debt, and can help you search for ways that you can improve your credit score at the same time.
  • Mortgage refinancing to renovate a home: Home renovations can be expensive and home improvement store credit cards usually have high interest rates associated with them. By using the equity that you have available in a commercial property or from your home equity, you can pay for your home renovations at a much better rate than if you were to put all of your purchases on a store or personal credit card. Home renovations accounts for a fair portion of home refinancing.With an equity loan such to refinance a mortgage loan you could also be able to take out enough cash to help pay and account for the labour cost associated when you finance a home renovation. The mortgage rates that are commonly offered on refinances are lower than the rates of these renovation store cards.As per a recent 2019 online news article, extensive renovations to a house are most common during the warmer months in Canada. When planning to renovate your, you should start by giving yourself a month, at the very least, for the home refinancing if you are able to qualify at a traditional institutional bank lender.It is good practice to leave yourself with at least a week if you are planning on going through an alternative lender or private lender who specializes in investing into mortgages. Start to submit your application for the refinance in advance to avoid larger fees and interests. In the event that you cannot qualify for a mortgage refinancing at a conventional banking institution, then an alternative B lender or private lender may be your only opportunity to get approved for a mortgage refinance. In the case of refinancing private mortgages, Clover Mortgage can in certain circumstances provide a borrower with a private mortgage loan in as little as two days.Keep in mind that mortgage rates are higher on a private mortgage. Due to these increased mortgage rates, private mortgages are usually seen as a last resort or temporary solution for a term of 1 year or in some cases a 2 year term.

 

  • Mortgage refinance to improve cashflow management: Sometimes we find ourselves encountering different types of challenges in life such as job loss, increased expenses, and other situations that put us in a position where our cashflow is low, restricting and difficult to balance. Sometimes we have one bad financial year, but the damage caused during that year may impact us beyond that year. We do not always foresee these situations and are not always able to effectively plan and prepare for them. During retirement can be a time when cashflow is not enough to sustain a comfortable lifestyle.If you are a homeowner, then one of the quick and easy solutions that may be available to you can be refinancing your mortgage. You can use the additional cash to help temporarily alleviate some of your cashflow management issues while you are doing what’s necessary to improve your situation.If you own your house or property contact Clover Mortgage to speak with one of our experienced and helpful mortgage brokers. We can help determine if you would qualify for a mortgage refinancing, how much you might qualify for, and which mortgage lender would offer you the best fixed or variable rates and terms.
  • Mortgage refinancing to have money for a down payment to purchase another home or investment property: Many people want to, or consider to, invest into real estate. As you may have read in the news online, or seen in real estate investment video content online on YouTube, it can be hard to save a down payment large enough to buy a home in today’s market. With the current high home prices in major Canadian cities Toronto, Ottawa, Mississauga, Oakville, Burlington, and surrounding areas in Ontario, the down payment needed to purchase an investment property can be a limiting factor for most people living in Canada. Many people who plan on buying additional properties are now left feeling limited with their options for financing. There are more and more Canadians who are turning to refinancing their mortgages and using the extra funds as a down payment or deposit on buying additional homes, commercial properties, and investment and income properties.Since the change to the banking system policy regulations, it can sometimes be next to impossible to get approved to refinance your mortgage through a bank in Ontario, many borrowers are turning to alternative lending solutions for their home and commercial property financing needs.

 

  • Mortgage refinance to invest: Aside from investing into properties, some Ontario homeowners choose to refinance their mortgages at a lower interest rate. These days, some homeowners are using these funds and investing the money into investment tools such as lending money for private mortgage investing, that yields much greater returns. This is called financial leveraging. This is what the banking industry is built on and what bankers have built their careers on. Financial leveraging is when someone is borrowing money at a lower interest to lend it out at a higher interest. The difference is their profit.Here is an example of financial leveraging plan using the available equity in a home:Let’s say that you can refinance an extra $100,000 in mortgage from your home equity at 2.74% as a fixed rate, as opposed to variable mortgage rate, on a 5 year term period. If you were to invest that $100,000 into a into a higher interest private mortgage loan that will pay you 10% interest, then you would be earning 7.26% as a gross profit.A home refinancing can also include with it a HELOC line, also known as a Home Equity Line of Credit. A HELOC credit line is secured by your home and typically carries a higher interest rate than your mortgage, but is revolving and can be used and paid back as you wish regardless of the interest rate.Here is an example of how you might be able to leverage a Heloc line to invest into other higher interest investment tools:Let’s pretend you can qualify for a $100,000 Heloc at a 3.95% rate. If you were to invest that $100,000 into an investment such as a lending on private mortgage loan at 10%, then you would be earning the difference which in this case is a gross profit of 6.05%.Heloc rates are always variable rates and will often times differ from mortgage rates and are based on a number of factors.Use our Mortgage Refinance Calculator to help you understand how much of a refinance you might be eligible for. Please visit our Tools Page where you can find other great calculators and valuable information. Use these calculators and useful checklists to better understand what mortgage options might work for you. Also, these calculators take seconds to use.
  • Mortgage refinancing to pay for education or pay off student and education debt: With post-secondary education becoming more and more expensive, many homeowners are turning to mortgage refinancing as a way to pay for their child’s college or university education. Refinancing your home can also be a great solution to paying back higher rate student and education loans.

 

  • Mortgage refinance to lower mortgage rates: Now, with today’s low rates, some Canadian property owners are refinancing their properties to get lower mortgage rates.As an example, let us say that you own a home and have an older first mortgage of $500,000 at an rate of 2% and a second mortgage of $200,000 at a rate of 8%. Your actual rate when taking into account both mortgages totalling $700,000 would be 2% multiplied by $500,000 plus 8% multiplied by $200,000 will give you $26,000. Divide 26,000 by 700,000 and that will leave you with a combined interest rate of 3.71% on $700,000.If you were able to refinance both mortgages into one single first mortgage with an interest rate of 3%, then you will end up saving a difference of 0.71% or $4,900 of interest over the course of one year.Depending on what your mortgage agreement specifies as the fee that you would pay as a penalty that you would have to pay for breaking your first mortgage early, the mortgage rates that you might qualify on the combination of your first and second mortgage can often times help you save a lot.

 

  • A seniors reverse mortgage refinance for retirement: If you are over the age of 55 and own your home, then you might be able to qualify for a reverse mortgage. A reverse mortgage will give you a portion of the available equity in your home in cash and requires no monthly payment for as long as you remain living in your home. This can be a great way to improve your cashflow during your retirement years.

Homeowners are often confused about the difference between renewing and refinancing a mortgage. A mortgage renewal happens at the end of the mortgage term if there is still an outstanding balance owed to the lender. In many cases, borrowers tend to renew their contract with the same lender at the same interest rate, or higher in many cases these days, and the same term. Unfortunately, you might be paying too much if you don’t shop around with other lenders when renewing your mortgage.

How can I qualify for a mortgage refinancing?

Qualifying to refinance a mortgage is similar to qualifying for a mortgage. If you are looking to get your refinance loan from a bank that you are banking with, since they might in some cases be able to offer lower mortgage rates, you will want to have a strong credit history along with enough declared income to qualify at the higher mortgage stress test rate. This is due to the strict rules that traditional banking institutions are required to adhere to. Depending on how your credit score and income might compare to the what is required by the new policy regulations, you may be required to turn to an alternative or private mortgage lender.

If you plan on refinancing your property, but you have less than ideal credit or bad credit, low income, or are self employed or working for tips and declare your income in an non-conventional way, then you would be better off to submit your mortgage refinancing loan appliaction to an alternative boutique lender or a private mortgage lender. This will almost always result in higher mortgage rates ranging from as small as 1% higher to as high as 8% higher than the regular mortgage rates. If you contact one of our mortgage brokers at Clover Mortgage, they will help you qualify for the lowest possible mortgage rates that are available to you and help you compare your options in order to select the right one for your needs.

Here are a few tips and things you may need to provide to your broker and lender to qualify for a mortgage refinance loan:

  • Two pieces of identification with your legal name
  • Contact information
  • Two recent paystubs if you are employed by a company
  • 1 year or 2 years of recent your most recent Notice of Assessment (NOA)
  • 1 year or 2 years of your most recent T1 Generals or T4’s (many lenders will consider 100% of your retirement pension, and other retirement benefits when calculating your income, so provide as much income information as possible)
  • Articles of Incorporation or Business Licence if you are self-employed or incorporated
  • Most recent 3 months or up to 1 year of banking statements from your accounts (business bank statements if you are incorporated)
  • Recent mortgage statement
  • Recent property tax bill to ensure that you do not have any tax arrears
  • A recent appraisal of your home conducted by a reputable third party, or you may in some cases opt to only have your property inspected by the lender or a third party of the lender’s choosing (this is usually quicker and less costly than a full appraisal). Depending on the lender, they may choose to use either method to determine the value and condition of your property.

It is important to note that in order to protect and ensure your guaranteed privacy, mortgage brokers will provide you the original copies of any documents and will shred any copies that are not originals. Your privacy is a top priority for our team at Clover Mortgage.

In some situations, you may not be required to provide all of these documents, and in some cases you may be asked for more documents depending on the type of lender and certain other factors. If you are self employed or declare your income in non-conventional ways, then you may be required to provide statements for all of your accounts when submitting your application for a mortgage refinance through a traditional institutional lender.

Pros and cons of refinancing your mortgage

While refinancing your mortgage can have its rewards and advantages, there are some things you should know before proceeding to apply for a home or commercial refinance.

Advantages and rewards to refinancing your mortgage:

Debt consolidation

You can lower your business or personal debt through debt consolidation using the extra funds you draw out of the equity of your home through your refinance loan. If you have built up enough available equity in your home, then you should be able to pay out high interest personal or business debts, such as credit on various cards, using the money you get from your home refinance loan. These debts can include a car loan, student education loan, a line of credit, high interest travel rewards and points credit card bills, and other types of debts, bills, an overdue tax payment, and different types of loans.

The Clover Mortgage Home Equity Loan Calculator, is one of several mortgage calculators and tools that can help you better understand how you might benefit from a debt consolidation home refinance loan. These calculators are great because they make complicated formulas simple and it only takes a few seconds to get the answers you are looking for using calculators that are available online.

Repair your credit

You can start to improve and rebuild your credit by paying off higher interest revolving debt such as a rewards credit card and other cards (which tend to carry higher debts and yearly fees than regular cards), past due property or personal tax bills, or other outstanding credit cards. By reducing the balance remaining on your revolving debts on cards and using the extra funds to ensure that you pay all of your bills and bring any past due debt arrears and cards into good standing, you can find your credit score grow and build before your eyes. Improved credit will lead you to significant savings in interest when applying for a mortgage in the future.

Evan small debts that are overdue can negatively affect your credit report. This is provided that other aspects of your financial situation are in good standing as it relates to your credit history. Paying down your credit cards can result in additional benefits too. You should also make sure that you pay your obligations in due time every month. Although you don’t have to be debt free to have good credit, getting close to being debt free can certainly help.

You will find that an improved credit score will come with many rewards such as reduced interest rates when applying for future financing loans, quicker and simpler approvals, and much more. Since your credit score is partly based on your loan to credit limit ratios, reducing that ratio it can help improve your credit profile and score.

Take advantage of lower mortgage rates

Depending on the prepayment penalty fee that may be involved with breaking your mortgage, based on your agreement, you may have a great advantage by refinancing your mortgage to get a great new low rate that can lead to significant savings. The qualified mortgage brokers at Clover Mortgage can help you crunch the numbers to make sure they present you with only the best possible options for you and that all the links fit together. If the numbers work, then you may have a few options available to you that can end up saving you tens of thousands of dollars over time.

If you have a variable rate mortgage, you will be paying a prepayment penalty of only three months interest to break your mortgage at any time during your term period. If your mortgage is a fixed rate mortgage, then you are likely going to be required to pay the greater of either three months of interest or the interest differential penalty, also known as the IRD. Contact us at Clover Mortgage to speak with a professional broker who can help you calculate the exact amount of penalty for the prepayment of your mortgage, based on your specific mortgage agreement.

If you get mortgage insurance for your mortgage through an insurance company like Genworth Insurance or CMHC Insurance, you might be able to qualify for even lower rates.

Access cash through the equity in your home or commercial property

Through a conventional bank, you can access up to 80% of your home’s value in total mortgages. If you step outside of the conventional banking system in Canada, then you can access up to 85% of your home or commercial property’s value and in some cases even 90% of the value of your home or commercial property’s equity as a first, second, or third mortgage. Once you and your lender close on the deal, your excess funds will be deposited directly into your chequing account or savings accounts. You can use those funds for whatever you’d like, including debt consolidation, investments, or even luxury purchases and travel. You can take that vacation you’ve been dreaming about for years.

Some potential drawbacks to refinancing your property:

Refinancing fees

Depending on a variety of factors, including whether your mortgage broker helps you refinance through a bank, a B lender, or a private lender, you will incur different costs when refinancing your mortgage. Legal costs, potential lender and broker fees should all be factored in when you account for what the cost will be. Great mortgage brokers will list out every single cost dollar by dollar to you before you commit to refinancing your mortgage loan, so that you can see exactly what you will be paying for and how much money you will need on the day of closing.

When refinancing through a conventional banking company, you may save a portion of the brokerage fees since some of the AAA banks in Canada pay the brokers directly for their services, though the application process tends to be much more daunting and difficult to go through.

Penalties for breaking your mortgage early

As mentioned earlier, depending on the types of mortgage you have, and if it is a fixed rate mortgage or variable rate mortgage, you may only be required to pay a fee as little as three months interest or an interest differential payment (IRD). The team of experienced mortgage brokers from Clover Mortgage will search for the best option for you with the right fee structure for your needs and try to save you money.

A mortgage refinance allows you to entirely swap the terms of your current mortgage contract for a different arrangement. You don’t have to wait for your mortgage term to end or approach the renewal date, you can be apply for a full mortgage refinancing at anytime. However, in most cases a refinance done before the end of the term will require the borrower to pay a prepayment fee. An experienced Clover Mortgage agent can help you better understand if a mortgage refinance is right for you and what fees, if any, might be associated with it. Please refer to our mortgage per-approval checklist to see what documentation you should prepare for completing a proper mortgage refinance application.

Frequently Asked Questions about mortgage refinancing (FAQ)

How easy is it to get approved for a mortgage refinancing at a bank?

Since the stress test and change in other regulations were introduced by the government, the banking system is subjected to much stricter rules. Getting approved for borrowing money for a mortgage or refinance at a bank has become much more difficult, and even impossible for many people in Canada. This change in banking regulations is the main reason why many Canadians are turning to non-traditional lenders outside of the bank world for all of their property borrowing needs.

Poor credit and low income accounts for the majority of bank declines. At Clover Mortgage, we have access and links to over 40 top lenders, many of which do not place much importance on poor credit or low income.

Does mortgage refinancing hurt your credit?

Mortgage refinancing in fact can help improve your credit score if you ensure that you make all of your payments on time. It can also help improve your credit if you use the extra cash that will be deposited straight into your chequing accounts or saving accounts to makes the payments needed to pay off the maximum amount you can on higher interest debts such as credit cards that provide you with travel points and other rewards. These types of credit cards tend to have higher rates than the types that are non rewards based credit cards. By reducing your overall revolving debts and credit cards, you will see that this can greatly help improve your credit score. The maximum credit score possible is 900.

Are mortgage refinancing rates the same as regular mortgage rates?

Although refinancing rates tend to be the same as rates on a new purchase mortgage, the rate that you will be given will depend on a number of qualifying factors. Speak with one of the mortgage brokers at Clover Mortgage who will help you qualify for the best possible mortgage rate, term, and amortization. Good brokers will search until they find the right solutions for you.

Can mortgage insurance help me get lower rates on a mortgage refinancing?

Yes. If you insure your mortgage refinance through a third party mortgage insurance company like CMHC Insurance, then banks and other lenders will likely approve you for even lower rates depending on the promotions and programs they are running. These low rates come as a result of the decreased risk that lenders have when lending you money on your home. There are many mortgage programs that offer the lowest possible rates on insured mortgage loans. Speak our team of brokers at Clover Mortgage to find out what programs might suit you best.

Is their an online glossary or guide relating to mortgage refinancing in Canada?

Here is a brief guide and glossary of mortgage related terms:

  • Adjustable Rate Mortgage (ARM): An adjustable rate mortgage is a mortgage in which the interest rate changes periodically. These changes are based on the prime rates dictated by the banks. An Adjustable Rate Mortgage is also known as a Variable Rate Mortgage (VRM).
  • Amortization: The amortization period of a mortgage is essentially the number of years that it will take a borrower to pay off the entire balance of their mortgage based on a specific interest rate and monthly payment amount. Amortization is the amount of time that it will take to repay a loan in full, including interest that is accrued and the principal loan amount, by a pre-determined schedule of ongoing equal payment.
  • Appraisal: An appraisal is a formally conducted assessment and analyses of the property with the purpose and reason of determining an accurate property value. A proper appraisal is conducted by a qualified, license and unbiased third party appraiser or appraisal company. The value of the property can be determined by a variety of ways including a cost approach, direct comparison approach, income approach, or a combination of those. Arranging for an appraisal on your home or commercial property is one of the services that your mortgage broker will provide you with.
  • Assumption Mortgage: An assumption is a legally binding agreement between the seller of a property and the buyer of that same property. In an assumption, the buyer will be taking over an existing mortgage form the vendor to themselves and assuming the remainder of the payments of that mortgage. This helps save the seller on penalty fees for breaking a mortgage early, and it saves the buyer on closing costs involved when getting a new mortgage.
  • Mortgage Broker: A mortgage broker is a licenced and qualified professional who helps arrange financing for clients who are looking for a new mortgage, a mortgage refinance, or a mortgage renewal. Professional mortgage brokers in Toronto and other parts of Ontario and Canada provide unbiased advice in order to guide you, and have a fiduciary duty to their clients, unlike the banks. Brokers are typically compensated for their services either by the lenders themselves or through brokerage fees charged to the borrower. The fees will depend on the type of financing arranged, the services rendered, and the lenders involved.
  • Closing: The closing is the last step in the process of getting a mortgage. The mortgage closing process involves a few things including a meeting between the buyer, seller, and the lender. At closing of a new property, the title ownership of the property, the property itself, and the money all get legally transferred.
  • Closing Costs: The closing costs are all of the costs that are involved when getting a mortgage or refinancing or renewing a mortgage. These costs include, but are not limited to, legal fee’s, appraisal costs, land transfer taxes, lender fees, mortgage transfer or porting fees, and more. The closing costs can range from 1.5% to as much as 10% depending on the situation. Your mortgage broker can help you calculate and understand all of the closing costs that are associated with your specific mortgage situation. You should note that mortgage renewal costs tend to be less due to the fact that there is usually less work involved since they might not always involve the transfer of a mortgage to a different lender.
  • CMHC: CMHC stands for the Canadian Mortgage Housing Corporation which provides High Ratio Mortgage Insurance to borrowers who might need it to qualify or to get a lower rate. This insurance protects the money that lenders provide to borrowers by guaranteeing them the payments on those funds that they lend towards mortgages in Canada. This insurance also enables homebuyers to buy a home with less than 20% down.
  • Commitment: A commitment letter is a legal document that is signed by both the lender and borrower confirming their agreement to proceed with the mortgage loan. It contains a set of conditions that must be fulfilled and met by the borrower before the lender funds the loan.
  • Construction Loan: A construction loan is a loan that helps the borrower complete the construction of a residential or commercial property. The financing is provide by the lender in stages know as draws, and these draw amounts and timings are based on hitting certain completion milestones. In order to receive the next draw, the next step of the construction process must be complete. Arranging construction loans is one of the services that Clover Mortgage specializes in.
  • Conventional Loan: A conventional loan is a standard mortgage that is not insured by a high ratio mortgage insurer such as Genworth Financial, CMHC, AIG, and more.
  • Credit Report: The credit bureau report is what mortgage brokers, banks, and other financial institutions and lenders use to determine if a borrower will qualify for a loan based on their past credit history, payment history, outstanding revolving debts on cards, and current debt ratios. All of this information is available on an individual’s credit report.
  • Default: Mortgage default occurs when a borrower fails to comply to the their legal obligations that are specified in their mortgage agreement. Most commonly default happens when a borrower stops making their monthly mortgage payments and falls behind.
  • Delinquency: The term delinquency talks about a borrower who is late on their mortgage payments. In many situations where a borrower is constantly late on payment, the lender will execute a power of sale on the property.
  • Down payment: A borrower looking to purchase a property must come up with the money to cover the difference between the amount of mortgage loan they will be taking out and the purchase price. This difference is the down payment amount they need to put down. The typical down payment amount on a new purchase is usually between 5% to 25% of the total purchase price, although a buyer has not limit of how large of a down payment they can give.
  • Equity: Equity is the calculated by taking the value of the property and subtracting any financing, like mortgages and balances outstanding on home line of credits. The remaining unencumbered amount is the owner’s equity.
  • First Mortgage: A first mortgage is a mortgage that is in a first lien position registered against your property and takes priority over any other liens that may be placed again your property. The only way that the first mortgage can ever be put into second position behind another lien is the in the event of a tax lien. With tax liens, the government can place a lien against your property for unpaid back taxes that take priority over a first mortgage or any mortgage. This is why that whenever applying for a mortgage, the lender will always check your tax records to ensure that you are not owing any taxes to the government. Typically this is done by providing your notice of assessment for the most recent 1 or 2 years.
  • Fixed-Rate Mortgage: A fixed rate mortgage is one that the interested rate is guaranteed to remain the same for a specified period of time known as the mortgage term. With a fixed-rate mortgage, both your interest rate and payments are fixed and do not change for the duration of your term.
  • Gross Monthly Income: Your gross monthly income is the total amount of income that you earn each month. The amount is calculated before any deductions, expenses, or debt payments are taken into account.
  • Investor: The term investor, in the mortgage world, refers to the source of funds that are used for the purposes of lending towards mortgages. In exchange for the investment, the investor earns a return in the form of interest that the borrower pays on the funds that they borrow for their mortgage. For an investor, it’s not always all about the return rate, as the security and risk of the investment is of the utmost importance.
  • Lien: A lien is a legal term and is used as security against a home or property in exchange for a mortgage loan, home line of credit, outstanding debts or payments, and so on.
  • Loan-To-Value Ratio: The Loan-To-Value Ratio, also known as the LTV, is a percentage that represents the ratio between a registered mortgage in comparison to the value or purchase price or a property. As an example, if you are buying a home or commercial property for $1,000,000 and need a mortgage of $500,000, then your loan to value ratio will be 50%. Lower LTV’s can lead to lower interest rates and savings in monthly payments.
  • Market Value: The market value of a property is equivalent to the amount that a property will be able to realistically sell for. This value is usually calculated using sales date over the past 90 days of similar comparable property sales. Market value is important when calculating the loan to value of a property.
  • Mortgagee: The mortgagee is the lender that is providing the money for the mortgage loan.
  • Mortgagor: The mortgagor is the borrower or property owner seeking to borrow again their property.
  • Net Effective Income: The net effective income is the gross income of a borrower less all taxes and deductions. Debts like department store cards and other forms of credit debt are not considered in this calculation.
  • Origination Fee: An origination fee is sometimes charged by a lender or mortgage broker. This fee covers the time it takes to prepare, package, submit, and organize the mortgage loan. This fee is usually stated as either a lender fee or broker fee on the disclosure to borrower documents and is calculated as and usually deducted from the gross proceeds of the mortgage.
  • P.I.T.H: The abbreviation P.I.T.H. is used to calculate the monthly expenses that are associated with housing and a mortgage. The abbreviation stands for Principal, Interest, Taxes, and Heat. This calculation is important and is used by a bank or other conventional lender when determining how much of a mortgage a borrower might qualify for.
  • Power of Attorney: A Power of Attorney document is a legal document that gives the authorization to an individual to act and make decisions on behalf of another person in certain legal, medical, and financial situations.
  • Prepayment: A prepayment is a condition of a mortgage where the borrower is allowed by the lender to contribute additional payments to their mortgage that fall outside of the regularly agreed upon payments in the mortgage payment schedule.
  • Prepayment Penalty: The prepayment penalty is charged when a borrower chooses to pay out their mortgage before the expiration of their mortgage term. It is important to understand how your prepayment penalty will be calculated on your mortgage. On the majority of fixed-rate mortgages this penalty is usually calculated as the greater of either 3 months of interest payments or the interest differential for the remainder of the term. On a variable-rate mortgage this penalty is usually only equal to 3 months of interest payments.
  • Principal: The Principal represent the amount that is still outstanding on the mortgage, also referred to as the mortgage balance remaining. The principal is exclusive of interest.
  • Realtor: Realtor is a common term used when referring to or talking about a licensed real estate sales person.
  • Second Mortgage: A second mortgage is a mortgage lien that is in second position after the first mortgage. Any additional liens on the property will go in priority after the second mortgage.
  • Title: The title is a legal document that is used to confirm and verify the legal ownership of a specific real estate property.
  • Title Insurance: Title insurance is insurance that most property owners purchase to guarantee that the property buyer is protected again any fraud and errors on the title of the property.
  • Title Search: A title search is usually conducted by the lawyer representing the buyer of a property. It pulls municipal records and helps confirm who the legal owner of the property is, and to verify if any incumbrances exist on the property. The title search is conducted before registering a mortgage, and is usually a condition of all mortgage contracts.
  • Underwriting: The underwriting process is the process of assessing a potential borrowers ability to qualify and pay for a mortgage. An underwriter of a mortgage will typically assess a borrower’s credit history, employment history, net worth, and debt ratios to determine what kind of mortgage rate, mortgage terms, and mortgage amount would be best suited for them.
  • Variable Rate Mortgage (VRM): See Adjustable Rate Mortgage

Many people may have funds locked away in the banking system through investment vehicles. One popular type of investment is a GIC. The challenge you might find with these long term banking investments is when the investor may want or need to access their money quickly. By refinancing a mortgage, a homeowner can gain access to money whenever they need it, unlike with fixed term types of investment savings such as a GIC. Although a GIC can be a great form of savings and investing instrument, if your debts and bills pile up, breaking your GIC terms it can be extremely difficult and can bring with them expensive penalties to break the terms early.

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Call or text us today at 416-674-6222 or toll free at 1-800-673-2230 for a Free No-Obligation Mortgage consultation.

Why Work With Us

Low Rates

*Commercial Mortgage Rates start as low as 2.75%

*Rates are subject to change. Terms & conditions may apply.

Fast Service

We pride ourselves on quick, easy & honest service. Our clients always come first.

Bad Credit

We specialize in dealing with bad credit & bank declines. We turn a “no” into a “YES!”

Easy Application

*No credit checks. No complicated application and no income required!

*Terms & conditions may apply.

Our Customers Love Us

Sandra F.

I was in debt and needed help getting back on track. My mortgage agent at Clover Mortgage helped me get approved for a home equity loan to consolidate all of my debt in one small monthly payment. Now I’m saving over $1,000 a month in interest and am left with less debt and more money in my pocket at the end of each month. Thank you Clover!

David J.

I’m a self employed independent contractor. I earn a decent income, but when I went to the bank to refinance my home, they denied my application telling me that I didn’t have enough “provable” income to qualify for refinancing my home. When I came to Clover I was almost out of hope. My Mortgage Agent at Clover was caring and professional, and help me get a great rate and flexible terms on full refinance. The whole process took less than 48 hours! I was impressed at how quickly and easily they were able to get me the money and home refinance I needed. Thank you Clover Mortgage, I’m recommending you to everyone I know!!

Andrea R.

I had really bad credit, but really wanted to purchase a Condo. When I went to the bank they made me go through a lengthy application process that took weeks, and then they turned me down at the end of it all. When I found Clover Mortgage online, I called them and a friendly Mortgage Agent was able to help me get approved for a mortgage quickly and hassle-free. I got a good rate and now live in a home that I am comfortable in and am able to easily afford my monthly payments.

Ankur R.

I definitely recommend Clover Mortgage to any new home buyer! They were very professional and helped my husband and I get mortgage for our new home at an even better rate than the bank was offering us. They also helped us get the mortgage with a smaller down-payment than the bank demanded from us. Since we did our mortgage with Clover, several of our friends and family members got their from them also, and Clover Mortgage has been able to help all of them, even the ones that were completely turned away and rejected by their banks.

Janet L.

My husband and I found ourselves in a tough situation. Luckily my expert mortgage broker at Clover Mortgage helped us get a fast and easy approval for an amazing rate for refinancing our home. Clover’s service is the best I’ve ever experienced and I’ve been recommending them to all of my family members and friends ever since. Thanks for your help Clover!

Raj I.

I definitely recommend Clover Mortgage to any new home buyer! They were very professional and helped my wife and I get mortgage for our new home at an even better rate than the bank was offering us. They also helped us get the mortgage with a smaller down-payment than the bank demanded from us. Since we did our mortgage with Clover, several of our friends and family members got their from them also, and Clover Mortgage has been able to help all of them, even the ones that were completely turned away and rejected by their banks.