Financial Counseling and Planning

Financial Counseling and Planning

 

  • Ontario Association of Credit Counselling Services (OACCS):  OACCS offers consumers money management, budgeting and credit use services.  This website also offers practical explanations on personal finances and debt problems.
  • Credit Canada:  Credit Canada offers free financial counselling and seminars to help put your finances and bills in order.  Credit Canada welcomes anyone who needs confidential advice about how to handle money and reduce or eliminate debt.
  • ServiceOntario:  This website provide resources and information about government services available to assist Ontarians in dealing with significant life events, such as having a baby, registering a death, managing debt, and getting ready to retire.
  • Prosper Canada:  Prosper Canada helps vulnerable Canadians access financial policies, programs, products and advice they need to build their financial wellbeing.
  • Ontario’s Ministry of Government Consumer Services:  Ontario’s Ministry of Government and Consumer Services website offers an array of consumer protection resources. The Consumer Protection section of the website features information on buying and selling your home, real estate fraud, and a consumer protection toolbox.
  • GetSmarterAboutMoney.ca:  Canada’s unbiased, non-profit source for information and tools that help consumers make better decisions when investing and managing their money. Established by the Ontario Securities Commission, the province’s securities regulator, GetSmarterAboutMoney.ca helps people make effective use of financial information.
  • Personal Finance:  This website offers plain language personal financial advice. Part of the Toronto Star, Personal Finance provides daily news updates, analysis, commentary for Canadians interested in learning how to take charge of their financial affairs, blogs, trends and tips. The site also offers how-to articles and DIY tools and calculators to help readers make informed decisions.
  • Consolidated Credit Counseling Services of Canada:  Consolidated Credit is a national charitable non-profit organization that provides debt consolidation and credit counseling services. Alongside consolidating payments, Consolidated Credit’s counselors focus on education and understanding.

Mortgages: A Brief History – Financial Services Commission of Ontario

Mortgages: A Brief History

​Fun facts on how mortgage loans have evolved through the years.

Taking on a mortgage is the most common way Ontarians can get a piece of the housing market – and has been for a long time. The mortgage industry dates back hundreds of years. But while the purpose of these loans has stayed the same, they’ve evolved from a simple repayment plan to a much more complex financial transaction.
Mortgages originated in England when people did not have the resources to purchase land in one transaction. Buyers would get loans directly from the seller – no banks or outside parties were involved. Unlike today, purchasers were not able to live on the land until the entire amount was paid. And, if they failed to keep up with payments, they would forfeit their right to the land as well as any prior payments they made to the seller.
By the 1900s most mortgages involved long-term loans where only monthly interest was paid while the borrower saved towards repayment of the original sum. Major world events, like the Great Depression of the 1920s and the two World Wars however, led to many borrowers being unable to repay even the interest on a property that was often now worth less than their original loan, and many lenders carrying a loan that was not secured by the value of the property.
This resulted in the introduction of long-term fully amortized mortgages that repaid some of the principal and some of the interest each month in a payment that was fixed for upwards of 25 years.
The Canada Mortgage and Housing Corporation (CMHC) was created in 1946 to administer the National Housing Act and today sells mandatory mortgage loan insurance when the buyer is putting less than 20 per cent down on the price of their new home. Mortgage loan insurance compensates lenders when borrowers default on their mortgage loans.
The rise of inflation in the 1970s altered mortgages into the products we know now. As interest rates climbed, lenders and borrowers found themselves locked into fully amortized loans that didn’t reflect interest rate changes. The creation of the partially amortized mortgage, which protects both lenders and borrowers from fluctuations in the market, mean that instead of 20- to 30-year terms, one, three or five-year terms amortized across 20 to 25 years have become a better option. Partially amortized mortgages are now one of the most common mortgage types in Canada.
Making the down payment for a mortgage easier to attain, the Home Buyer’s Plan, which allows Canadians to withdraw money from their Registered Retirement Savings Plans (RRSPs) on a tax-free basis to buy a home, was introduced by the Canadian government in 1992.
On July 1, 2008, under the Mortgage Brokerages, Lenders and Administrators Act, 2006 , the Government of Ontario has required all businesses and individuals who conduct mortgage brokering activities in the province to be licensed with the Financial Services Commission of Ontario (FSCO). Mortgage brokers and agents play a big role in the mortgage process, with 51 per cent of first-time home buyers using their services according to a 2016 CMHC survey. Under the Act, all mortgage brokers and agents need to meet specific education, experience, and suitability requirements with the goal of increased consumer protection, competition and professionalism in the industry.
Mortgages have evolved from repayments that provided protection and benefits only for the landowner, to a system in which both the borrower and the lender can enter into the transaction with confidence.

Working with a Broker – The Application

Before we can have a conversation your mortgage broker needs to know about you – your income, assets, liabilities and credit history.  An application is your story and helps us determine your needs and find a mortgage that will be the best for you moving forward.  We have many questions that will guide us and educate you.  Our process is to get to know you, your families needs and help you become the decision maker for your future mortgage.  This is our business and we are committed to our clients now and into the future.  It’s a relationship.

Let’s start the conversation with your application.  Apply Here

FREE APPRAISAL!

Many mortgage loans require an appraisal for the lender to determine the value of the home. The appraisal compares similar properties that have sold within a recent time frame. The cost of an appraisal may vary depending on location and type of appraisal requested.

Mention that you noticed FREE APPRAISAL on this website and you will be reimbursed the cost of your appraisal when you use our services to obtain a mortgage, and your mortgage file closes with us. It’s that easy and we know saving money is a good thing.

 

Where Can We Place Your Mortgage?

Mortgage brokers have access to many different lenders providing our clients with choice and options when it comes to a mortgage. There is no difference in the contract you sign with any lender we have access to. They contract to lend you an agreed upon amount, at a set interest rate, for a fixed term and amortization. You contract to pay the mortgage. The differences may lie in the additional offering from the lender such as prepayment options, warranty programs, penalty calculations. Our expertise can help you determine why two mortgage offers from different lenders with the exact same interest rate can be DRAMATICALLY different. We can explain the differences and the benefit of one lender over the other even when their rates are exactly the same.

We can place a mortgage with;

Banks – TD and Scotia and Manulife are great supporters in the mortgage industry as they work side by side with mortgage brokers. We have several other banks that work with us offering exclusive products and options

Credit Unions – Local credit unions often have flexibily in qualifying clients

Monoline Lenders – Internet based lenders who offer excellent portals along with highly competitive rates and products

Trust Companies, Mortgage Investment Corporations, Private Lenders – Offering solutions for clients that may be credit or income challenged. These lenders also offer mortgages in 2nd and 3rd position

What is an INSURER?

There are currently three mortgage insurers in Canada. They enable mortgages to be placed where the down payment is less then 20% by insuring the mortgage in the event of default. This cost is to the borrower and the benefit is to assist the lender. The lender then has protection to lend.

The insurers in Canada are;

Canada Mortgage and Housing Corportation (CMHC) https://www.cmhc-schl.gc.ca/

Sagen (Formerly Genworth) https://www.sagen.ca

Canadian Guaranty https://www.canadaguaranty.ca/

Insurers may also bulk insure conventional mortgages – your broker can provide more details!

Why work with a Mortgage Broker?

 

Using a Mortgage Broker When You Buy Your Home

What will a mortgage broker or agent do for you?

Getting a mortgage is often the largest financial commitment Ontarians make and many homebuyers find that there are several benefits to using a mortgage broker or mortgage agent. Mortgage brokers/agents provide options and information to guide consumers through the mortgage application process. Some lenders will only work through brokers or agents. 

What is a Mortgage Broker/Agent?

Mortgage brokers and agents are licensed professionals who work for a licensed mortgage brokerage and it is with the brokerage that you enter into a legal relationship. Mortgage brokers/agents can identify a large number of lenders and options for you, although many work directly with just one or two lenders.

Licensed mortgage brokerages and their agents and brokers can act on behalf of the lender, borrower or both. A borrower shopping for the best mortgage should first confirm with their prospective broker or agent that their role will be to act on their behalf. A licensed broker or agent is required by law to provide written disclosure to you about their relationship so that you can decide.

Depending on the type of license, the licensed professional you deal with may be a mortgage broker, or mortgage agent. Here, “mortgage broker” is used broadly to refer to either of these individuals.

Mortgage brokers:

  • Look at your finances to determine the right type of mortgage product for you.
  • Assess and compare proposed mortgages and determine if you meet the lender’s criteria and if the mortgage is suitable for you.
  • Gather whatever information and documents are needed, and make sure all the paperwork is complete and submitted for the lender to approve.
  • Negotiate with the lender regarding rate and term, liaise during the closing process, provide administration.
  • They can also explain the application and approval process and answer any questions you may have, and review the rate, terms and conditions of the mortgage.

Text description of image titled “7 Things a Mortgage Broker Can Do For You”. 

Working with a Mortgage Broker/Agent

From your initial meeting with a mortgage broker to the closing of the transaction, mortgage brokers are subject to a series of regulatory requirements as well as industry accepted practice standards.

Establishing the Relationship

Mortgage brokers are expected to ensure that you, the borrower, understand the relationship you are entering into with the mortgage broker and the services to be provided to you. Mortgage brokers should provide you with information about their role as well as other key aspects of the transaction.  The Financial Services Commission of Ontario (FSCO) recommends that you get this information up front so you have a good understanding of the mortgage broker’s/agent’s role, the fees that he or she will charge, the services that will be provided and the information that the mortgage broker/agent will need from you.

When entering into a relationship with a licensed mortgage agent or broker, this is the kind of information you should be asking of them:

  • The nature of the broker-client relationship
  • Who the broker represents in the transaction
  • What information you will need to provide
  • How that information will be used
  • How the broker will be compensated
  • The services the broker will provide
  • What is expected from you
  • Any applicable broker charges and fees

It is important to note that if your mortgage is for $400,000 or less, mortgage brokerages in Ontario cannot accept or require you to make an advance payment for any expenses or services that will be offered by the mortgage brokerage or one of its employees, until you sign your mortgage agreement or enter into a new mortgage renewal agreement.

Your mortgage broker may ask you to sign a written service agreement, which is the same as a borrower disclosure. Written service agreements are not mandatory in Ontario but if your broker provides one it will make clear the roles and obligations of the mortgage broker and client. 

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Qualifying You for a Mortgage

Mortgage brokers need to obtain information from you in order to advise you of your mortgage option(s) and obtain approvals from lenders.

Providing Mortgage Options

Mortgage brokers are expected to provide you with option(s) that are appropriate and suitable to your circumstances based on an assessment of the lender, the mortgage, its structure, its features and its risks in light of the information you have provided on your needs and circumstances.  

The mortgage broker will also explain his or her rationale for the option(s) that have been identified, provide you with information that will assist you in determining whether you can afford the mortgage and give you material information on the nature, costs and the particular risks of the mortgage option(s) identified for you. This information will help you decide if the mortgage is right for you.

You may be asked to sign a written acknowledgement of the risks associated with the mortgage.

For further information on the risks related to obtaining a mortgage, please read Understand the Risks of Getting a Mortgage.

Submitting the Application

Mortgage brokers will assess and submit your information to the lender you select from their options for approval. For further information on the application process, please read The Mortgage Application.

The information your mortgage broker provides to the lender must reflect the decision you have made. It must be truthful and consistent with the information you have provided and must not leave out any required information.

Your mortgage broker must submit all the information to the lender in a timely manner. Providing the lender with this information at the proper time ensures they can make the appropriate decision regarding the mortgage.

Disclosures

Mortgage brokers must provide you with certain information to help you make an informed decision about your mortgage. Your mortgage broker will be required to provide you with disclosures that include information on the role of the mortgage broker, the risks of the mortgage, and any potential conflicts of interests.

  • An estimate of the total cost of borrowing for the term of the mortgage must be provided to you. The total cost of the mortgage depends on the terms and conditions for paying it back, such as the interest rate, fees and the amount of time it takes to pay off the entire mortgage (i.e., the “amortization period”). The total cost can be more than the amount you are borrowing.
  • In Ontario, mortgage brokerages, brokers and agents are required to disclose to you the material risks of your mortgage in writing and in a manner that is logical and likely to bring the matter to your attention.
  • All disclosure provided to you must be timely. Providing you with the right information at the right time will help you make an informed decision. In Ontario, there is a minimum two day cooling off period, unless waived. Take the time to review the details of the mortgage.
  • The information your mortgage broker provides to help you make a decision must not contain misrepresentations, untrue or misleading statements. The information provided should be accurate and clear.  If you do not understand any part of your mortgage transaction, you should ask your mortgage broker for clarification.

For further information on what licensed mortgage professionals are required to disclose, or what they cannot require you to do, please read Checklist – Working With a Mortgage Broker/Agent.

Documentation

Mortgage brokerages must securely maintain complete and accurate records related to every mortgage transaction (for at least six years after the expiry of the term/renewed term) in accordance with the Mortgage Brokerage, Lenders and Administrators Act, 2006, and return any original documents you provided upon request.

Conflict of Interest

Mortgage brokerages, brokers and agents must ensure that actual or potential conflicts of interest in connection with the mortgage are disclosed in writing.

A conflict of interest occurs when the mortgage broker has an actual or perceived personal interest in the transaction.  That personal interest could influence the broker to provide advice to you that is in their interests, not yours.  

Many things can lead to a conflict of interest, including receiving fees or incentives from other parties in the transaction, being related to another party in the transaction, and acting as a lender or realtor in the transaction.

Mortgage brokers must disclose conflicts of interest and should not place their own interests above the interests of their clients. If the mortgage broker is only representing you in the transaction, he or she has to place your interests first. If you feel that any advice, options or recommendations provided by your broker are not based on your interests, for example that the broker has received an incentive, call the Financial Services Commission of Ontario (FSCO) at (416) 250-7250 or toll free at 1-800-668-0128 and ask for the Contact Centre.

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How to find a licensed broker or agent

The Financial Services Commission of Ontario (FSCO) licenses mortgage brokers, agents, brokerages and administrators in Ontario. Licensed mortgage professionals have met specific education, experience and suitability requirements.

FSCO maintains a list of all licensed mortgage professionals  who have been approved for Licensing under the Mortgage Brokerages, Lenders and Administrators Act (MBLAA). Further verification can be obtained by faxing 416-226-7838, Attention: Licensing & Market Conduct Division. Or, you may write to: Licensing & Market Conduct Division, Financial Services Commission of Ontario, 5160 Yonge Street, Box 85, Toronto, ON, M2N 6L9.

Before agreeing to work with a mortgage broker, you should ask these questions:

  • Are you a licensed mortgage broker? If yes, capture the license number.
  • Do you represent the borrower, the lender or both?
  • Do I need to sign a contract?
  • What services do you provide and how will you help me?
  • Do you charge a fee? How will you be compensated?
  • How many lenders do you work with? Was most of your business done through one lender last year?

If your mortgage broker has a service agreement (not mandatory in Ontario) be sure to read it and discuss the terms and conditions with him or her. It will help you understand the services the mortgage broker will provide and well as any fees, payments or possible reimbursements.

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Related Articles

Working with a Mortgage Broker – Checklist

Understand the Risks

The Application Process

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Financial Services Commission of Ontario (FSCO)

5160 Yonge Street, P.O. Box 85,
Toronto, Ontario M2N 6L9
Telephone: (416) 250-7250 | Toll free: 1 (800) 668-0128
Fax: (416) 590-7070 | TTY: 1 (800) 387-0584
Website: www.fsco.gov.on.ca

Copyright © Queen’s Printer for Ontario, 2016 – Last modified: November 2016

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