June 1, 2020

Four questions with Mortgage Broker Angela Calla

Angela is an award-winning mortgage expert with 16 years of experience. Alongside her team, she helps mortgage holders get the best mortgage. She's also hosted The Mortgage Show on CKNW for over a decade, and is a best-selling author with her book The Mortgage Code.

Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Here are her answers to the four questions we asked her.

The Bank of Canada significantly cut interest rates at the beginning of the COVID-19 pandemic. What do home buyers need to know about this change?

This change presents an opportunity to help Canadians invest in themselves. With rates at where they are today, approximately 50 per cent of the payments they make goes toward the principal amount borrowed. They can position themselves to be mortgage-free faster, reduce their largest monthly payment (the mortgage), or use that capital for other lifestyle goals. If anyone currently has a mortgage over 3.5 per cent or has a mortgage renewal coming up, it’s time to plan how to get your equity working for you.

What advice do you have for home buyers looking to optimize today’s mortgage options?

Mortgages should be reviewed at least once a year to see if there are any market changes you can take advantage of or life stage/style changes we can plan for to ensure your mortgage is structured in the best way possible. This will ensure you have the right payment structure for success. This can mean increasing or decreasing payments (when the time is right to do so to protect your wealth) and reviewing your outside mortgage obligations with outside debt management.

Statistics have demonstrated most of us will have a life change, either by choice or not, prior to the maturity of the term. Because of this, it’s important to ensure you understand the difference in penalties associated with each lender. Ensuring the lowest exit cost from a mortgage is a large wealth-building tool when you need it most during an unexpected life change. Don’t make the mistake of thinking that the lowest rate contributes to that.

What’s the best advice for home buyers applying for a mortgage?

Knowing what to expect for your income and down payment scenario is the easiest to review by ensuring you get completely pre-approved with the verification of those documents, not just a 60-second auto-approval. While most everything can be reviewed in advance, lenders always reserve the right to ask additional questions or get updated documentation.

Due diligence is a large part of the approval process. While the fundamentals of always getting your mortgage working for you with the lowest cost of borrowing will never change, life, products and circumstances do. Some items can be done upfront and others take place during an accepted offer. This is why the subject period is so important. It’s when the lenders will do the final verification of the property.

What’s the best way home buyers can avoid having their deal collapse due to financing?

The best way to have a deal not collapse is to be aware of what’s required for your specific circumstances, and prepare accordingly. While we can generalize, everyone’s journey is slightly different and has its own set of requirements. Part of this is done in the pre-approval process and the rest has to do with the specific property.

This could mean you may need to provide:

Documents specific to your income within a timeframe for approval
An appraisal (have an appraiser picked and ready to go)
All documents related to the purchase price of the home
Answers to any questions on the form B or related to any strata documents
Assessments or special comments

Be prepared to answer those questions upon submission of your accepted offer and within the approval timeframe. Having these documents (and funds if you require an appraisal) will help avoid delays or surprises that may affect your deal.

You should also note if a price is re-negotiated. Make sure you’ve informed your mortgage professional about it in advance. Price and/or date changes alongside strata and/or homeowners’ insurance may also be a condition to the mortgage that could impact your approval.