A pre-qualification helps you determine your borrowing capacity for the purchase of a home based on your income. A pre-approval determines your mortgage loan capacity more precisely based on several factors, including your credit score.

While this process results in the maximum mortgage amount you qualify for, it's not the most valuable part of the exercise. At the start, your best move is to familiarize yourself with what's at play and how it impacts the outcome. Knowing what the buttons and rules do let you plan and choose the outcome.

What if I ask my family for help or rent my future basement? Questions like these allow you to explore your options and crunch the numbers. Personal finance means getting personal: the less plug-and-play your situation is, the more you'll benefit from a one-on-one discussion

A mortgage is a loan secured by real estate, most often a home. When you make a purchase, you typically put forward part of the purchase price (basically, a down payment) and will obtain the rest from a bank. You then pay it back over the mortgage's lifespan (or amortization) with regular payments consisting of interest and principal.

A lender’s decision to grant a mortgage approval comes down to the property in question, the applicant's verifiable income, their credit history, and the source and amount of down payment the applicant can put down.

There are many moving parts to consider, so the best first step is to get pre-qualified.

When budgeting, there are three things you should consider:

  1. The down payment. Your minimum down payment depends on what and where you're looking to buy, your income type and the amount you earn.
  2. Closing costs. These costs cover land transfer taxes, legal fees, disbursement expenses, and more.
  3. Relocation costs. These costs may include hiring movers, new appliances, furniture, and more.

While you calculate your minimum down payment and estimate your closing costs, your out-of-pocket moving costs are guesstimates at best, and you should keep them to a minimum.

Together, we can run some basic numbers to give you an idea of how that can look.

No. It comes down to how much income you make, how you report it, and who pays your taxes. How stable your income is and how long you've been earning at the current rate may also come into play.

Some banks are purely interested in applicants who fit a specific criterion. In contrast, other banks will take a more common-sense approach that focuses on your ability to make regular payments while still having enough income to live.

Some types of support payments, like child support or spousal support, are eligible income, while others, such as unemployment insurance or disability benefits, are ineligible at most lending institutions.

Regardless of your choice, you'll be fine if you deal with a professional. Give preference to experience, determination and ability to communicate clearly with your team.

Buying your first home will come with challenges and a relatively steep learning curve. Pick your team well – be it a real estate agent, mortgage broker, or lawyer. Select your team early on in the process and stick with them. After all, you’re partners! Always ask for clarity and transparency wherever possible. Take notes, and don't be afraid to ask questions.

Aim to have a working household budget, and remember: we can help you get the best mortgage at the best rate, but you're the one who ultimately has to live with it. Be sure to take the time to evaluate your options carefully to set yourself up for success.

A home equity line of credit (HELOC) is secured credit. Your home acts as a guarantee that you will repay the money you borrowed.

Up to a maximum credit limit, you can borrow money, repay it at your discretion, and borrow again. It typically comes with higher rates than their regular mortgage counterparts. You can best use them for consolidating short-term and/or recurring costs.

There are other factors to consider, and every situation is different. Talk to a professional to help weigh your options.

Mortgage refinancing involves replacing your current mortgage with a new one. With a newly approved loan, there may be different terms, but the most common trade is a lower interest rate. Refinancing is a wise decision if it saves you money, allows you to build equity, repay your mortgage faster, or uses your home’s equity if you need cash. It’s also best used when consolidating long-term debt as you win on the difference in interest.

There are costs and benefits to refinancing. A great place to start is to talk to a professional to help weigh your options.

Short of using cash, you'll likely reach for some credit options. Current market conditions may permit this, or they may not. A few avenues exist to help you use your home's equity to do renovations.

Aside from a “plain vanilla” refinance (replacing your current mortgage with one that has a lower interest rate) or a home equity line of credit, you can also consider a Refinance Plus Improvements mortgage.

A Refinance Plus Improvements mortgage is a credit product that lets you refinance and get an additional advance to cover the costs of a renovation project once it's complete. It’s all under the same rate and agreed upon ahead of time

Paying off your mortgage earlier is sometimes the byproduct of a lucky lottery draw. We often see people break their mortgages when changing properties or refinancing.

When you prepay a mortgage before its term is up, you incur a series of charges, the foremost of which is a prepayment penalty. The amount depends on your current rate, the term, and the type of product you currently have.

Speaking to a broker may shed light on what that penalty looks like and put your plans into perspective.

In today’s market, as early as possible. Most lenders can hold rates for up to 120 days. An early discussion with a mortgage professional can help you narrow down the term and rate type that works best for you and focus your search.

Your current mortgage lender will offer a “sign-and-forget” option—a letter asking you to sign and send back for an easy renewal of your mortgage. However, statistics show those rates are rarely competitive in the market. Don't sign it without doing your homework first, as this may not be the best interest rate and conditions available to you.

To start, you need to understand the basic math of investing. You either buy low and sell high, or you buy well and keep for a while. Ask yourself, which one do you want to do, and how will your numbers look? Together, we can work out some scenarios and prepare you for your search.

Every investment comes with its own set of risks. We can consider mitigation strategies to help you manage some risks, but not all are inherent in a given investment. Real estate is no different. The plan you choose will have its own set of risks. How you manage or minimize them will depend on your unique approach.

Buying a property out-of-the-box means you’re not inheriting old problems, and the place will come with a warranty. As they say, the new car smell is never free.

An upfront conversation about your numbers can put some of these elements into perspective and help you plan your real estate portfolio around your goals, abilities, and lifestyle.

Cash flow is what you make every month minus what you spend. What you spend every month should include a buffer for any unplanned expenses (which you should be saving up for anyways). Positive means you’re in the plus and visa-versa.

The bank views cash flow-positive property as a more robust investment and is more likely to lend preferentially against it.

How do you estimate and budget for cash flow? That’s a more extensive conversation that we can have.

The answer is it depends. First, you should ask at least three people: your accountant, mortgage broker, and lawyer. There are considerable implications of doing so, but I’ll stay in my lane and speak only to the borrowing ones.

When you finance a property held in a holding company, there are rules you have to follow. In addition, you will:

  1. Limit your choice of lender and product options.
  2. Incur costs and be bound by some additional conditions of financing.
  3. Forfeit some privileges you may be otherwise entitled to when buying a property as an individual. And notwithstanding all of the above, it still makes sense to go the hold-co route for some specific scenarios.

Call professionals, take good notes, and run some solid numbers to make sure this makes sense for you - before you make a move. Ask to be referred to tried and true professionals who can help you improve the quality of the answers you get.

Investment concepts, where the outcome hinges on elbow grease or downright speculation, are often harder to sell to a lender. These projects will hold the operator (you) to a higher standard of financial ability to service this debt should your project hit choppy waters.

In contrast, opportunities, where properties have a strong cash flow and a solid long-term value projection, will be a lot easier. Financing costs will be lower, and the emphasis will be placed on the property itself rather than its investors.

How much are you looking to borrow?