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Invoice terms and conditions sample text for Mortgage

- Hey, welcome back, it's Nolan Matthias, and today we're discussing mortgage basics. The very basics of what you need to know about getting a mortgage, right down to terms like closed and fixed and variable, and all of that jazz. But before we get into it, do me that favor, hit that subscribe button, hit that notification bell, and please hit that like button, so more people like you can see this video. And don't forget about our race to 10,000 subscribers. Yes, that's right. One lucky winner, one lucky subscriber will win their monthly mortgage payment or their rent payment just for subscribing to this channel. So go ahead, do me that favor, hit that subscribe button so I can do you that favor of paying your monthly mortgage payment. Okay, so let's get into it. Let's discuss the basics of mortgages, starting with what a mortgage is. So mortgage in its most simplest terms is a loan to get a house. That's it, it's a loan to buy a property. And how you determine the amount of the loan is simply by taking the purchase price of the property, let's say it's $400,000, subtracting your down payment, let's say that's $50,000, and the amount of mortgage that you need is therefore $350,000. Very simple. Now from here is where it gets a little bit more difficult and a little bit more interesting because in the event that you were putting less than 20% down, you need what's called mortgage insurance. Mortgage insurance comes from three different companies in Canada. It's other CMHC, which is the biggest and the most popular, and the government backed one. Sagen, formerly Genworth Financial, don't ask me why they renamed it Sagen, I don't have no idea what that means, and Canada Guarantee are the other two insurers. Now, it doesn't really matter who you get your mortgage insurance from. They all do basically the same thing with minor variations in their products and how they qualify people. But for the most part, it doesn't matter where you get mortgage insurance, you just have to get it when you put less than 20% down. And know this, that all three insurers are somewhat backed by the Federal government. For CMHC, it is 100% backed by the Federal government and for Sagen and for Canada Guarantee, it is 95% backed. Now, if you're putting more than 20% down, you don't need to get mortgage insurance. Although some lenders will do what's called back insurance in order to insure their entire portfolio so that you can get lower interest rates. If you are putting more than 20% down, you will often find yourself having to pay for an appraisal. They're typically around three to $400, however, that is in lieu of a five to $10,000 mortgage insurance premium that you would have to pay otherwise. So it is very much a very good deal to have to get an appraisal rather than mortgage insurance. Now, the mortgage insurance is designed to protect the bank in case you default. So in other words, it is not there to protect you, it is there to protect the lending institution that has lent you the money. Now, that being said, always make sure that if you can, to keep the mortgage insurance in place, when your mortgage comes up for renewal, or if you switch to a different lender. The reason why is because that insurance makes it significantly cheaper for you to get a mortgage in the future. Insurance typically means lower interest rates because there's less risk for the bank. Keep in mind that the most risky mortgage for a bank is the one that is uninsured, where you've only put 20% down. That's why when you put 20% down, you pay a slightly higher interest rate and rates start to get better as you start to get to that 35% down payment point, which is when interest rates start to end up being pretty similar to what you would pay if you were getting an insured mortgage. Now, there's two types of rates you can typically get, the first is fixed, the second is a variable. Fixed rates obviously have a fixed rate for the term of the mortgage. Variable rates have a variable rate that typically changes with movements in the Bank of Canada key lending rate. You typically pay a higher price for fixed rates, you pay a premium for security, and you also typically pay a higher penalty if you want to get out of that mortgage because you've committed to maintain the mortgage for a fixed period of time. A variable rate on the other hand is typically priced lower, it will typically save you money over the long-term. Yes, there is the risk of interest rates increasing over time. However, that risk is often mitigated by the fact that there are significantly lower penalties to switch to a different lender or to pay out the mortgage. And also keep in mind that when you're getting something like a five-year fixed mortgage, you're really getting a five-year adjustable mortgage that adjusts in price every five years, and eventually if interest rates do go up, you are going to renew into a higher interest rate anyways. So a variable rate just allows you to feel that pain more slowly over time, rather than all at once, at the end of five years. Statistically variable rates almost all of the time will be a better choice than a fixed rate mortgage. Even though you have that added sense of security with a fixed rate mortgage, the reality of it is a variable rate will save you money, and the chances of your interest rate jumping significantly in a short period of time are very, very low. Now your amortization is the amount of time that it will take to pay off your mortgage in its entirety. Insured mortgages have a maximum amortization of 25 years. Uninsured mortgages have a maximum amortization, typically of 30 years. And that amortization is what determines your payments, the longer your amortization, the lower your payment. Now the amortization is not to be confused with the term. The term of your mortgage is the amount of time that you have a rate guaranteed for you. In terms of a fixed rate mortgage, it's the amount of time that you have that fixed rate guaranteed for. In terms of a variable rate mortgage, it is the amount of time that you have the discount guaranteed for it. So in a variable rate mortgage, if it's priced at prime minus 0.5 or prime minus 0.1, that discount will be guaranteed for the term of the mortgage, so let's say five years. Now, if the Bank of Canada adjust their key lending rate, obviously the key lending rate or prime will change, but your discount off of prime will stay the same. Now there are two types of payments, there are unaccelerated payments and accelerated payments. Typically unaccelerated payments are monthly or semi-monthly payments, although they can be bi-weekly or weekly, depending on how your lender sets them up. The accelerated payments are typically weekly or biweekly. And it is important to remember to ask for accelerated weekly or biweekly payments. If you just ask for weekly or biweekly, there's a chance that you may get non-accelerated payments. The easiest way to determine if the payment is accelerated is to take the monthly payment and divide it by two, in the case of biweekly payments, or divided by four in the case of weekly payments. And if your bi-weekly or weekly payment equals either of those numbers, then you have an accelerated payment. If it is less than that, then your weekly or bi-weekly payment is not accelerated. We highly recommend for anybody purchasing a home to live in, to take accelerated weekly or bi-weekly payments. The two of them are virtually the same, there's a little tiny bit of benefit at the end of 25 years if you take a weekly payment over a bi-weekly payment, but it is minimal, I'm talking two, $300 over a 25 year period. So biweekly, weekly, pick the one that's right for you. We choose weekly because it allows you to manage your cashflow a little bit better knowing that there's a little bit of money coming out every single week, rather than a larger amount of money coming out every two weeks. Now, when you go to get your mortgage, it is a good idea to get pre-approved. There are two types of pre-approval processes. There is fully underwritten and there is not fully underwritten. Any sort of app that tells you that you're pre-approved in less than two or three minutes and basically spits out a number, or anybody who takes an application over the phone and doesn't get your job letters, your pay stubs, and all of your pertinent documents is doing a non-underwritten pre-approval. They typically are not worth the paper that they are written on. An underwritten pre-approval on the other hand, gets your job letter, get your pay stubs, gets all of your documents, gets them all confirmed and gets you a real number for what you are pre-approved for. That is the type of pre-approval that we do at Mortgage 360, and this is the only type of pre-approval that we recommend. Obviously, when it comes to getting a mortgage, we highly recommend that you get a mortgage through a mortgage broker. It is 2021, the conversation of where the best place to get a mortgage is over. It is clear that mortgage brokers have more access to more products, more lenders, and have a better overall sense of the market than an individual banker. Do your banking, so in other words, your savings, your checking accounts and the things that need to be done at a bank at the bank, but take advantage of a mortgage broker so that you can get the absolute best mortgage for you at the most competitive price. We often find that when somebody does get a mortgage from a bank and they understand the differences between different banks and different lenders, they are often choosing a bank that is different from the one that they deal with. Now, every bank has things that they do really, really well. Some do mortgages really well, some do checking accounts really well, some do investments really well. What's important is making sure that you get the mortgage that is right for you, and is the best for your circumstances. And chances are, it is not from the bank that you typically deal with. And keep in mind that a mortgage payment is simply a payment that comes out of your bank account on a monthly basis or a biweekly or a weekly basis if you choose...chosen to pay your payments biweekly or weekly, and that is all it is. You don't need to see it on the same screen as all of your other banking, you just need to make sure that you have the absolute best product for you. As far as what lenders look at, when they're looking at a mortgage, they look at three things when it comes to you personally, they look at your credit, they look at the amount of down payment that you're putting down and they look at your income. They look at those three things and determine how much they are willing to lend you. And then on top of that, they also look at the property. The quality of the property plays an important role in the mortgage because that is the security that securitizes the mortgage. In other words, if you default, that is the recourse that the lender has. So they typically don't want a property that is not going to be marketable. They want a really great property, as well as a really great borrower in order to lend them money for a mortgage. Now, if you're looking to get pre-approved for a mortgage, and that is an underwritten pre-approval, the simplest way to do it is to go to the link below and apply online at mortgage360.ca. If you're just looking to figure out approximately what you would qualify for, and you aren't necessarily ready to jump into the market yet, we're also going to link below to our online mortgage app, which will help you determine how much you qualify for, see what rates are and get all of the things that are mortgage related before you actually jump into a pre-approval. So if you found this video useful, do me that favor, hit that subscribe button, hit that notification bell, and please hit that like button so more people like you can see this video. And don't forget about our race to 10,000 subscribers contest, all you have to do is click that subscribe button. Cheers, and we'll see you on the next video.