Valley First

Mortgage Basics

All Valley First mortgages include:

  • Quick approval
  • Competitive rates
  • Mortgage protection
  • Plus, we've got great, competitively
    priced home insurance packages to
    suit your unique needs.

3.69%* Special Rate

With a 5-year fixed mortgage rate this great you can afford to get the home you want!

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Down Payment

Things to Consider

This decision is based on how much do you have for a down payment.

Conventional Mortgage

This type of mortgage is for you if you have at least 20% of the purchase price (or appraised value if this is lower than the purchase price) as a down payment.

High Ratio Mortgage

If you don’t quite have 20% of the purchase price as your down payment, a high-ratio mortgage is for you. With this type of mortgage you’ll need to be insured through either Genworth or Canadian Mortgage & Housing Corporation (CMHC) and you can choose to pay the insurance premium in one payment or add it to the total amount of your mortgage. The amount of your insurance premium will depend on how much you need to borrow.

Repayment

Things to Consider

This decision is based on what kind of repayment plan would you like.

Open Mortgage

An “open” mortgage can be repaid at any time during the term of the mortgage without a penalty and usually has a shorter term (from six months to one year). While open mortgages can allow you to pay your mortgage off faster, they often come with a slightly higher interest rate. But, if rates appear to be going down or you’re thinking you may be moving again in the next few years, an open mortgage may be exactly what you need.

Closed Mortgage

A “closed” mortgage has a longer, set term (usually six months to 10 years) and limited prepayment options. If you decide to refinance, renegotiate or pay out the mortgage before your term ends, a penalty applies. However, what you sacrifice in flexibility, you usually make up for on rate. A closed mortgage is a great choice if you suspect that interest rates are on the rise and aren’t planning to move in the short term.

Rate Types

Things to Consider

This decision is based on what type of mortgage rate would you like.

Variable Rate Mortgage

Your mortgage payment will include a payment to the principal amount of your mortgage plus an interest payment. A variable interest rate is based on the “prime” lending rate, so as prime rate changes the amount paid towards principal changes. This type of mortgage is great if you feel that interest rates are dropping.

Key Features

  • The mortgage rate moves up or down as Prime rate moves.
  • Available in open or closed terms.
  • Flexible payment terms available (weekly, bi-weekly, semi-monthly and monthly).
  • Convertible mortgage option so that with a convertible mortgage, you can lock into a longer term during the current term of your mortgage without a penalty. Certain conditions apply.
  • Ability to increase payment by 20% of documented each year.
  • Ability to prepay up to 15% of original balance per year for closed terms.
  • Switch over to a fixed rate mortgage at any time, no penalty and no fee.

Fixed Rate Mortgage

Your mortgage payment will include a payment to the principal amount of your mortgage plus an interest payment. A fixed interest rate is a set rate which means that over the term of your mortgage, your payments will not fluctuate. This type of mortgage is great if you feel that interest rates are on the rise.

Key Features

  • Available in terms from 6 months to 10 years.
  • Flexible payment terms available (weekly, bi-weekly, semi-monthly and monthly).
  • Ability to increase payment by 20% of original payment each year.
  • Ability to prepay up to 15% of original balance per year for closed terms.

FAQ

Frequently Asked Questions

What is a mortgage?

A mortgage is loan you use to purchase a home-or some other piece of property. The amount you borrow is called the principal and each mortgage payment is a combination of principal and interest. The property remains in the possession of the borrower, but it may be re-claimed by the lender if the loan and interest are not paid as agreed.

What do you need to apply for a mortgage?

Applying for a basic mortgage with us is simple. Depending on your current employment arrangement, you’ll need to bring the items checked off in the table below.

To apply for a mortgage, you'll need to be at least 19 years of age in order to sign all the legal stuff.

 FT employmentPT employmentSelf-EmployedSeasonal*
Revenue Canada Notice of Assessment of current tax year*

Current pay stub**

Business Financial Statements
(2 previous years)

*Assuming no commission income. If you collect commission income it is best to bring in full tax returns for the previous 2 years.
**Not required if your pay cheque has direct deposit with Valley First for the previous 6 months.

As we understand more about your personal situation and the mortgage you are looking for additional income confirmation may be requested.

If your mortgage needs require more than the basics, that's fine. We have an array of mortgage products to suit your needs—just contact us to find out what you'll need to bring before your appointment.

What are the terms for mortgages?

Mortgages are available with a fixed rate of interest for various terms, ranging from six months to 10 years, with payments amortized over periods of up to 30 years. We also offer variable rate mortgage options.

May I pre-arrange my mortgage?

Based on your financial situation, we can pre-approve a maximum amount of mortgage financing at a specific rate for a period of 90 days. You will know, without obligation, the amount you can borrow, the interest rate, and your payments.

Why is mortgage pre-approval important?

Mortgage pre-approval is important for a number of reasons:

  • It determines the maximum mortgage loan for which you qualify.
  • It allows your realtor to show you a range of properties in your price range.
  • It allows your realtor to make a realistic offer on your purchase, and saves time in the negotiation process.
  • It holds the interest rate for a period of 90 days, guarding you against rate fluctuations.
  • It provides peace of mind during the home-buying process.

What documents are required for pre-approval?

Income confirmation. This will be used to determine how large a mortgage payment you can handle. Use the table above for guidance.

What is Genworth, CMHC or High Ratio mortgage insurance?

If the amount of your mortgage is more than 80% of either the purchase price or the appraised value of the property (whichever is lower), the mortgage is considered high ratio. To comply with legal requirements, you must purchase mortgage insurance. Mortgage insurance is available from Genworth and Canada Mortgage and Housing Corporation (CHMC).* An insurance premium also applies, which you can add to the mortgage amount. More information is available here.

*Some conditions apply.

May I switch my mortgage from another lender to Valley First?

Yes. If you already have a residential first mortgage on your home with another approved lender, you may switch your mortgage to Valley First. Certain conditions, however, may apply.

How can I save money on my mortgage?

The easiest way to reduce the interest costs on your mortgage is to pay it off sooner. Here's how:

  • Pay weekly or biweekly. Making your mortgage payments earlier and more frequently through weekly or biweekly payments can save on interest compared with monthly payments.
  • Choose a shorter amortization period.
  • Small increase in payment

Example:

This comparison shows how you can reduce your amortization period and save on interest by choosing a more frequent payment schedule.

Mortgage amount of $250,000 at 6.0% interest, calculated on a declining balance: 

In this example, weekly payments can save you $43,032.29 and almost 5 years on your mortgage.

  • Prepay. You can prepay up to 15% of the original principal amount of your mortgage anytime during each year of the term of your mortgage without penalty or an administration fee.
  • Increase your monthly payments. Once per year, during the term of your mortgage, you can increase your monthly mortgage payments up to 20% of the monthly payment originally established for the current term of the mortgage without penalty or an administration fee.

Is any mortgage protection insurance available?

The following optional mortgage insurance is available to you to help you feel more comfortable with your home purchase:

  • Mortgage life insurance
  • Mortgage disability rider
  • Mortgage Loss of employment rider
  • Mortgage Critical illness insurance

What are the other costs of a home purchase?

The other costs associated with the purchase of a home may include the following:

  • Inspection fee—required if a professional is to inspect the house prior to the completion of the purchase 
  • Appraisal fee—required to ensure the property is acceptable security for the mortgage 
  • Legal fees—includes lawyer's or notary's fees plus any disbursements required to transfer the property and register the mortgage 
  • Tax adjustments—you will be responsible for paying the taxes for the portion of the first year that you own the property 
  • Mortgage insurance—if the down payment is less than 20% of the purchase price, an insurance premium on the mortgage amount is required (it may be added to the mortgage amount) 
  • Home insurance—arranged to cover the property in the event of fire or other damage
  • Mortgage protection insurance—optional, but is available to cover the mortgage amount in the event of death, disability, loss of employment, or critical illness 
  • Moving costs—vary depending on how far you're going and who is helping you move

May I use my RSP to make a down payment?

A federal government plan allows first-time homebuyers to use their RSPs to help finance their home purchase. This money can be used as a down payment, or to help with other closing costs. RSP home ownership withdrawal forms are available from your RSP holder. The criteria are as follows:

  • Each applicant can withdraw up to $25,000
  • Applicants cannot have owned a principal residence within the past 5 years, unless it was a revenue property
  • You must reside in the home for at least one year 
  • The RRSP funds must have been invested for more than 90 days before withdrawal to qualify 
  • The withdrawn amount must be repaid, over an interest-free repayment period that can be as long as 15 years

Protection

Types of Protection

Mortgage life insurance

Mortgage insurance helps your family retain its home if you (or your co-borrower) die before the mortgage is paid off.

  • Pays the outstanding balance of an insured mortgage up to $1,000,000.
  • Premiums are based on your age and the amount of your mortgage when you apply for coverage
  • Available for purchase between the ages of 16 and 69 (with coverage ending at age 75)

Disability coverage

A disability rider ensures that your mortgage payment will be made in the event you are ill, or injured, or unable to perform your usual job.

  • Available for purchase between the ages of 18 and 69. Joint coverage is available at no additional cost (benefits based on 100% unless specified).
  • Benefits start after you have been off work for 60 days and continue up to 24 months for each period of continuous disability.
  • Since benefits are paid directly to your mortgage at Valley First, there are no tax implications.

Loss of employment

A loss of employment rider ensures that your mortgage payments will be made should you become involuntarily unemployed.

  • Covers your mortgage payments up to a maximum of $3,000 per month.
  • Available for purchase between the ages of 18 and 69. Joint coverage is available for no additional cost (benefits based on 100% unless specified).
  • Benefits are paid after you've been off work for 60 days and continue for up to 9 months for each claim.
  • Since benefits are paid directly to your mortgage at Valley First, there are no tax implications.

Critical illness

If you are diagnosed with life-threatening cancer, or suffer a heart attack or stroke, mortgage critical illness insurance will pay off your mortgage balance in full.

  • Coverage amounts must equal life coverage and must be between $1,000 and $1,000,000.
  • Available for purchase between the ages of 18 and 59. (Coverage ends at age 75.) Joint coverage is available at reduced costs.

Lingo

Mortgage Lingo

Amortization—The actual number of years it will take to repay a mortgage loan in full. Generally up to 25 years.

Appraised Value—An estimate of the value of the property offered as security for a mortgage loan. Usually completed by an independent accredited appraisal firm.

Assumption of Mortgage—Assuming or taking over the existing mortgage on the property being purchased. Depending on the terms within the mortgage document this can be done either with or without a qualifying process.

Blended Payments—A method of repayment where principal and interest remain constant in their amount.

Blended Mortgage—If your mortgage is portable, and you need extra funds, the new mortgage can be added to the old and the rate/term is blended. You can also get a Split Mortgage so you can take a new term for the extra funds.

Closed Mortgage—A mortgage which does not provide for prepayment prior to maturity without some form of prepayment penalty.

Genworth or CMHC—Canada Mortgage and Housing Corporation. A high ratio mortgage insurer. You’ll pay an interest premium but you’ll be able to borrow up to 95% of the value of the appraised property.

Completion Date—The date on which the purchase and sale of a property becomes final. Accordingly all documentation must be completed and payment of funds made by this date.

Compound Interest—Interest charged not only on the principal sum but also on interest amounts charged in a previous period.

Conventional Mortgage—A mortgage loan which does not exceed 80% of the purchase price or appraised value whichever the lesser.

Conveyance—Transfer of title to the property at Land Titles Office from the vendors name to the purchasers name.

Default—Non-payment of the installments due under the terms of the mortgage(s).

Discharge—The removal of all mortgages and financial encumbrances on a property.

Gross Debt Service Ratio (GDSR)—This is the total cost of housing payments (this includes principal, interest, taxes, and sometimes heat and maintenance) divided by the family's total gross income. Generally this ratio should not exceed 35%.

Interest Adjustment Date—A date usually one month prior to the first regularly scheduled mortgage payment date from which interest is calculated for monies advanced previous to that date.

Leasehold Mortgage—A mortgage on a property which is on land that is leased as opposed to freehold.

Loan to Value—The ratio, expressed as a percentage, of the mortgage to the appraised value or purchase price which ever the lesser.

Mortgage Insurance Premium—A premium which is added to the mortgage and paid by the borrower over the life of the mortgage. The mortgage insurance insures the lender against loss in case of default by the borrower.

Mortgage Life Insurance—A form of reducing term insurance recommended for the borrower. In the event of the death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.

Mortgagee—The lender.

Mortgagor—The borrower.

Offer to Purchase—A formal legal document which offers a specific price for a specified real property. The offer may be firm (with no conditions) or conditional (certain conditions yet to be fulfilled.)

Open Mortgage—A mortgage that permits prepayment in whole or in part of the principal balance without notice or penalty.

Penalty—A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.

P.I. (Principal & Interest)—Principal and interest due on a mortgage.

P.l.T. (Principal, Interest, & Taxes)—Principal, interest and taxes due on a mortgage.

Prepayment Option—The right to prepay specified amounts of the principal balance. Penalty interest may be incurred on prepayment options.

Principal—The amount you still owe the lender at any time.

Rate (interest)—The return the lender receives for loaning you the money for the mortgage.

Roll-over Mortgage—A mortgage loan where the interest rate is established for a specific term. At the end of this term the mortgage is said to "roll over" and the borrower and lender may agree to extend to loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Second Mortgage—This is usually at a higher interest rate and represents the difference between the price of the house and first mortgage plus the down payment.

Survey—The accurate mathematical measurements of land and the buildings thereon made with the aid of instruments.

Term—The length of time the mortgage agreement exists. At the expiry of the term the contract may generally be renewed for a further term and the rate renegotiated.

Total Debt Service Ratio (TDSR)—This is the total cost of housing payments plus all other installment payments divided by the family's total gross income. Generally this ratio should not exceed 42%.

Underwriting Fees—A sum of money collected by some lenders to offset expenses incurred in the lending transaction.

Variable Rate Mortgage—A mortgage loan for which the rate of interest changes with market conditions. Usually the monthly payment amount is fixed for a stipulated period but the amount of principal reduction varies according to the rate of interest.

*Rate is subject to change without notice and are available O.A.C. Rates are compounded semi-annually. Terms and conditions may apply. Mortgage funds must be advanced within 90 days of the application. These rates are discounted and can not be combined with any other rate discounts, promotions or offers. Additional fees may apply. For specific Annual Percentage Rate (APR) rates, please contact your branch.

Ready to apply? Borrowing with Valley First is simple!

Online

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In Person

If you're more comfortable coming in to see us, we'd be happy to go through the application process with you.

By Phone

If you’d like to call us, here is a complete list of our branch and insurance office numbers.