A pre-approval is a written committment from a lender that you will get a mortgage for a set amount of money, at a specific rate of interest that is guaranteed for a set period of days. The pre-approval is calculated based on information provided by you and is normally subject to certain conditions being met before the mortgage is finalized. Conditions would be things like 'written employment and income confirmation' and 'down payment from your own resources'. Having a pre-approved mortgage gives you the edge before you even go house hunting. You will know what you can reasonably borrow to buy a home, what your payments will be, and what your interest rate will be. With a pre-approved mortgage, you can lock in at today's rates. If rates go down before you complete the purchase, you will automatically get the lower rate for the term you selected. This protection could save you a substantial amount of money if interest rates fluctuate while you're house shopping. A pre-approved mortgage is important for a number of reasons:

• You'll have a clear idea of what you can afford
• It allows your realtor to show you a range of properties in your price range
• You'll be able to make an offer when you find a perfect home
• It holds the interest rate for a period of 90 days
• It provides peace of mind during the home-buying process.

With your financing already mapped out, you can concentrate on finding the right home in your price range. A pre-approved mortgage puts you under no obligation and is available to you at no cost.

Two programs are available that let you buy a home with as little as a 5% down payment. One is administered by GE Capital Mortgage Insurance Company and the other by Canada Mortgage and Housing Corporation (CMHC). Low down payment mortgages must be insured to cover potential default of payment, and their carrying costs are therefore higher than a conventional mortgage because they include the insurance premium. Low down payment mortgages are often referred to as National Housing Act (NHA) or High Ratio mortgages.

Both programs allow you to obtain a mortgage of up to 95% of the purchase price. Depending upon the percentage of down payment to be used, CMHC and GE will charge a one-time insurance premium to you, the borrower. This premium can be added to the mortgage without affecting the Loan To Value ratio (LTV).

In general, the credit status of an applicant must meet the lending criteria of the particular mortgage lender. A JUMP Mortgages Consultant can help you meet the required criteria and assist you with the entire mortgage process. Because we deal with many lenders we have a greater chance of matching you with a lender. There are a few important conditions which apply to eligibility under this program:

• The applicant must be able to prove that their down payment comes from their own resources - savings, sale of investments, etc. The exception being a family gift that never has to be repaid, and which is in the borrower's possession before the application for Mortgage Loan Insurance is sent to CMHC or GE.
• The price of the home must be within the eligibility ceiling for the area... three major centres - Toronto, Vancouver and Victoria qualify for $300,000... 22 other centres plus all North-Eastern Ontario centres have a $175,000 ceiling, and the rest of Canada's ceiling is pegged at $125,000. These are constantly under review.

A Cashback mortgage is when the client receives a rebate on their mortgage after the mortgage closes (usually within 3-7 business days). This rebate varies anywhere from 1% to 7% of the mortgage amount depending on the lender and term chosen. The money from a Cashback mortgage is especially handy for the fist time buyer who needs extra funds to purchase home improvement items such as blinds, carpet, appliances, or even furniture. Thus, first time buyers are the number one consumer of Cashback mortgages in Canada.

It is important to remember that this rebate is never directly paid back to the Bank. Instead the Bank increases the interest rate on the entire mortgage to recoup their costs.

The Federal Government recognized the obstacle many Canadians face in trying to come up with enough money for a down payment to purchase their own home and implemented the Home Buyer's Plan. This program is administered by the Canada Revenue Agency and allows you to withdraw up to $20,000 from a Registered Retirement Savings Plan (without penalty) to use as a down payment on your new home. If you are buying a home with your spouse or partner, or other individuals, each of you can withdraw up to $20,000. The RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.

To qualify for this plan, you must be considered a first-time home buyer. You are still considered a first-time home buyer if you have not recently owned a property within the five years prior to applying for the Home Buyer's Plan.

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan. The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home. While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your financial planner whether this strategy makes sense for you, given your personal financial situation. For more information, visit Canada Customs & Revenue Agency Web site.

The length of mortgage terms varies widely - from six months right up to 10 years. As a rule of thumb, the shorter the term, the lower the interest rate the longer the term, the higher the rate. While four or five year mortgages are what most home buyers typically choose, you may consider a short-term mortgage if you have a higher tolerance for risk, if you have time to watch rates or are not prepared to make a long-term commitment right now.

Before selecting your mortgage term, we suggest you answer the following questions

• Do you plan to sell your house in the short-term without buying another? If so, a short mortgage term may be the best option.
• Do you believe that interest rates have bottomed out and are not likely to drop more? If that's the case, a long mortgage term may be the right choice for you. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term hoping that rates drop by the time your term expires.
• Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses.
• Are you willing to follow interest rates closely & risk their being increased mortgage payments following a renewal? If that's the case, a short mortgage term may best suit your needs.

There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by:

• Take advantage of all prepayment privileges allowed by your lender
• Make accelerated payments as weekly instead of monthly
• Choose the shortest amortization period possible
• Selecting a non-monthly or accelerated payment schedule
• Increasing your payment frequency schedule
• Making principal prepayments
• Making Double-Up Payments
• Selecting a shorter amortization at renewal

In fact, using all of the Lender's flexible payment options to the fullest may enable you to prepay as much as 25% or more of your original mortgage balance each year.