Planning to buy a home or property? Getting a mortgage loan will bridge the financial gap and help you acquire the property you desire. The decision to take up a mortgage is probably the most critical financial decision you’ll ever make. Before you sign up for a new mortgage or a second mortgage, it is necessary to carry out some research and find a mortgage that best suits your situation.
Check on your savings and know how much you can comfortably pay in installments. If you don’t finance the mortgage to the end, you risk losing the property to auctioneers.
Banks versus Mortgage Brokers
The first step in your quest for a mortgage in Canada is to visit a bank and have them analyze your financial status and give a mortgage pre-approval. Once you’ve known how much mortgage you can qualify for, you can begin to compare rates by visiting a few banks or accredited mortgage brokers. Different mortgage financiers have different terms of service which determine the rates and the amount of mortgage you are eligible for. If you’re a Canadian citizen or a long-time resident, the banks may need to review your credit history to determine your rates and whether or not you’ll qualify for mortgage financing.
The advantage of using a mortgage broker is that you’ll save time that you would spend visiting every bank for mortgage comparison. They have data for various banks and will give you a suitable match for your financial situation.
How to Improve your Chances of Getting a Mortgage
First, you need to have some substantial savings to make the cash deposit for the property you’re purchasing. For first time borrowers, it may be helpful to take a small loan and pay on time to build your credit record. You can also get a credit card and use it responsibly. If you’re a newcomer to Canada, some banks will offer mortgages based on your overseas credit history. The TD Canada Trust and the Canadian Imperial Bank of Commerce can get that information. However, for such situations, the banks will require you to fund between 25% and 30 % of the total value of the mortgage.
Percentage Value You Can Borrow
Conventional mortgages will cover up to 80% of the total buying price of the property if you’re a Canadian resident. You must save enough to foot the other 20%.
High ratio Canadian mortgage can offer variable down payment limits between 5% and 20%. In this case, you’ll have to purchase mortgage loan insurance. Many lenders will require upfront payment for the mortgage loan insurance, while some may include it as part of your monthly installments.
Acquiring a mortgage in Canada can be a challenging venture especially for first-time borrowers or new immigrants. Hopefully, the above guide can save you some time and money by making the whole process easier. For additional resources, you may be able to learn more at the Canadian Mortgage Services website.