For those who are going to buy a home in Canada, the majority will need to obtain a mortgage. To be successful at this there are some steps that can be taken.
How Much is Needed?
You as a home buyer will have to determine how much of a mortgage is needed. This will partially depend on how much of a downpayment you have gathered to put down on the home you are buying.
Qualifying for the Mortgage
There are several factors the mortgage lender will take into account, such as:
- The Downpayment
When it comes to the general rules for the downpayment, these can vary according to the different provinces in Canada, for example:
In Ontario, home buyers can have as little as 5% of the purchase price as their down payment. This is for a home that is being bought up to a maximum of $500,000. A home that is more than this up to one million will require 5% on the first $500,000 then 10% on the remainder.
- Credit Rating
Mortgage lenders will look closely at your credit rating. They will look at how much debt you have and your history of making payments.
An important factor will be your financial stability with respect to your income and how long you have been in your present employment.
A lot of home buyers want to know how much of a mortgage they can qualify for. This helps them to determine how much they can afford to pay for a home. It helps to narrow down their choices when it comes to the prices of homes.
When a mortgage lender gives a pre-approval, it usually will lock in the interest rate, and the pre-approval is good for up to 120 days.
Finding a Mortgage Provider
Shopping for a mortgage comes with a few options. It is worth taking the time to shop around for a mortgage as terms and interest rates can vary. Some of the options available are:
- Using a Mortgage Broker: This is a professional who will do all the work of shopping for a mortgage for you. They usually have several mortgage companies or individuals that are willing to provide mortgages. The broker will determine which of these is best suited for your particular circumstances.
- Using a Bank: A lot of people are established with their bank and will approach it for a mortgage. You are not restricted to applying for a mortgage at your particular bank. You can approach any bank or mortgage lender to apply for a mortgage.
- Private Lenders: Some individuals would prefer to go to a private lender. In some cases, the home seller is willing to take back the mortgage.