Are you looking to dive into home ownership in Canada? If this is the case, you should be prepared at every step. One thing is for sure- your mortgage application is the most significant step of your homeownership process.
As a matter of fact, the entire process will be seamless if you get your mortgage application right. But worry not! Altrua Financial has got you covered! Here are 10 of the best tips to applying for a mortgage in Canada:
Check your credit score
Credit scores in Canada run from 300 to 900 across these categories: Excellent, Very Good, Good, Fair and Poor. As such, your credit score is a snapshot of your financial health. Therefore you should know what it is. The higher your credit score, the lower your mortgage interest will be.
Have a large down payment
You will need to have a down payment in order to get a mortgage in Canada or anywhere else for that matter. With a big down payment, you will need to borrow and pay less. In Canada, the minimum down payment requirement is 5% of the purchase price.
Have a stable income
When applying for a mortgage keep your day job as it will give you a stable income. This way, you will be in a position to service and pay off the loan.
Don’t overspend
We cannot emphasize this enough. To successfully pay off your mortgage, you have to have healthy spending habits. Do not take on too many expenses that you cannot afford.
Pay any existing debt that you may have
You don’t want to have debt upon debt. As a mortgage is a long term debt, it is only wise to minimize your existing debts so that paying the mortgage will be easy.
Get pre-approved
When the lender evaluates your financial situation, they will pre-approve you for a set mortgage amount as well as the payment terms and interest rate. As mortgage pre-approvals last up to 120 days in Canada, you will have a lot of time to find a suitable home after you have received an approval from a lender.
Get a great interest rate
The only way to go do this is to shop around. This way, you will find lenders who are offering low and affordable rates.
Know what you can and cannot afford
Carefully consider the potential mortgage payments, debt repayments, living costs and other financial obligations to know whether you can afford a mortgage in Canada. Only you know and understand your lifestyle and financial needs.
Consider the penalties
As with any other commitment, breaking a mortgage also comes with penalties. To do this, port your mortgage. Porting means moving your mortgage to the new property. Flexible lenders have a mortgage portability notice of up to 90 days. This will give you time to put your finances in order before making a payment.
Choose your new home carefully
While a lender will determine whether the home you want to buy is worth its pricing, you should avoid properties that still need a lot of money spent on them.
There you go! 10 mortgage application tips that will score you the loan (and home) of your dreams in Canada.
Interesting related article: “What is Interest Rate?“