26 May How To Find Out If You’re Eligible For A Mortgage
If you’re looking for a mortgage to buy a new property, then your best bet is to meet with an experienced mortgage broker who can help you find out your eligibility and choose the best option for your financial circumstances, from a range of lenders.
What are banks and other lenders assessing when you apply for a mortgage?
If you’re a Canadian citizen or have been living in the country for several years, then the lenders will review your credit history before making any decisions about your eligibility. You will need to prove to them that you are employed, or have some source of regular income, and a cash deposit will be necessary.
What if you’re new to the country or have no credit history?
One way of building up your credit history if you don’t have one, is by taking out small bank loans and making timely payments. You could also get a credit card and begin using it responsibly.
If you haven’t been living in Canada for very long, then you might be able to get a mortgage based upon your overseas credit history. If you don’t yet have employment, you’ll need to have funds for up to 35% of the house price, or enough money to fund a year’s worth of mortgage payments in a bank account. If you’ve already found a job, then the deposit amount should be significantly less. While you may find some lenders offering more relaxed terms, it’s highly likely they will charge you an interest rate that is higher.
How does a conventional Canadian mortgage work?
Canadian lenders generally cover up to 80% of the purchase price of a property if you’re living in Canada, and you are required to cover the costs of the remaining 20%.
What about high-ratio mortgages?
High-ratio mortgages are required by those able to provide a down payment of between 5 and 20% of the cost of the property, and you’ll need to buy mortgage loan insurance. While some lenders will ask that you pay the entire cost of the insurance premium in one go and up front, there are those who will simply add it to your monthly mortgage repayments.
How can you find out how much you can borrow?
There are numerous online calculators belonging to banks that will enable you to assess how much you might be able to borrow according to your income, but a mortgage broker will also help you with this. Be aware that different banks often give different results.
Why should you use a mortgage broker?
As these are independent, highly knowledgeable experts in the field of mortgages, and deal with all lenders, mortgage brokers are in the best position to help you find the best mortgage for your financial circumstances. It’s often the case that mortgage brokers find deals for their clients that offer much lower deposits than they would have found if they’d searched on their own, and they are constantly updating their knowledge of the market and changing rates.
Check in with your local, trusted mortgage broker and see what savings they can make for you. If your chosen mortgage broker is still working from home, simply call them up or drop them an email.