Gone are the days when you have to allocate a very huge amount of cash in order to purchase the property you have always wanted. Now, in the Canadian mortgage scene, you can potentially buy the property within a certain percentage of down payment, which is often five percent. When this is the case, however, you will be required to have mortgage default insurance which then brings you back to just settling for more than the 20% down payment for the property.
This is called the conventional mortgage or one where you are expected to pay at least 20% of the property’s value as down payment with the remaining 80% or less financed through a lender. This will then be the Loan to Value ratio of your property. Always remember that the higher the contribution you make, the lesser the mortgage loan amount you will pay over time. Whichever the case, whether you choose a 5% or more than 20% down payment, you might as well consider learning how to save for that amount.
Save your funds in an account
Saving for the down payment is perhaps the most practical way with which you can get that dream home of yours. It will take time to save this amount if you do not learn how to choose the right account with which you should save those funds. It is recommended that you have an account that guarantees you will gain interest on your savings. Mutual funds, term investments or a Canadian Tax-Free Savings account can be a good start. You may also want to invest with a Registered Retirement Savings Plan (RRSP).
If you are lucky enough, you can also use the cash gifts given by your friends and loved ones. You can save the same in any of the funds mentioned above so that when the time comes and you are ready to make an investment, there is something you can use to finance your down payment.
Secure mortgage default insurance
If in case you have not saved the 20% down payment but you have at least 5% savings to finance the down payment for your dream home then you are good to go provided you have secured mortgage default insurance. You can look for the best suppliers of such insurance in Canada. This insurance is a licence for you to obtain the nod of the lender since there is something he can ran after in case you default on your payment. Do not mistake this with the regular homeowner insurance that protect homeowners from property damages.
Pay the insurance accordingly
You have choices when it comes to paying the mortgage default insurance. First, you can pay it on a lump sum basis right at that instant when you have closed the mortgage deal with the lender. If you do not have enough money to pay it lump sum, however, you can go for option number 2, that is, to pay the insurance over time in addition to your monthly mortgage amortisation.
It will be wise to compare mortgage rates to save you more in terms of your total investment later on. Feel free to compare rates via this website!
One of the most common challenges people with bad credits face is getting a good mortgage. Luckily, there are bad credit mortgages that cater specifically to such individuals. People make financial mistakes sometimes. However, it does not mark the end of your dream to own a house. There are useful ideas that make things work even with bad credit. Hard financial times and mistakes put you on the right footing when you learn from them. To make a bad credit mortgage work for you, you need to consider the following ideas.
Type of lenders
Many lenders will probably turn you down when you approach them for a loan with a bad credit score. By searching around carefully, you can still find lenders who can assist you in your current financial situation. It is possible to get a mortgage with a bad credit. Bad credit mortgage lenders make it possible. However, you need to be careful when selecting a lender. There are lenders who may take advantage of your situation. Ensure you find reputable bad credit mortgage lenders before taking further action.
Work on short-term basis
For a fact, it is costly to get a mortgage with a bad credit. If you decide to get the mortgage loan, you need to consider making it a short-term commitment. It pays in the long run when you choose to make short-term commitment. Managing the mortgage payments over a short-term period makes it possible for you to be eligible for conventional loan programs that have low interest rates. Note that this does not imply getting a short-term loan as an alternative. It simply means ensuring you pay the mortgage on time. This is inclusive of all your debts and bills. Over time, your credit score will improve and earn you a chance for better conventional loans.
The interest rate for a fixed-rate mortgage may be too high for you during tough financial times. Therefore, you can consider an adjustable-rate mortgage as it guarantees you the possibilities of getting low rates. It helps keep the mortgage payment low and realistically manageable in your current financial situation. Consult mortgage experts for more clarity on how to make good use of an adjustable-rate mortgage.
Different types of lenders have varying terms and conditions. For instance, there are mortgage lenders who have a prepayment penalty option. These lenders often convince borrowers to take the option. In a mortgage contract, this clause essentially gives the lender the liberty to collect additional money when you make early payment or additional payments beyond a given limit with a view of reducing the debt. Over time, it can be very costly. You can make extra payments if you are in a good financial position as it will help reduce your debt. For the clause, do not consent to the idea.
Working with a reputable mortgage broker is highly recommendable especially when you are in a tight financial spot and you need to make critical choices. A broker will help you to make use of all these ideas in the most effective way.
One of the first steps of becoming a savvy investor in Canada’s real estate scene is to be familiar with the average rental prices in Vancouver, Montreal and Toronto. This invaluable knowledge will also prevent you from making any regrettable decisions.
Rental prices in Montreal
Montreal is popularly known as a city of renters because it has a great reputation for being a town with good bang for your rental buck. In fact, it has the largest rental market in Canada with rental housing options such as duplexes, triplexes and apartments. Montreal offers a broad range of old and new dwellings that offer a variety of architecture and styles to suit many tastes.
When it comes to rental apartments in and around Montreal, the average rental price is over $1,100. In addition, one-bedroom apartments can be rented for approximately $970 and two-bedroom apartments can be rented for approximately $1,180 per month on average. Over the years, studies have shown that the average rental rates for one-bedroom apartments have decreased by 0.5% and two-bedroom apartments have decreased by 3.1%.
Rental prices in Vancouver
Vancouver has the highest rental rate throughout Canada and it is approximately $1,280 per month on average, and that’s why Vancouver’s tenants are starting to feel the squeeze as rentals prices keep increasing. In addition, nearly half of Vancouver’s population rents. These tenants prefer to live older apartment buildings that are located along Main Street and other arterial roads.
Still, there are other tenants who rent bigger houses that are “carved” up into luxurious suites. One of the reasons why Vancouver’s rental apartments can fetch up such a high price is because investors tear these units down then builds them anew. Once these units receive a facelift, their owners can then easily double the price of the rental fees.
Rental prices in Toronto
Just like Vancouver, Toronto also tops the list when it comes to high rental prices. The price of a rental two-bedroom unit is more than $1,260 per month on average. Just west of Toronto, there are units in Burlington that go up to $1,550. What’s more, Burlington is just one part of the Greater Toronto Area and already has a population of over 175,000. In addition, an increasing number of new housing developments are springing up and rental properties are becoming more popular with people who work in Toronto while wanting to stay away from the hustle of a big city.
Interested in buying a second home in one of these cities to rent out?
You should first know that you are going to be a landlord, and that’s why learning how to manage the property and your tenants come with great pertinence. There are a lot of ways to invest in a rental property, and it starts with choosing an apartment that’s located near your child’s college or a unit in an existing multifamily condominium. The next thing to keep in mind is not to neglect to run the numbers. From online mortgage calculators to a mortgage broker, there are many avenues that allow you to get help to calculate down payments, insurance, taxes, and more.
The statistics of the typical first-time homebuyers are fast changing today. A lot of single women these days can afford to buy properties on their own to build up valuable equity, and are no longer waiting to find a life partner prior to pursuing the lifestyle and financial advantages of owning a home. One in every first-time property buyers today is a single woman, and new property market is in sense beginning to reflect that.
While most of these women are ready to jump into the commitment of owning a home, not all of them are willing are give their valuable time to outdoor chores such regular yard or garden maintenance. As such, the majority of these women tend to purchase homes that require little or no maintenance, but with an option to plant container gardens.
The easiest and most fashionable way to hold onto their maintenance-free lifestyle is to acquire a condo. These properties are problem-free when it comes to their upkeep and unencumbered lifestyle is an obvious advantage to people that would rather not be tied up every weekend with maintenance chores.
Condominium unit owners are charged a flat monthly rate to cover maintenance of the common areas in addition to provide prompt service by reputable maintenance service providers if there are maintenance issues in any single unit. Problems related to electrical, plumbing, air conditioning and heating systems are handled by pre-approved maintenance staff as agreed with the condo management or association. This means help is available at a moment’s notice.
Women looking forward to purchase their first home have two options to opt for when it comes to financing their purchase; paying cash or through a home purchase loan product such as a mortgage. But whichever the financing option, it is critical that they work out a practical budget. This does not just imply working on a budget they can afford based on their current state of affairs but that can allow some room for changes. Skilled private mortgage experts in Canada recommend keeping mortgage interest rates as low as possible.
Consider other day to day living costs
When mulling over how much you should borrow, it is critical to allow for increases in other living costs, particularly where utilities and food are concerned. All these should not scare you off purchasing that great condominium you have always wanted but rather to urge you to work out a budget that you can comfortably afford. Once you have found a dream property to purchase, it is easy to forget other things that are equally important for your day to day living.
Use a home loan calculator
Make use of a home loan calculator to help you easily determine the kind of a home buying budget you can afford. When calculating what you can really afford, it is critical not to ignore your supplementary expenses. For instance, if you love eating out, or going to the theatre, or even indulging your passion for surfing, then make certain to include these costs. This way, you will know what kind of a condo or any other home type you can afford without having to give up your favorite hobbies.
So you are planning to acquire an investment home. Or probably are ready to purchase a second home. But do you know that these two property types are quite different where their purchase is concerned? To start with, getting a mortgage loan to purchase an investment property is costly, and the whole application process is complicated.
Financial institutions often charge clients higher rates for investment properties as these are deemed a business venture. The main reason for this is that borrowers are borrowing to acquire investment properties for renting out or even selling for a profit. These loan types are considered riskier than those that are availed to ordinary homeowners. Since the borrowers won’t be staying in their investment premises, the majority of lenders believe they might abscond from their payment obligations if they suddenly find themselves financially incapacitated.
The higher than normal interest rates offer additional protection to the lenders. Moreover, most of the lenders require borrowers to pay a higher down payment – normally at least 30% of a home’s final sales figure, when they receive a loan to purchase an investment property. In this case, it is critical to differentiate whether you are buying an investment premises or a second home.
Like mentioned above, premises owners normally don’t live in their investment properties. Instead, they rent them out all through the year. Sometimes, they might even plan on holding their premises until they appreciate enough in value to allow them to dispose them off for a healthy profit. Unlike second homes, investment properties could be situated near their owner’s main residences.
Can an investment property be a second home?
Second homes are properties in which owners live in them for a given duration of time each year. Simply put, second homes can be deemed to be vacation properties. If their owners don’t live in them on a regular basis, lenders then consider them as investment properties. For a property to meet the criteria of being termed as a second home, then it must be some distance away from your primary residence. In this case, it must be more than fifty miles away from your main dwelling.
Is it worth it tricking the lenders so as the get a given mortgage product?
Since all investment properties attract higher interest rates, some borrowers are tempted to try tricking their mortgage loan provider by claiming that their investment property is in fact a second home. This way, they can then lease their premises and earn a healthy income without incurring a higher interest rate in mortgage payments. In actual sense, this is a mortgage fraud, and if a property owner is found out, they he or she could face stiff penalties. Mortgage fraud is a growing problem around the country, and mortgage loan providers are well trained to discover mortgage applications that seem to be for investing purposes although they made to look like second homes so as for the borrowers to obtain better interest rates.
All in all, you can’t own two vacation homes in the same location, even where most of the dwellings there are deemed second homes. People that own more than one vacation homes in one location therefore are required to consider the second premises as investment properties.
Paying off your mortgage early is the surest way to give yourself a peace of mind especially when there is so much on your plate. Early payment of mortgage makes sense because most people want the security and psychological merit that comes with home ownership free from the burden of debts. While finding experts who offer recommendations for early payment of mortgage is an ideal step, you can still pay off your mortgage using methods that are faster and safer as compared to others. Here is a look at some of the effective ideas for loan payment.
The magic is usually in the mortgage calculator. When you play wisely with the mortgage calculator, you will clearly see how the addition of little payment to your principal here and there significantly reduces the length of your loan. The key thing here is trying to figure out an affordable amount of money that can reduce the loan-term without affecting your financial position. When you pay a little more principal, you get a bonus. As your principal gets lower, payments made henceforth are applied on your principal. Always make sure that when you are paying extra, it is applied on the principal balance instead of being set aside for the next payment.
Short-term mortgage refinance
A 15-year mortgage is quite common though you can refinance into a mortgage for 10, 15 or 20 years. Therefore, you may want to consider a 15-year mortgage because it may not be as high you think even though people think high payment is involved. The advantage of a 15-year mortgage is getting committed to the higher payment. You hardly get a chance to dither about your ability to afford the extra payment every month. In that case, you can achieve the effect of a short-term mortgage (when working with a 30-year loan-term) by making payments as though you were paying for a 15-year loan-term. This puts in you in control instead of the money lender.
Consider biweekly payment option
A year has 52 weeks and 12 months. Biweekly payment works best when you make plans while factoring 52 weeks and 12 months in a year. Therefore, when you pay half the regular mortgage payment every other week, you will make 26 half-payments by the end of the year. That is equivalent to 13 full monthly payments. This extra amount of money at the end of every year can chop off about 5-6 years of your 30-year mortgage. You can check with your bank to see if there is any arrangement for a biweekly payment plan. Some banks will charge while some will offer free service.
It is everyone’s dream to own a home without the stress of pending mortgage payments, foreclosures, high mortgage rates and the like. With these three simple ideas, you can take your time to figure out one that is likely to benefit you the most. All these ideas aim at reducing your mortgage payment making it possible to pay it off earlier so you can have peace of mind in your lovely home.
Recent studies show that seniors retire with more debt than they can afford and less earnings. If you find yourself in this bracket, then seeking a reverse mortgage can present you with a better option. In as much as they are available to retirees or those planning for the same, you should ensure that you analyze your situation well. This means that you should ask yourself some fundamental questions.
Do you have substantial home equity?
If you do not own your home or cannot be able to pay off your mortgage with the proceeds you will receive with the reverse mortgage, then it probably isn’t suitable for you. Your equity will depend on your home value, reverse mortgage interest rates and your age. Thus, you will need to contact several reverse mortgage lenders who will be able to provide you with a quote.
Are there other cheaper options?
The biggest advantage that you will receive in this form of mortgage is that you will not be required to make monthly payments. Thus, even with your low income and a poor credit score, you will be able to get approved for this loan. As good as this, you will have to contend with a higher interest rate. Thus, you should consider other forms of getting finances such as:
• Taking a part-time job
• Renting a section of your house
• Selling and moving to a cheaper home
• Seeking government’s assistance
• Traditional home equity loan
Should you use your home equity?
Since reverse mortgages can get you out of a tight spot, you should try and hold off until the right moment presents itself lets you use it only to regret that there was no need for it. For instance, when you are paying off your medical bill, you could consult your bankruptcy lawyer to give you advice on how you can use your debt situation to discharge it. This will enable you to preserve your home equity for a more dire time.
How long will you be staying in your home?
Since your lender will be sending you letters to sign and return to confirm you are still living there, you should determine whether you will be at your home for the entire mortgage period.
If you happen to fall sick and have to be moved to another home where you can specialized care, you will have to contend with the loan became due and payable immediately. Therefore, you should assess your situation very carefully.
Have you discussed this reverse mortgage with your spouse?
You should ensure that your spouse is aware of all the requirements and stringent rules that relate to the mortgage. This means that they will need to be in the house, lest it be sold once they move to recover the money if they are unable to.
Have you discussed it with your family?
Since your child or whoever you live with might see it as a risk since their home might be lost in case something happens, you should discuss these matters with your family members and hear their opinion.
All in all, you should evaluate all these questions relating to reverse mortgages before you take it out since it can have grave consequences should you fail to make payment when it falls due.
Homebuyers tend to make a lot of mistakes way before they start looking for a mortgage lender. These mistakes can ruin the chances of any homebuyer of qualifying for a mortgage. Outlined are mistakes you must avoid so as to qualify for a mortgage:
Closing that unused credit card
At times it may seem like a good idea to close a credit card that you no longer use, but in the real sense that does more harm than good. For example, if you own five credit cards and each has a credit limit of three thousand dollars that shows that you have a total of fifteen thousand dollars available credit. If you close one credit card your available credit reduces to twelve thousand dollars. If you happen to have five thousand dollar credit card debt, five thousand dollar credit on fifteen thousand dollars will look better, according to lenders than in the case of twelve thousand available credits.
Making a big purchase
If you are planning to apply for a mortgage, you must resist any urge of making a big purchase. Do not go loading your credit card with the charge of an entire living room set of seats. This not only makes it hard for lenders to work with you, but also throws your debt-to-income ratio out of proportion. Lenders are comfortable working with someone whose total monthly debts do not exceed forty three percent of their gross monthly income.
Most mortgage lenders prefer that you have a stable job and you have been working for at least two years, this assures them of your stability. If you change jobs before the mortgage loan closes, then you could lose the chance to qualify for a mortgage since lenders will think that you might lose the job. Loss of a job means that you will not manage to meet your monthly mortgage obligations. If you must change your job, do so after you have closed the mortgage loan.
That missed credit card payment
A credit card payment is considered late if the payment is made thirty days past the supposed due date. Once you pay your credit card late, this remains in your credit card records, causing lenders not to be so comfortable working with you. This automatically reduces your chances of qualifying for a mortgage loan.
Missing the lock period
Missing the lock period is one mistake that causes your mortgage to be quite expensive. You happen to get your hands on a good interest rate and you even pay extra so as to ensure that the lender locks the rate. The problem kicks in when you delay in providing the required paperwork to the lender to such an extent that the interest-rate lock expires. In such a case the interest rate rises, causing a rise in your loan payment each month. Ensure that you have all the required paperwork ready before you start on the loan application process this will help you save time and money.
Mortgage loans are supposed to ease the financial burden of any homebuyer, ensure that you avoid the mistakes mentioned above and you will be having no reason not to qualify for a mortgage loan.
Before you go out shopping for a mortgage, there are two significant concepts that you need to understand and differentiate as each will determine your position in the real estate market. These are pre-qualification and pre-approval, and in most cases you may confuse the two since they are close in meaning and yet different in implications. Generally, you must be able to tell the difference between pre-qualified and pre-approved if you intend to make the most out of your mortgage experience.
So, what is prequalification?
Before you start looking into a mortgage as a way of financing your purchase of a home, it is important to get an overview of your financial position with respect to what you can or cannot afford in as far as the mortgage is concerned. Most lenders consider one’s income, available assets and debts during a pre-qualification assessment. This means that there are no details involved and thus the outcome is only general, especially considering that most lenders actually conduct these assessments over the phone or by email.
The idea of a prequalification is to give you a rough estimate of what you may be able to get if you apply for a mortgage. You may notice that being the first step towards acquiring that mortgage, prequalification is usually free and it does not require an application. All you have to do is contact your lender and provide some basic information regarding your financial position.
Pre-approval takes a little more to achieve
Unlike prequalification, pre-approval requires more than the self-reported financial position of the client. Here, the lender will require you to possibly pay an application fee and fill out a mortgage application form. Once they have all the necessary information, they are expected to evaluate your ability to pay that mortgage and in most cases this includes an analysis of your credit rating. You will for example not just be expected to list your assets, but rather also to provide documents that prove your ownership of the said assets.
A pre-approval is more of a final look at your financial position before the lender agrees to pay for your home. Consequently, if you have a pre-approval, you are more likely to get a good deal since the seller is assured that you can access the required funding. Sellers are actually more attracted to buyers who have the money at hand or a pre-approval from their lender of choice.
A pre-approval is much more solid than a prequalification because the pre-approval implies that you have the lender’s blessing to find a house within the given price range. If you get a pre-approval, you are more likely to get that mortgage approved, and thus you will be able to buy that property faster and easier compared to when you only have the prequalification. The pre-qualification is only an estimate of what a lender may be willing to offer you in case you apply for a mortgage. In case of any questions regarding mortgages, you can always contact us and we will be thrilled to engage you with our ideas and solutions.
It is every family’s dream to have their own home, where they can create some beautiful memories, raise their kids, spend their time with their loved owns and a lot more memories and of course a place to relax in old age.
But buying a house is not a joke. Many wait for really long time to buy a house, and many others spend their lifelong savings to purchase a house and still can’t accumulate enough funds to buy their dream home. So does it mean that buying a house is next to impossible thing for many of us? No, my dear friend, that is not true. For such people there are banks and financial institutions, and these institutions have made the dream of buying a house a reality. This is been made possible with the help of mortgages and loans.
All about Mortgage Loans
In a simple term mortgage is nothing but a type of loan, which is usually taken to buy a house. In this type of a loan, the borrower gives the collaterals the house itself. After taking the collateral in form of the house, bank or mortgage broker Montreal will lend a large amount of money, which is then used by the borrower to buy the house.
This amount is then repaid by the borrower over a long period of time in form of small installments. The amount of loan and installments both are decided by the bank or the financial institution keeping in mind the repaying power of the borrower.
Mortgage loans can be of various types; like there are some which are called as “fixed rate mortgage” (FRM), where as some are variable mortgages or “Adjustable Rate Mortgage” (ARM). There are other types of mortgages too, depending on various factors. A list of all those is as follows:
- Interest: Interest rate could either be fixed for the entire life of the loan or it could be variable ad change from time to time as per the terms and conditions of the loan. In these types the interest rate could sometimes be higher or can also be lower.
- Payment: Mortgages can also be classified on the basis of its payment plan, like the payment amount and payment frequency. Payment amount and frequency is decided at the time of taking the mortgage and is an agreement between the borrower and lender. Though many institutions allow the borrower to increase or decrease the amount, if requested by the borrower.
- Term: Mortgage loans can also be classified on the basis of its duration. Though most of these loans are for a long period of time like 10 to 20 years.
- Prepayment: Few types of mortgage loans can be prepaid, without any fee, where as some have to be paid in full duration.
When one opts for the fixed rate mortgage, he or she also pays down the principal amount gradually. It is referred to as amortization. This helps those who do not have a big amount to buy a home and can pay the loan amount, small or big, gradually, as per his or her convenience till the end of the period of the loan.