Category: Home loans

What Should First Time Home Buyers In The Greater Toronto Area Know?

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Being a first-time buyer in the greater Toronto area is not a simple task. 2018 has set in with its fair share of troubles. The increase of mortgage qualification rates by the government has left many potential buyers waffling.

The unexpected change has thrown homebuyers into a state of uncertainty and confusion. The changes do very little to address the government concerns on home prices due to the massive supply shortage facing major markets. If the shortages go on unaddressed, the concerns will persist as well.

How The Home Buyer Landscape Has Changed

Mortgage type

The 20% down payment is now seemingly unattainable. Even the uninsured mortgage borrowers have to go great lengths in proving that they are able to pay off the monthly mortgage within the limited 5-year benchmark rates as published by the Bank of Canada, or an additional 2% on their contract mortgage rate. To survive, your income must be sufficient to cover up the extra costs.

The changes are a huge blow to young and inexperienced buyers with financial limitations. While the changes are very unfavorable to first-timers, the rates draw a danger line to keep off any unable buyers. Secondly, the unreasonable rates are not commensurate to the rising demands. The housing shortages cannot sustain the ever-growing population.

What Is The Average Home Buyer’s Budget?

The average rate is $350,000 for the average first time home buyer. If you are used to downtown Toronto’s process, this may seem way too small, but it aligns with what many buyers can afford. In the Great Toronto Area, the median resident’s income varies between $38,018 for a single person to 132,596 for a couple.

According to most financial experts, to ease your mortgage, ensure your mortgage costs do not go beyond 30% of your monthly income. With taxes, maintenance, and utilities, you need minimum household earnings of $61,500 after taxing or just $5,120 per month. To avoid mandatory default insurance, you need a 20% down payment equal to around $70,000.

However, with the surged rates, we are forced to assume a supposed rate of 5.5% translating to an upshot in monthly payments to $1,709.

Best Areas For First-Time Home Buyers

Identifying the best areas to purchase your home is not impossible. Once you understand your ideal kind of lifestyle that appropriately fits into your budget, you will easily weed out any unfavorable deals and determine what suits you best. For an all-time urbanite, Hamilton is the best choice. For a relaxed lifestyle, Tecumseth will do just fine. Finally, Oshawa is the best catch if you intend to raise your young family.

Bad Credit Mortgage Can Bring You Through Trying Times

One great advantage of obtaining a bad credit mortgage in Montreal despite poor credit is that even though the interest rate might be more than the loan,  you will be building collateral once you close the offer and get into the home. If the housing industry appreciates, the value of the home you own will increase and the amount of money you still pay back will certainly reduce. This will make it possible to market your house for more if you want to use money as a down payment on your next house. A bad credit home loan will also enable you to get into a home with a little down payment. There will be a trade-off in a higher rate of interest, but if you do not have enough money, poor credit home loans will be an option for you.

Categories: Home loans

All about Mortgage Loans

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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.

Categories: Home loans