A mortgage is especially designed to help you buy a home or any other property. Deciding to buy a home and getting a mortgage is perhaps the single most important decision that you will ever make in your life. A home mortgage is almost like a marriage, as it entails a commitment for a lengthy period of time, often for the better part of your adult life.
A mortgage refers to raising funds to buy a home or property. The mortgage loan is secured against the buyer’s property. This means that repayment of the mortgage is extremely important, or there is a legal mechanism that entitles the lender to take possession of the property, in the event of a loan default. But, before you get a mortgage or renew one, it is imperative that you do adequate research, in order to get a mortgage that is best suited to your needs and your income capability. The foremost decision you have to make is to ensure that your mortgage repayments fit into your income budget, because if you cannot make your payments, then you will be in danger of losing your home.
An Insight into the Canadian Mortgage Market
There are many types of loans in Canada that have competitive interest rates– mortgage interest rates, student loan interest rates , and business and personal loan interest rates.
The Canadian mortgage market has evolved dramatically over the last few decades. There have been shifts in the availability of funds, interest rates, source of funds and the nature of the mortgage themselves.
As the needs of lenders and borrowers become increasingly complex, the practice of mortgage lending has evolved from simple repayment to a host of complex repayment options that are offered by most private and public financial institutions in Canada. Today, short-term mortgages, long-term mortgages, high-ratio mortgages, variable mortgage rates are repayment innovations that are common to the Canadian mortgage market.
When you apply for a home loan in Canada, there are several factors that will determine the loan amount you are eligible for, and the rate at which that you will pay back the loan. To be eligible for mortgages in Canada, there are four very important influences that impact the decision of mortgage lenders – stable income, good credit history, property you are purchasing and your down payment. All these factors will work together to determine the options that suit you best, and the rate given to you by the mortgage lender. Here are some factors to give you better insight into the Canadian mortgage market.
- Credit History: This is an important part of any loan process, as the lender is keen to know that if you have borrowed money in the past, you have paid it back. This will determine whether your loan is approved or disapproved and how much of a loan amount you are eligible for.
- Capital Accumulation: Lenders want to know the value of your accumulated assets, over time. This will help them make decisions regarding your loan.
- Collateral: When you take a mortgage, you will be putting up the house you buy as collateral.
- Ability to pay back: Most financial experts recommend that your housing loan should not exceed 30 percent of your gross income, and all your debts should not exceed 40 percent of your gross income. Lenders consider all these factors before approving or disapproving the loan.
- Employment History: It is an evaluation of the number of years you have been in employment, number of jobs, type of job, how long have you had your job etc.
You could also look into all these details through several online tools that are made available to residents of Canada, such as my bank tracker, credit tracker and my finance tracker.
In order to be eligible for a mortgage, gross annual income, assets and liabilities and credit history will be taken into consideration by mortgage lenders. They will also determine the loan amount that you are eligible for, depending on all these factors. In some cases, annuities can be used to pay off a mortgage, but you will need to know how does an annuity work. The mortgage decision can be quite a complex process, but the tips below should help give you a deeper comprehension of getting a home mortgage in Canada.
- Getting preapproved for the loan: You should understand the process of prequalification – the kind of credit check and income verification process the mortgage specialist is following.
- Collect all requisite information: Ensure that you have all the information related to your income, banking information and tax returns. All this information will help offer you a preapproval with fewer conditions.
- Check your credit history: This may not be done by all bankers at the preapproval stage, but it could prevent you from getting the final approval on your loan, so be sure to get your own credit history checked, so that you are better placed when applying for the loan.
- Build your credit history: If you are in the soft stages of getting a home loan, you could get a Registered Retirement Savings Plan (RRSP). This will appear on your credit report and will help to build your credit history.
- Avoid expensive purchases and frequent job changes: Do not rake up huge credit card bills or buy expensive cars or jewelry, before you are buying a home. It can impact the loan amount that you are eligible for. If you change jobs too frequently before your loan, a lender may take notice of it and consider you to be a flight risk, which could again impact the home loan amount eligibility.
It is always best to be prepared and most mortgage seekers will go for pre-approved mortgages, before the process of buying their home. This will help them to set a budget for their purchases that is well within their financial means. By knowing the pre-approved amount, the homebuyer will know what kind of house to look for and in which area to look. There are several lenders in Canada that aid buyers in the pre-approval process and will lock in competitive interest rates for them.
Your home is the biggest investment and taking a loan is one of the most important financial decisions that you will ever make in your life. Do you know how much debt you have? You will need all this information to know whether you are financially prepared to own a home. If you are looking to buy a home, then mortgage lenders will ask for this information. That is why getting the right advice will have a big financial impact. MyMortgageBroker will support you through all stages of the mortgage process, while understanding your needs and requirements. If you have a mortgage or are taking a mortgage, then perhaps you will want to pay your mortgage as soon as possible, so that you minimize your interest costs, but at the same time maintain the same quality of life that you are used to. A Canadian mortgage calculator will help you to assess and cultivate a strategy of repayment that will best suit your objectives and capabilities. You can use these mortgage calculators to double up your payments, make lump sum payments or make custom payments.
Most banks, mortgage lenders and mortgage brokers in Canada provide mortgage calculators to help you make a decision on your home loan repayment options. The availability of tools such as mortgage calculators help customers to determine the kind of mortgage financing that is best suited for them. It will also help you to identify whether you qualify for a home loan, or whether you will need to wait for a certain period to be eligible.
Here are some Canadian mortgage calculators that are available to mortgage seekers in Canada.
- Buying and Renting Calculator: With the help of a renting and buying mortgage calculator, the buyer can make a choice on renting or buying, based on the information and repayment options. Renting a home requires a low initial investment, while buying may need a large initial investment. There are different advantages to renting and buying. Each individual must assess his financial health and overall objectives before making a decision.
- Mortgage Amortization Calculator: A Mortgage Amortization Calculator refers to a payment and balance summary of the mortgage that can be calculated. These results can be seen in an amortization schedule. In this kind of calculator, the monthly interest payment is calculated on the mortgage, interest rate and mortgage term. This mortgage calculator will help to create an amortization schedule for your mortgage. You can see how much interest you need to pay and make a note of your principal balance. With this, you will be able to assess the impact of a principal prepayment on the life and interest that is paid on your mortgage.
- Mortgage Affordability Calculator: In any home loan, the maximum mortgage that the buyer is eligible for is based on his income earnings. The traditional formula of calculating home loan eligibility was based on three times the person’s gross annual income. However, this was not considered to be a reliable formula. It would be more realistic to consider a number of factors in the personal budget, such as the amount of money that can be spared, insurance and taxes to finally determine a home loan repayment plan. Typically, a mortgage loan should not exceed 30-35% of a monthly income. The mortgage affordability calculator will help you to take a number of considerations into account, before you decide on your repayment option. In simple words, a Mortgage Affordability Calculator will help you to establish how much you can borrow for your home mortgage.
- Mortgage Approval Calculator: A mortgage approval calculator is an indicator of what you can afford to pay, based on your expenditure and income. This is a financial tool that is meant to guide your decisions on mortgages, by delivering a snapshot of your borrowing power that is based on a couple of factors, including income, expenses and interest rates.
Once you have gone through all your calculations, do they look encouraging or discouraging? Do you feel like you are confident enough to buy a home? If you are discouraged, you need not fear. You may have to step back and make a few adjustments and improvements. MyMortgageBroker will help you to build a plan, so that you can qualify for a loan in a matter of a few months. Here are a few things you could do to improve your mortgage situation.
- Save more prudently for a down payment in the future
- Pay off all existing loans first
- Consider changes to your household expenditure to see where you can spend less money – by saving more, you will be one step closer to a down payment on your house
- Lower your expectations – your first home may not necessarily be your dream home
- Keep a copy of your credit report
All mortgage lenders will ask for a copy of your credit report before approving your loan to see how you have paid off your debts in the past. To ensure that you have adequate credit history, you can contact credit agencies to get a copy of your credit report, by paying a fee for this service. Once you get your report, you should examine it to ensure that the information is accurate and complete.
Getting a mortgage in Calgary, Canada
Balanced on the oil, agriculture and tourism industry, Calgary is a rich economy in Canada. Widely regarded as one of Canada’s most rapidly growing cities, Calgary houses a population of 1.3 million people. With a boom in housing sales, Calgary, today, is one of the hottest Canadian housing markets. The housing market in Calgary is witnessing exponential growth and the existence of low interest rates has played a huge role in powering the home buying market. When choosing a home in Calgary, you should also keep in mind the city of Calgary property taxes , as you will need to pay that to your local municipality on an annual basis. You must ensure that you can make your mortgage payments, along with your property tax payments, without too much of a burden on your lifestyle. MyMortgageBroker will help you to assess your repayment abilities, based on your income.
Mortgages and mortgage payments in Calgary can be set up in many ways – monthly, bi-weekly, weekly and lump sum payments. People from Calgary often tend to apply for their mortgage with just one lender, most likely their bank. But, they may be missing out on getting the best interest rates, as they do not shop around, often citing lack of time. It is even be possible to buy a home with little to no down payment in Calgary. There are several government programs that are available to enable you to buy a home with as little as a zero down payment, depending on whether you qualify for them or not. With MyMortgageBroker, they will do all the work for you and get you the best possible comparisons on interest rates and mortgage opportunities, so that you don’t end up paying more than you need to.
Finding a Calgary mortgage broker with in-depth understanding of the local housing market can be extremely beneficial, if you are looking to buy a home or property in the city. They handle everything – from applications to negotiations of interest rates. However, choosing a Calgary mortgage broker can prove to be a daunting task, with so many options to choose from, all of who will claim to get you the most competitive rates. Therefore, it becomes essential to do thorough research, before settling on a mortgage broker in Calgary that will best suit your needs. If you are looking for an experienced and reputed mortgage broker with a good track record in Calgary, then you can log on to www.mymortgagebroker.com.
If you live in Calgary, the mortgage calculator Calgary will help you to calculate monthly mortgage payments, which is based on purchase prices, term and interest rates. Mortgages in Canada are compounded semi-annually and this calculator will help you to understand the loan amount that you can afford or qualify for.
If you are thinking of buying a new home, you should always know what to expect, before impulsively making an offer on the house. By using a mortgage calculator, you will be able to conveniently determine your mortgage payment options. You must also understand the terms and conditions that are set forth in a loan, whether the bank has specific repayment options or whether they expect a promissory note etc, so that you are fully aware of the terms of your loan. If you want to know more about what is a promissory note, you could log on to www.mymortgagebroker.com for more information.
If you need any further information about mortgages in Canada, you could log on to www.mymortgagebroker.com and choose from the various options that have been made available on the website. If you need any further help with the process or have any additional questions, you can contact their customer service representatives between Monday and Friday at 403-870-2669tel:1-877-753-6667. It is really as simple as that!