With property prices touching the roof, buying a house in Canada is not easy. A house is an investment that you make once in your lifetime and cherish it throughout your life. It is something that you pass onto your family and your family will pass on to their offsprings. A house is something that you live in, make memories and decorate it so that it reflects who you are, what you like and what you want to be. Buying a house is not an easy task, it takes hardship, investment, saving as well as lots of research so that you make the right investment. If you are also looking to buy a house,you can use the mortgage facility to make your dream come true.
In a mortgage, you only have to pay downpayment for your house, and the rest of its payment can be divided into fixed installments paid every month for a period of time.
Once you have decided to buy a new house, the process begins with estimating how much you can spend on it. If you do not have a lot of savings then you would want to consider a mortgage, and gather information on how much you can afford.
Get Mortgage or re Mortgage or Investment Request Now
Here is what you need to know about the mortgage:
There are a lot of factors like credit score, income, debt, and your down payment , etc that will be considered to estimate the amount of mortgage you can afford. These factors will be evaluated by the mortgage representative and decide the size of your mortgage.
Your down payment will be determined by your income and savings. The debt ratios on the other hand are determined on the basis of your income, other installments and monthly expenses. Your yearly income will be divided into 12 parts, from which they will deduct your basic expenses and other installments to calculate the remainder. For example:
The down payment should be at least 5% of your house price, this can really restrict your house buying limit. So, if your down payment is fixed at $20,000, the maximum home value inclusive of your debt ratio that you can afford is ($20,000 / 5%). The minimum down payment will increase if the value of your house is more than $500,000 (5% of $500,000 and 10 percent of values exceeding $500,000). But for purchases over $1,000,000 or more, the buyer will have to make a 20% down payment.
What makes you the right candidate for mortgage?
The lenders will look at the credit score of the buyer to decide if he is the right candidate for the mortgage. Your credit score will speak for your financial health and tell the lender about the risk involved. The credit score is calculated between 300-900 points. A person with a score of 700 or above will help you in getting the mortgage easily. A lower credit score shows that you haven't handled your previous installments well; the lender may consider this as a risk and may not give you the loans or lower the amount for you.
Your credit score is given by the credit reporting agency also known as credit bureaus. The credit score is issued by banks, credit unions, retailers, credit cards, etc. The two main companies that take care of your credit score in Canada areTransUnion and Equifax Canada. These agencies will give you a free credit report every year but you can have a look at it anytime with a small fee.
Factors influencing your credit score:
Each credit-reporting agency have a proprietary formula to calculate your credit scores like:
Previous Payment History – missed or late payments,bankruptcies, overdue accounts, and other debts will reflect on your credit score
Credit Utilization – how much credit you have used on your debts will also affect your ranking. You should be using less than 35% of its total value.
New Credit Requests – the time when you applied for the new credit.
Credit History – The time period for which your account has been opened will also count.
It is a process in which you replan your mortgage loan. Private and government banking institutions allow you to re-plan your mortgage by converting it into the newest plan available with lower installment and better rate of interest.If you are already have mortgage on your house, you can speak to your lender to about remortgage plan to help you in reducing your installment but this can only be done if you are already 5 to 10 years in your existing mortgage plan. This process is usually created to help people in reducing their current installments. This process will include the reassessment of your property and according to its current price your new mortgage installment and interest will be decided.