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One of the important factors in home ownership is understanding things like your credit score. Some people don’t pay much attention to this metric until they begin the mortgage discussion! However, you will find that your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power.
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.
If you are not sure what your current credit score is, you can find out through Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. Once you have your credit score, always double check that there are no mistakes and ensure you dispute any problems if applicable.
f your credit score is accurate, but does not meet the minimum requirements, you will want to look at your current debt. Home ownership is an incredible investment, but it is also costly. Fortunately, there are a number of things you can do to improve your credit score as well as your future financial success, including:
There is also the option of going with an Alternative Lender (or B Lender) if you are struggling with credit issues. A DLC Mortgage Professional can help review your credit score and provide you with options for your mortgage needs.
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.
If you are not sure what your current credit score is, you can find out through Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. Once you have your credit score, always double check that there are no mistakes and ensure you dispute any problems if applicable.
Now that we have talked credit, it is time to consider budget! We know, we know… but we promise, you’re almost there!
When talking about budget, it is important to consider the purchase price budget, as well as your cash flow budget. Being house rich and cash poor makes for a no-fun home! The home price based on your cash flow budget may be dramatically different than the budget home price you qualify for.
The benefit of a budget is two-fold. Not only does it help you to understand your purchase price range and help you to find an affordable home, but it can also help you to see any gaps in your budget or opportunities for future savings. This will be instrumental when you become responsible for mortgage payments.
To help determine your budget, we suggest checking out the My Mortgage Toolbox app on Google Play and the Apple iStore. This handy, consumer-friendly tool will help you determine your mortgage payments, affordability, income required to qualify and even the closing costs!Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.
If you are not sure what your current credit score is, you can find out through Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. Once you have your credit score, always double check that there are no mistakes and ensure you dispute any problems if applicable.
The down payment on your home could come from your own savings such as a savings account or RRSPs. Thanks to the federal government’s Home Buyers’ Plan, potential first-time home owners are able to leverage up to $35,000 of your RRSP savings ($70,000 for a couple) to help finance the down payment. A gift of a down payment from an immediate relative is also acceptable.
Quick Tip: If your down payment comes from TFSA or RRSP, the bank will want 90 days of statements to ensure the funds are accounted for. Gifted funds rarely require 90 days of proof.
It is always a good idea to check with a Mortgage Professional for qualifying criteria and availability to ensure your source of down payment is eligible.
The down payment on your home could come from your own savings such as a savings account or RRSPs. Thanks to the federal government’s Home Buyers’ Plan, potential first-time home owners are able to leverage up to $35,000 of your RRSP savings ($70,000 for a couple) to help finance the down payment. A gift of a down payment from an immediate relative is also acceptable.
Quick Tip: If your down payment comes from TFSA or RRSP, the bank will want 90 days of statements to ensure the funds are accounted for. Gifted funds rarely require 90 days of proof.
It is always a good idea to check with a Mortgage Professional for qualifying criteria and availability to ensure your source of down payment is eligible.
After you have secured your down payment, it is also important to mention that you will need to have the closing costs available upon finalizing the purchase of your new home. These costs can range between 1 – 4% of the purchase price.
When it comes to mortgages, there can be a lot to know! Do you go with a fixed-rate mortgage or a variable-rate? What are the terms? What are the penalties? Which is the best payment frequency? With so many questions and so many lender options, it can be hard to find the best solution for you. That is where a DLC Mortgage Professional can help.
Rate is only ONE of the many features in selecting the best mortgage product that meets your financial goals. With access to hundreds of lending institutions, Dominion Lending Centres Mortgage Professionals are familiar with a variety of mortgage products allowing them to help find the best mortgage for YOU! Plus, unlike banks, mortgage agents are a third-party service focused on YOUR needs. This means that you can get the best rates and unbiased advice all for FREE from someone whose only goal is helping you achieve your dream of home ownership.
When you apply for a mortgage you will typically need to provide a standard package of documents, which almost always includes:
To have the best success with your mortgage, it is recommended that you get pre-approved! This can be done through your Mortgage Professional to ensure that you get the best mortgage product FOR YOU, from the best rate to the best term agreement.
While getting pre-approved might sound boring (and you might be asking ‘why can’t I just get approved instead!?’) there are actually a host of benefits which will make searching for your perfect home that much easier.
While nothing is fully approved until the property is presented to the lender and signed off, there are ways to help protect your pre-approval and ensure the rates and terms are guaranteed upon final financing. In order to do this, we suggest you:
You made it!! Once you have your down payment and have qualified for a pre-approved mortgage (your credit score is in order and all documentation has been provided), you are ready to start searching for your perfect home. Your Mortgage Professional can give you recommendations for a realtor if you don’t have one already.
Our mortgage can offer better rates, personalized service, flexibility and products at no cost to you, finding you the right mortgage to suit your needs.
I suggest you create a budget to start. This helps you to see if you have the financial means to afford your mortgage payment, property taxes, strata/condo fees, monthly utility bills and any other household expenses!
In addition to your mortgage payments, you need to be prepared for property taxes, insurance, utility bills, condominium fees and routine repairs and maintenance.
A pre-qualification provides you with a ballpark estimate of how much you maybe able to afford based on your own self report of your financial situation. This helps set a realistic price range for those eager to start shopping the real-estate market.
Don’t confuse this with the pre-approval! You can find more details on pre-approval under the tab above.
Yes, you can! However, when self-employed you will need to submit additional documentation including:
No. It is critical that income details, properties owned, debts, assets and your financial past are accurate. If you have been through a foreclosure, bankruptcy, consumer proposal, there are still options but only if you disclose this info to your mortgage professional right away!
We do not recommend it! A lender can pull their credit 30 days prior to closing if the original information on the approval changes. Making big financial commitments such as a car or financing furniture, before closing on your home may result in the deal going sideways.
Closing costs are generally 1.5% to 4% of the purchase price of your home.
A fixed rate means you are locked-in for a term. The benefit is that you know your monthly mortgage payment and it will stay the same. With variable rates, they are often lower than a fixed rate but they can fluctuate with the BOC posted rate.
Yes! You will need to make arrangements for a Lawyer or Notary to draw up the mortgage documents for you to sign. If you don’t have a legal professional, ask you mortgage professional if they have someone they can recommend.
The qualifying rate is the Bank of Canada conventional 5 year fixed posted rate. A contract rate is the rate offered by the lender on the homebuyer’s actual mortgage payment.
When you purchase a property, whether a single-family home, condo or cottage, you buy the title. The registration of that title confirms that you’re the rightful owner. Most transactions include a lender’s title insurance policy, which is designed to protect the loan and help the deal close faster. However, only an owner’s policy will offer you protection against title fraud, survey and title issues, or even pre-existing defects.
If you’re putting anything less than 20% down when purchasing a home, mortgage default insurance is mandatory in Canada and allows consumers to purchase homes with a minimum of 5%.
Your income dictates the size of your mortgage. Adding a mortgage helper, such as an income suite, will add income to your application and increase your mortgage qualifying amount.
