Obtaining A Mortgage

Posted by Kent Braaten on Monday, January 21st, 2019 at 10:29pm.

Mortgage picture

It is best in our current market to get a pre-approval for a mortgage.  You can go to your bank and speak to them about your options, or you can contact mobile mortgage specialists who will help you with all of your needs.

MORTGAGE TYPES/OPTIONS
It is best to speak with a professional in the mortgage industry, but some options for younger buyers are:
0% down, etc.
Do not let o% down fool you as you will need some money up front for your deposit, which will likely come from a line of credit.

5% Down Payment
The following is an excerpt from the Canada Mortgage and Housing Corporation Website under the topic of “Mortgage Loan Insurance”:

“Get into your home sooner.  Mortgage Loan Insurance helps you do it.  Put as littles as 5% down. When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required.  It protects the lender and, by law, most Canadian lending institutions require it. Having mortgage loan insurance means that if you, the borrower; default on your mortgage, the lender is paid back by the insurer – CMHC or a private company.  With the risk of losing their money removed, lenders have the confidence to make mortgage loans of up to 95% of the purchase price of the home (subject to price ceilings).
That means your down payment can be as little as 5% of the house price.  With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home.”

COST OF MORTGAGE LOAN INSURANCE
There are two components: an application fee and an insurance premium.  The application fee typically ranges from $75-$235, and mortgage loan insurance premiums range from .5% - 3.75% of the amount of your loan (additional charges may apply).  This depends on the size of the loan and the value of your home. The premium can be added to your mortgage loan and paid off as party of your regular mortgage payments, or paid off in a lump sum at the time of purchase.

WHERE CAN YOU APPLY FOR MORTGAGE INSURANCE
See your lender, who can obtain mortgage loan insurance from CMHC or a private insurer.  CMHC will insure mortgages up to 95% of the home’s purchase price or the market value of the property, whichever is less.  (Restrictions may apply, contact your local lender). Both new and resale homes are eligible.

Some of the criteria that must be met:
The must be in Canada and must be your principle residence.  Housing payments, including principle, interest, property taxes, heating (P.I.T.H), the annual site lease in the case of a leasehold tenure and 50% of applicable condominium fees, can’t be more than 32% of your gross household income (GDS ratio).
Your total debt load can’t be more than 40% of your gross household income (TDS ratio).  Other criteria apply and are subject to change. For more details contact CMHC or your local lender.

 

 

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