We understand that buying a home can be overwhelming. There is indeed a lot to keep in mind during the process, and the informative guides provided on our site will help you prepare for a Canadian mortgage. Since there is so much to remember if you want to get the best mortgage deal, we have put together this list of mortgage tips that summarizes much of the content on our site and makes for a handy checklist during your mortgage application and approval process.
Based on your credit history, existing debts and income, your mortgage broker or lender will tell you the maximum loan that you should be able to comfortably afford. However, you probably want to get a loan with a balance that is lower than the maximum the lender or broker recommends because you never know what future surprise expenses may eat into your discretionary income. The smaller the mortgage, the more you will have left over for other expenses, so make sure to estimate on your own how much of a mortgage you can afford before consulting a broker or lender so that you do not feel compelled to borrow more than you can handle.
Our mortgage broker vs. bank page contains many helpful mortgage broker tips, so it is worth consulting them before you decide who you will contact when you consider your mortgage options. Here we just want to remind you not to overlook the advantages that mortgage brokers offer most Canadians. Brokers do all the hard work for you and force lenders to compete for your business, which usually drives down the interest rates being offered. What’s not to like about that?
Those who offer mortgage renewal tips often recommend that you consider several lenders when it is time to renew your mortgage and not automatically choose with your existing lender for convenience’s sake. When you do not shop around, you may miss an excellent interest rate that another lender is offering. In fact, this applies whether you are renewing a mortgage or applying for a brand-new loan.
When you are negotiating with a lender, do not be afraid to mention the lower rates its competition may be offering. That may encourage the lender to match its competitor’s interest rates or even to offer you a better deal. To help you gain the advantage in negotiations, we keep you informed with up-to-date interest rates in Canada on our current mortgage rates page.
Home buyers often get so enamored with a home that they loose sight of their goal to pay the least amount possible when they are negotiating the offer to purchase. In other words, love for a home can easily turn into a desperate grasping for the home that makes the buyer willing to do whatever the seller wants to guarantee the sale. It is far wiser, however, for you to be willing to walk away from the home, since it usually encourages the seller to give up more in negotiations than if he or she senses you are desperate for the home. After all, it is not the end of the world even if the seller does not blink and you must walk away. In many cases, the seller will not be able to sell the home to anyone else, and you can put in an offer a few days, weeks or months later that meets your needs and that the seller will feel more inclined to accept. Even if the seller ends up selling his or her home to someone else, just remember that there are plenty of homes out there, and you will find another one that you adore.
Depending on whether you are in urgent need of a home or not, this is one of the Canadian mortgage tips that you may not be able to follow. Like other markets, the real estate market swings between two extremes. On the one hand, there can be more buyers competing in a market that has an insufficient number of homes for sale to meet demand. This is what is known as a sellers’ market because the reduced supply allows sellers to command premium prices for their homes. On the other hand, there can be more homes on the market than there are buyers to purchase them. This is called a buyers’ market because the excessive inventory gives buyers the upper hand in negotiations with those who really want to sell their homes. Obviously, you will see the lowest prices during a buyers’ market, so wait for a buyers’ market to buy your home when you can.
The loan itself is not the only cost you have to keep in mind when you buy a home. You also have closing costs such as the Land Transfer Tax and home inspection fees. Furthermore, you will probably want to get some new furniture and appliances when you move. This is one of the most practical mortgage tips in Canada: Do not forget about these extra costs because without money to pay them, closing your loan and moving can be nightmares.
Many Canadians are tempted to get a loan with an amortization period of twenty-five years or longer because such mortgages have the lowest minimum monthly mortgage payments. Such mortgages, however, cost the most over time because you end up paying more in interest over the life of the loan. If you can shorten your amortization period and afford a larger monthly payment, you should certainly opt for the shorter amortization schedule. A shorter amortization period usually requires a minimum payment that is only slightly higher than the payment for a longer amortization period, and you can save tens or hundreds of thousands of dollars over the lifetime of your loan.
These are just a few of the best tips for getting a mortgage in Canada. We recommend that you acquaint yourself with the mortgage help section of our site to help you fully prepare yourself for the mortgage and home buying process.