Applying for a Mortgage in Canada

After days of house hunting, you’re finally ready to settle in your Canadian dream home. But before you rush in and start painting the walls, you better get that mortgage you’ll need. Here are some things you’ll need to review before you move in:

Income and credit history

Since you’re getting a loan, your lender will verify if you can actually pay for it. Make sure that you have a steady income source and that your credit history is clean. You’ll be presenting a copy of the purchase contract of the house you want, and the lender will evaluate your capability to pay for it based on these two factors.

Lenders will also look into your debt-to-income ratio. Based on what you earn (bonuses and other add-ons included), the total amount you pay in mortgage shouldn’t exceed 20% or more of your income. Also, the total amount you pay for all of your debt-related expenses (loans, bills, etc.) should allow you to save for your mortgage payment.

Interest rates

Since interest rates will change depending on the country’s economy, the best way to choose the rate that’s right for you is by basing it on what you can afford to pay. The lowest rate isn’t necessarily the best, especially if it’s on an adjustable rate mortgage. Maybe, you’ll be better off with a fixed interest rate, even if it’s higher. Do your research and choose the rate that's best for your financial situation.

Insurance

Your lender will require you to pay mortgage loan insurance only if you cannot pay the 20% down payment, so it’s better if you can meet that mark. The mortgage loan insurance is more for the lender, in case you fail to settle dues.

There’s also the mortgage life insurance. It’ll help a lot in the case of an untimely death, so your family won’t suffer much burden in settling mortgage payments.

Make sure to find a lender who won’t dupe you into paying more interest. The Canada Mortgage and Housing Corporation can help you with this. You have to disclose important information with your lender and settle all payments on time.

...........................................................................................................................................