Everyone yearns for the day they will finally get to be homeowners and start enjoying the benefits which come with the title. However, considering these economic times, very few are capable of buying properties in cash which makes financing a difficult option to evade. If you have finally made a decision to purchase property and are currently looking for the financing option, below are some things you ought to know about applying and successfully getting a mortgage in Vancouver.
Pre-approval makes things easier
Getting pre-approved for a mortgage simply means that a financial expert or a special calculator has been used to calculate what you can afford for a mortgage. The pre-approval document makes it easier to convince lenders that you are capable of paying your dues without straining too much or defaulting. It will also benefit you directly by reducing the time you take to search for suitable property; with an exact figure which tells you what you can afford, you won’t waste time looking for properties which are beyond your financial capabilities.
Have a second look at your credit report
Did you know that you cannot qualify for a mortgage in Vancouver if your credit score falls below 650 points? In addition it is required that you have at least three active credit accounts over the last two years. If you meet these requirements, you will be eligible for what is referred to as A lending mortgage rates which happen to be the best.
The 5% down payment
Another of the requirements you might not have been aware of is a 5% down payment. For instance, you would have to make an initial payment of $ 5000 if the home you intend to purchase costs $ 100000. Remember, this is not a rule made up by the mortgage industry but one from Canadian Authorities. The rule aims at insuring your home mortgage against default.
Your lender should have mortgage default insurance
Pertinent to the 5% down payment rule, Canadian authorities also require your lender to be insured against mortgage default if you are going to pay less than 20% down payment. However, since very few are capable of parting with 20% of the value given for the home they intend to buy, all lenders are required to have mortgage default insurance.
As the borrower, you take care of the closing costs
In Vancouver, you will be needed to pay for the closing costs associated with your mortgage. Closing costs range anywhere between 1.5% to 2% of the property’s value. However, you do not need to worry about this if you hire a mortgage broker to handle transactions for you.
Hiring a mortgage broker is highly beneficial and quickens the entire process
If you are looking for mortgage, you can either do that alone or you might opt to hire a mortgage broker. The latter is considered beneficial since brokers or agencies are experienced in such exercise; they know what is needed and have connections to lenders which means looking for appropriate financing will take less time.
The maximum amortization period has been reduced to 25 years
Prior to the 9th of July the year 2012, the government allowed payback periods for mortgages to run up to 30 years. However, that period has been reduced to 25 years which means you have to pay larger installments for highly valued homes.