Hi All,
In today’s post, I am going to discuss “Mortgages for Canadian Millennial Professionals”.
My top 3 tips about Mortgages are:
1. Find a great Mortgage Advisor
In order to find a great mortgage advisor you should search for ones at banks and through mortgage brokers.
If you can get approved through a bank, this is the best case scenario and when you go to renegotiate your mortgage in the future sometimes banks are easier to stay with since your already with them.
Mortgage brokers are very flexible, less stringent, and will most likely be able to find you some excellent rates. They shop around through other banks and brokers for the best rates.
Banks are good when you are with them but sometimes their rates are a little higher than mortgage brokers since they are only getting rates for their clients through one institution. Also, they are more stringent and are much harder to get approved through.
2. Shop around for a great rate
By doing your own research and finding where the best rates are, this will save you a ton on your entry into the housing market.
Like tip number one above, you want to use your current mortgage advisor through either a bank or broker and get them to shop for the best rates for you.
As far as being competitive, its going to be tough to get lower rates than mortgage brokers since they shop around for their clients by getting rate quotes from hundreds of different lenders.
The banks can only compete amongst themselves for great rates for their clients since they are the only lender. Occasionally there rates could be lower than the mortgage brokers if other banks have dropped their rates first.
3. Utilize your savings for down payment
Saving for your down payment can be done in a variety of ways. Most people have a portion of their earnings from a non-registered savings account, Tax-Free Savings account, Registered Retirement Savings, Stocks, Index Funds, or Mutual Funds or Gifted Funds from a family member or friend.
I utilized my bank stock from working at the bank as the majority of down payment as a first time home buyer. When you apply for your pre-approval, banks prefer dealing with someone that has down payment mostly in cash.
If you are using your down payment in the form of a loan or line of credit, keep in mind this debt is added to your overall debt for when the banks or mortgage brokers calculate your debt to service ratio.
The banks and mortgage brokers use a risk assessment that has several areas they look for in great mortgages:
- Great Repayment History
- Good or Excellent Credit Score
- Good or High level of Income
- Low Level of Debt 35% or less of your overall income
Summary
I thank you all for watching and hope you gained some valuable insight into how to handle the unexpected that life can throw at you sometimes.
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Cheers,
Alex
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