Living in Canada is not too tough, but being on a rent can be tricky and the rates can go high. It happens that an individual has enough money and plans to go for a mortgage, then he needs to know a few details and conduct a thorough search prior to going for one.
Those residing in Canada need to have a good record when it comes to money and the relationship with the bank. Three important details are imperative and they are listed below.
1. A clean and verifiable credit history from a reputable bank.
2. Permanent Resident Status
3. Enough money to fund at least 35% of the house purchase.
If a person has a job in Canada, then the 35 percent charges will be waived for him. But there are some lenders that may offer more relaxed terms but charge an above average interest rate respectively.
When to apply for the mortgage?
It happens that a person is on a work permit and is not a permanent resident of Canada. Some lenders may offer him a mortgage and require him to keep one 'years worth of the mortgage payments in a bank account until he applies for the permanent residence in Canada.
But being on a work permit is favorable for the individual and will result in a positive outcome for him. The standard Canadian mortgage requires 25 percent of the house purchase to be funded by the buyer while the remaining 75 percent is covered by the lender.
The banks fund greater than the 75 percent of the property value if the borrower is willing to pay for the indemnity insurance in order to insure mortgage against default. Moreover, banks provide mortgages up to three times the annual gross income to the people that earn average income respectively.
How can an Individual get better in terms of his Mortgage?
An individual can get mortgage in Canada in two different ways. He can deal directly with the banks or he can use a mortgage broker as well. In this regard, a few aspects which are vital are mentioned below.
– Majority of the mortgage brokers are independent advisors. They will try their best to find the best mortgage for the respective individual in his circumstances.
– Brokers mostly have connections and contacts with many lenders.
– They get paid by the lender rather than the individual.
– Records show that brokers got better mortgages for those who had migrated to Canada and negotiated at better rates as well.
Types of Mortgage
a. Open Mortgage:
Open mortgages can be paid-off or even negotiated at any time without any additional interest.
b. Closed Mortgage:
Closed mortgages cannot be paid off early unless the borrower is willing to pay the additional interest. In these mortgages the interest rates are quite low than the open mortgages respectively.
What to do for the Mortgage
To begin with an individual needs to be familiar with the details related to the Mortgage. He just cannot be relaxed about going about it and keep in touch with the best brokers and the banks respectively.
He should note down the rates being offered and keep in mind the interested rates which will affect the mortgage. He should get the advice before buying the mortgage from a broker pertaining to the selection of an open or a close mortgage.