Owning a home in Canada has never been this easy before. Even for the first-timers, the process isn’t a hassle anymore. People in their 20s and 30s are financially independent and clear on their future goals, making their house purchase a very practical move. Give a part of the credit to the easy availability of financing options that were not there a couple of years back.
But, that has resulted in confusions too. Not every home loan in the market is meant for you. And, how intelligently you plan matters in the long term. You have to realize that with a loan comes an obligation of monthly instalments. Before you work towards converting your home purchase dream into a reality, be considerate of those conditions and other things.
Here I have enlisted them in the article ahead for your reference.
- Your Home Loan Eligibility
Just as owning a house is a big decision for you as a buyer, the same is with the lending institution. That is why they have a few set parameters to qualify an applicant for the mortgage. The stability in your income and career, age and your overall financial position are few factors impacting your eligibility.
- Types of Loan Available
You might just be interested in a home loan, but when you start researching a little, you will be amazed at the number of mortgage programs available. You have adjustable/floating rate loans, fixed-rate loans, and a combination of both. Take guidance from a mortgage broker to know what works best in your case.
- Affordability
Your financial status is the largest contributing factor to consider before applying for a loan. There is not only a mandatory EMI amount to arrange, but your cost of living to adjust it with. So, make an affordable home purchase.
- Pre-Approval of Loan
Before your property selection should be the pre-approval of the loan, which can help you know the exact budget in hand and make your house hunt more focused. It can even help you negotiate appropriately and close on deals faster than expected.
- Rate of Interest
Your EMI amount depends on what loan type you choose. Mortgage lenders and banks offer different choices to the borrowers as per the down payment made. The bigger the sum of the down payment, the lesser is the EMI amount.
- Repayment Tenure
The loan tenure and instalment amount go hand in hand. The longer is the duration of the mortgage; the smaller is the monthly interest to be paid. But, there is the burden of paying two to three times your loan amount over time. A short tenure with higher EMI is better, provided you have a stable income.
- Option to Switch Lenders
You don’t have to stick to your current lender forever. In case you get a better deal somewhere else, you should be free to avail it. So, confirm whether you can make a switch or not. Ask for any charges if applicable.