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WELCOME TO CANADA

WELCOME TO CANADA

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you with a certain mortgage amount and helps you to focus your house hunting to properties within your price range. When you receive a mortgage pre-approval, this typically locks in an interest rate for a period of time from the application date.

Save up for a down payment

In order to purchase a home, you will need to have money in the bank to use as a down payment. Canadian banks recommend putting down 20 per cent of the purchase price of the house. Homebuyers with less than a 20 per cent down payment will need to get mortgage loan insurance. The Canada Mortgage and Housing Commission’s mortgage loan insurance enables homebuyers to finance up to 95 per cent of the purchase price of a home.

Know your credit score

Lenders will review your credit history prior to approving you for a mortgage. If you have borrowed any money in Canada or have any open lines of credit (credit cards, personal loans, etc.), maintaining a satisfactory credit rating will be an important asset when trying to arrange a mortgage. For newcomers who haven’t yet established a Canadian credit history, the Scotiabank StartRight®

Mortgage Program2 can help you own a home sooner.

Understand your expenses

Your mortgage isn’t the only expense you will incur when owning a home. Look into what your property taxes, heating, water and gas will cost. Also don’t forget to include condo/maintenance costs if you purchase a condominium. If you’re buying a house, it’s recommended to put aside some savings for maintenance expenses such as a new roof or furnace repairs. Make a budget of all of your expenses related to the home to see if home ownership is a realistic goal. As a general rule of thumb, it’s recommended that your monthly housing expenses shouldn’t be more than one-third of your total household income.

Make use of online mortgage calculators

There are many online mortgage calculators that can give you an estimate of what you may be able to afford. They ask you to enter your current income, current credit expenses, plus all the estimated house costs, including down payment, to determine how much of a home you can reasonably afford.

Get pre-approved for a mortgage

A mortgage pre-approval is a pre-qualifying process with your lender (typically a bank) that lets you know exactly how much financing you can realistically be able to arrange for a home purchase. Getting pre-approved for a mortgage will allow you to shop for a home with ease, know- ing that your lender will provide

Choosing a mortgage

Once you’ve found your dream home, you’ll likely need to arrange a mortgage to finance your purchase. Like houses, mortgages come in all shapes and sizes, meaning there’s lots to understand when making decisions about the type of mortgage you want. Here is an overview of some mortgage basics: Amortization period. This term refers to the length of time you will have to pay off your mortgage. Mortgages typically come in 20 to 25 year amortization periods. The longer your amortization period, the smaller your monthly payments will be, but the more interest you will pay overall. Payment schedules. You will have the option of paying your mortgage monthly, bi-monthly, every two weeks or weekly. Increasing your payments means you’ll have a couple of extra payments per year, which helps you to pay down your mortgage faster. Mortgage term. When getting a mortgage, you’ll also have to decide the length of time for which the interest rate, your lender is providing, will apply. A mortgage term is typically five years, but can be less. When the term is up, you will have the option to renegotiate the interest rate. Interest rate type. Mortgage rates come as fixed or variable. A fixed rate will not change for the mortgage term. Fixed rates are typically higher, but they provide peace of mind knowing that your interest costs will remain the same for the entire term. Variable interest rates fluctuate with prime rate changes, which may go up or down, thereby affecting your mortgage payments. If interest rates go down, you’ll pay less. Variable rates are a good option for homebuyers who are willing to accept some degree of risk. Open or closed mortgage. An open mortgage allows you to pay off your mortgage in part or in full at any time without any penalties. This option comes with a higher interest rate but is a great idea if you think you’ll run into some extra money, such as an inheritance, or if you plan to sell your home in the near future. A closed mortgage has a lower interest rate but doesn’t offer the same flexibility meaning you’ll have to pay a penalty if you pay off the mortgage before the term ends.

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