Many of us might plunge into the housing market by browsing real estate websites, comparing neighborhoods and properties value projections. Also seeking advice from friends and family, or contacting recommended realtors.
In this journey of home ownership especially if we are first-time home buyers, our preferred property involves securing a mortgage unless we have sufficient savings or funds to purchase the property outright. The critical question then becomes: How to avoid common mortgage mistakes when we purchase that “unique property ” that we like to own?
Tip: Work with a trusted mortgage agent to asses your mortgage affordability early in your home-buying journey.
2. Consider related expenses Beyond Monthly Payments
Homeownership does not end just with paying your monthly mortgage. Calculate the property taxes, utilities, insurance, and maintenance costs.
Tip: Check all monthly expenses.
3. Pay attention to the Mortgage Stress Test
Canada’s mortgage stress test is that borrowers can qualify and handle higher interest rates to prevent borrowers from taking on too much debt when buying a home or refinancing their current mortgage
Tip: Check if your budget can withstand an interest rate 2% higher than the current rate.
4. Wrong Mortgage Type
The different types of terms and rates such as Fixed-rate and variable-rate mortgages need to be explained and choosing the wrong one can cost you thousands.
Tip: Contact to compare fixed vs. variable options based on your financial goals.
5. Failing to Calculate Early Repayment Terms
Different mortgages come with limitations on lump-sum payments or early repayment penalties.
Tip: Take advantage of prepayment options to pay down your mortgage faster without penalties.
Top Mortgage Tips for Canadians
Some tips that will guide you toward the best decisions:
1. Improve Your Credit Score
Your creditworthiness can lower your interest rate and monthly payments.
Tip: Aim to pay down credit card balances and avoid unnecessary credit cards or line of credit request applications in the months of applying for a mortgage.
2. Ask for the Best Mortgage Interest Rates
Different financial institutions offer different rates, and comparing them can save you thousands over the term of your mortgage.
Tip: Contact to find the lowest mortgage rates by comparing interest rates from multiple lenders to secure the best Mortgage terms and conditions.
3. Understand Amortization Periods
A shorter amortization period means higher payments but less interest over time. A longer period lowers monthly costs but increases total interest.
Tip: Balance affordability with your long-term financial goals.
4. Consider Additional Costs
Beyond the purchase price, prepare for closing costs, legal fees, and land transfer taxes.
Tip: Reserve extra funds of 1.5%–4% for the added costs.
5. Stay Informed About New Rules
Due to the recent changes, in the Mortgage industry such as the increased CMHC-insured mortgage cap and 30-year amortizations for first-time home buyers, having accurate information on the latest policies is critical.
Tip. Contact reliable sources to stay updated.
