Buying a New Home Blog Series – Part One – Low Interest Mortgage Approvals

Buying a new home is exciting but involves preparation if you want to get the best deal. Getting the best deal will mean getting a good price on your home, negotiating a low interest mortgage, getting competitive quotes on homeowners insurance and mortgage protection insurance and more. 

A low interest mortgage when buying a home will be important because a mortgage payment for most people represents their largest debt and monthly payment. 

Mortgage interest rates in Canada have been so low for so long that buying a new home is very affordable and in some cases you may be able to buy a new home that bears a mortgage payment comparable with a monthly payment for rent. 

When thinking about how much of a mortgage payment you can afford, it is important to remember that in addition to a mortgage payment you will also have a monthly payment to property taxes, hydro, gas and homeowners insurance. This can really add up and because utility costs in Ontario have increased dramatically over the past few years, it is important to get a low interest mortgage approval that gives you a low monthly mortgage payment so that if your utility costs rise, you can still afford to carry your home. 

There are many different types of low interest mortgage products out there. Your mortgage interest rate will often depend on the type of mortgage product that you choose and the amount of your down payment. 

Those who want to take advantage of the current historically low interest rates but may not have planned to buy a home may not have substantial savings accumulated to cover the cost of a down payment. There is no money down programs offered by many banks that enable families who don’t have a down payment to be able to buy a new home.  

Before buying a new home with a no money down mortgage, you must consider that this will not get you the lowest rate mortgage available. This is because in most cases, a no money down mortgage will involve a slightly higher interest rate because the bank will recover the equivalent of a 5% down payment through interest in the first 5 years of your mortgage. For example, right now National Bank’s 5 year fixed mortgage interest rate is 3.49% if you have a down payment of at least 5%, whereas, their mortgage rate with no money down bears a 5 year fixed mortgage rate of 5.29%. This represents about a $300 difference in monthly payment to the homeowner.  

Also, when buying a new home choosing a variable rate mortgage is often cheaper than choosing a fixed rate mortgage. Variable rate mortgages are less interest because they float with prime. The homeowners carry some risk because if interest rates rise, so will the variable rate on the mortgage. The safest bet is often to choose a low variable rate mortgage with an option to lock in. This allows you to receive the lowest interest rate with the safety net that if rates start to rise, you can lock into a higher fixed rate mortgage. 

Buying a new home is often the single biggest purchase that an individual will make. For this reason it makes sense to research, prepare and establish a relationship with a local mortgage broker who can educate you on what rates are available with all the banks so that you can make the best informed decision.

Mississauga Mortgage Broker Finds the Low Interest Mortgage Financing Options over the Holidays

The holiday season is right around the corner and holiday shopping mania is about to begin. Whether you like to prepare for the holidays in advance or are a last minute shopper, holiday financial planning could mean the difference between a stress free new year and facing a landslide of credit card bills.

Homeowners have many options as it relates to holiday financial planning and now is a better time than ever to consider consolidating your debt. Your home is your best shot at securing low interest mortgage financing and there are currently many low interest mortgage financing options available in Ontario.

Low interest mortgage financing options could include a secured line of credit, a first mortgage refinance or a second mortgage, and the best option for you will depend on your personal financial circumstances and the type of debt you are looking to consolidate.

Those who don’t have a lot of debt ($15,000 or less) may be best suited for a line of credit. Lines of credit generally offer low interest rates and you only use what you need. A line of credit is considered a low interest mortgage financing option and gives you the flexibility of a low monthly payment with an option to pay as much as you want (when you have extra money). If you live in Mississauga, a Mississauga Mortgage Broker can help you to obtain a low interest line of credit that offers you the maximum benefits.

If you owe $16,000 - $25,000 in debt a second mortgage may be the best choice. Because second mortgages offer a fixed repayment, this low interest mortgage option will enable you to consolidate your debt and fix your monthly payment so that you know when you will be debt free. With second mortgages, you can set your amortization as low as 5 years which is essentially a 5 year consolidation loan. After you make your payments over 5 years, your debt is paid in full. A $25,000 mortgage financed on a 5 year amortization could bear a monthly payment as low as $500 per/month.

If you owe more than $25,000 in debt, refinancing your first mortgage is likely the best choice. Once you have accumulated a significant amount of debt, a second mortgage amortized over a short period of time may bear a monthly payment that is too much for your budget to take. Refinancing your first mortgage is an excellent low interest mortgage financing option that will create immediate cash flow and put an end to multiple payments to various credit cards.

All of these low interest mortgage financing options will enable you to consolidate your debt, will reduce your payments to one single monthly payment and allow you to start the New Year off without the usual landslide of credit card bills come January. Homeowners in Mississauga should consider speaking to a local Mississauga Mortgage Broker for the lowest interest mortgage financing options that are available locally. For more information about low interest mortgage financing options from Mississauga Mortgage Broker Paul Mangion, call 416 204 0156 or visit www.gtamortgagematters.com

Low Interest Mortgage Loans – How Long Can You Hold Your Low Interest Mortgage Approval?

Low interest mortgage loans are available to those who want to purchase or refinance their homes.

If you are thinking about buying a home, it makes the most sense to make sure you can obtain a mortgage before you start house shopping. You will also want to be sure that you understand the extent of your mortgage closing costs to ensure that you have the liquidity to go through with the purchase.

Do not go from bank to bank applying for mortgages. This will result in multiple credit inquiries on your credit report and will reduce your overall credit score. This alone could disable your ability to get approved for a mortgage.

Go to a Mortgage Broker, one that deals with all the major banks. They will be able to:

- Pull your credit

- Review your credit applications

- Tell you what you qualify for

- Negotiate with the banks

- Obtain a low interest mortgage pre-approval on your behalf

Most Mortgage Brokers can negotiate with the bank to hold your mortgage interest rate for 120 days.

Depending on your credit and income, you will need between five to ten percent of the purchase price as a down payment. If you are obtaining a CMHC mortgage, you will have to prove where your down payment money came from.

If you are planning to purchase a home, you will also need to consider the following “other closing costs” you will incur when purchasing a home.

1. It is always prudent to have a property inspector go in and do a home inspection on a property you are planning on purchasing. The cost of an inspection is approximately one thousand dollars.

2. You will have to obtain Fire Insurance Coverage on the property. This is often cheapest when bundled with other insurance policies, such as car insurance.

3. Real estate legal fees will be incurred both on your property purchase and on your mortgage closing. Many Real Estate Lawyers can offer you a bundle deal that covers both closings.

4. Finally, you will need to have enough money set aside to cover your land transfer tax which could be 1-3% of the property purchase value.

Your closing costs will vary depending on the location of the property you are purchasing. Step one in the process of planning to purchase a home is to establish a relationship with a good Mortgage Broker. For more information about low interest mortgage loans and how long you can hold your low interest mortgage approval visit http://www.gtamortgagematters.com/