Things to think about for your first mortgage

Doing even the simplest thing for the first time can be traumatic and result in unexpected failure, especially if you don’t take the appropriate steps to prepare. Applying for a mortgage is certainly not rocket science, but it does carry a few challenges that beginners tend to underestimate. In order for this hugely important task to go as smoothly as possible, you should go through this checklist in your mind and clarify what your priorities are ahead of the visit with your mortgage broker.

Is your income stable enough to take a mortgage?

A mortgage represents a heavy long-term financial commitment, as it will be very hard to terminate the agreement prematurely without losing a bunch of money. It isn’t something to be taken lightly, and you should probably wait until your career takes off for good rather than jumping headlong into debt as soon as you get the chance. You should never plan too optimistically and borrow based on your expectations of future income, or the reality might arrange a rude awakening. It is better to err on the side of caution when such huge figures are involved.

Do you plan on starting a family soon?

Perhaps that house you are eying is large and comfortable enough for you today, but will there be enough room for a couple of kids in a few years? You need to ask yourself some serious questions before you decide on your first home, or you might be forced to go through the same process all over again soon. Unfortunately, the reverse situation also represents a grave danger – going through a divorce while your home is under a sizable mortgage is a nightmare scenario, especially if both spouses are co-signatories of the original loan.

How much to pay in cash and how much to borrow?

According to Canadian law, at least a portion of the new house must be paid for immediately in order for the mortgage to be approved. That regulation also applies to first-time mortgages in Guelph and similar towns in this part of the country. If you put down a larger amount when you file the papers, you might be able to obtain more leverage when it comes to the full amount of the loan and the conditions for its repayment. Of course, the final decision on this issue will be affected by the financial power of the borrower just as much as his preferences.