PROUDLY CANADIAN
Buying a home is definitely one of the biggest decisions you can make. Purchasing a property is an investment and one that should be thoroughly planned. But, most important of all, is to prepare for your application and this means you will need to start by calculating how much money you will need. Affordability is one of the most important factors when it comes to applying for a mortgage, as you’ll have to be absolutely sure that you can afford it.
It is estimated that the average Canadian home buyer will spend around 11 months engaged in the house buying process, although they start thinking about the decision long before then. Each person’s financial situation will be different, which is why it’s important to work with a reputable mortgage broker or use an accurate mortgage calculator in Canada to help you determine how much money you need for your mortgage.
Assessing Your Financial Situation
If you apply for a mortgage, your lender will want to know how you are going to repay your mortgage. This means they will have a look at your current credit profile, as well as your income and your current debt. This will give them a good overview of your current financial situation as well as the money you will have at your disposal to service your mortgage.
This process may require you to provide additional documentation such as an employment letter, pay stubs, bank statements, and really anything else that can support your mortgage application.
The next thing you should think about is the down payment you need to provide. Although every mortgage can be different, generally you will need at least a 5% down payment as a minimum, depending on the purchase price.
Remember that it will be important for you to be able to show the source of your down payment funding. Usually, this can be achieved by providing three months’ bank statements so that your lender can see you have the funds available. Lenders also need to ensure that you are not purchasing a property with the proceeds of any crime or money laundering process, so you can expect some scrutiny when it comes to submitting your down payment.
What Can You Afford?
In order to know exactly what you can afford, you can make use of a mortgage calculator in Canada to assist you with the process. Your mortgage broker can help you work out what you may qualify for, based on your income and your current credit profile. There are many things that can have an influence on your mortgage application, which is why it is usually assessed on a case-by-case basis.
Keep in mind that with recent changes in the way you apply for a mortgage, you will need to undergo a financial ‘stress test’ which requires you to prove that you will be able to maintain your mortgage payments with at least a 2% higher interest rate.
If you are looking for expert advice with regards to your mortgage application, speak to the team at Mortgage Guys. We can help you with a mortgage calculator in Canada, specifically aiming to help you determine how much money you need In order to qualify for a mortgage.