Article provided by: Diane Bertolin, Mortgage Agent in Association With Unimor Capital Corp.
If you are in the market for a new home, contact a reliable mortgage broker today. Diane Bertolin of UCC is a trusted mortgage broker in Windsor who can answer your questions and help you get approved for a mortgage quickly. One of the first things to consider when applying for a mortgage is if you will qualify or not. Don't worry! Most people get approved. In Canada, lenders will typically analyze three factors when a homebuyer applies for a mortgage loan, including:
1.Your credit score
2.Your down payment
3.Your debt servicing ratios
Diane Bertolin will walk you through each factor in more detail.
In Canada, credit scores are set between 300 to 900. Ideally, you would like to find yourself in the 680 to 900 range. Individuals who fall within this range will satisfy any Canadian lender's requirements.
The next group is comprised of those who fall between the range of 600 and 680. This group has an average credit score. Depending on the rest of the details of their mortgage application, they may qualify for a prime mortgage or they may not.
The final group is made up of individuals who have a credit score below the 600 mark. These Canadians may still qualify for a mortgage. Unfortunately, it would have to be with a B-level lender, and the individual will pay a considerably higher interest rate.
What Determines Your Credit Score?
If you would like to know your credit score or have further questions regarding the matter, don't hesitate to contact a mortgage broker in Windsor, such as Diane Bertolin of UCC. Be advised that there are two main factors that determine a Canadian's credit score.
1. Make sure that you pay your monthly bills on time.
2. Ensure that your credit balances are low compared to their limit.
For example, if you have a $5,000 credit card, then make sure your balance stays below $2,500 or 50% of that card's limit.
Down Payment for Mortgage
Let's say you purchased a home for $300k. If you plan on occupying this house yourself, the minimum down payment would be 5%. If you want to avoid paying CMHC insurance or if this is an investment or rental property, then the minimum down payment goes up to 20%. These are the minimum down payments for a mortgage in Canada depending on the specifics of the property purchased.
Debt Service Ratios
Let's say we have a household where Mary is earning $60k and her husband John is earning $45k for a total annual household income of $105k. The lender will then compare this income to the monthly expenses that the household incurs. They likely have existing expenses such as their car payment and maybe some student debt that's still left over from when they went to the university.
The lender will determine if there is enough income left over to service the purchase of a home after monthly expenses are paid. The household we now have a monthly mortgage payment in addition to monthly property taxes.Mortgage Broker Windsor
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