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What Are The Factors That Can Affect Home Loan Eligibility?

A lot of people consider the possibility of taking a home loan as extremely daunting. While home loans are serious business, they are also quite easy to understand. If you have always wanted to have your own place and you are doing well financially, it might not be a bad idea to take out a home loan against your available assets and get the house of your dreams. Banks and other financial institutions have made it very easy for people to take out home loans. However, there are certain factors that can affect your eligibility for a home loan, since banks and other financial institutions need sufficient proof of your legitimacy before they hand over their money to you.

If you are thinking about taking out a home loan, you have come to the right place. Read on to know more about the factors that can affect your eligibility for a home loan.

  1. Your age.

This is the first factor that is taken into account by banks and other financial institutions, since it is an important factor in loan approval. If you are young and have a stable source of income, you are more likely to be sanctioned for a home loan than if you are much older and nearing retirement. This is because banks may doubt your potency to repay the loan in full.

  • Your job and income.

This is second on the list of considerations. Of course, unless you have a stable job with a steady income flow, you will simply not be sanctioned for a loan at all. Unconventional or risky jobs which do not always promise a stable future can hamper your plans to get a home loan. If you have a history of frequently changing your workplace, it might also affect your eligibility.

  • Your credit score.

This is the most important consideration when it comes to sanctioning home loans, since your credit score is basically a history of all your monetary transactions. It displays your repayment history, existing/outstanding loans, credit card dues and debt history. This is a measure of your financial credibility which the bank or lender will take into account while debating whether you are a good candidate for advancing a loan, since it will determine whether you will be able to pay the amount in due time.

  • Your property details.

A loan is always advanced against some sort of asset, and for home loans, this is usually the property that you are taking out the loan for. Your property is the security against your home loan. If you property is worth a lot, your home loan amount will automatically be more.

  • Your dependents.

The number of people who depend on you is taken into consideration before advancing a loan. This is because the more dependents you have, the more people you need to take care of and thus your ability to pay off the loan in time may get affected, as your disposable income will be lower. This can also affect your home loan eligibility.

Six Smart Tips to Qualify for a Home Loan

There was a time when buying a home was considered to be a challenging achievement. But, as real estate and financing markets underwent progression, house purchase became quite wide-spread. Average-income individuals could afford a reasonable shelter on their head and call it their own without having to pay the full price.

However, no compromise has been ever made on the formalities that a homebuyer is required to fulfil in these years.  A few components like age, income, credit score, location of the property, repayment capacity still remain the crucial parameters to evaluate your ability to apply for the loan and affect your application status.

Therefore, it is highly recommended to gain a complete understanding of them and always be considerate of these expert tips –

  1. Maintain Your Credit Score

Your credit score is the first thing that lending institutions evaluate before providing any loan to you. So, if you look forward to getting a go-ahead for your mortgage from lending institutions, you better maintain a clean history of credit bills and timely repayments of existing loans.

  • Pay Higher Down Payment

Your home loan lenders can finance anywhere between 70 to 90% of your property’s price, and the rest has to be contributed by you. However, instead of paying the bare minimum value, it is wise to make arrangements as high as you can from your pocket. That will immediately boost your eligibility status.

  • Have Clarity on Your Job and Career

Every lending institution you are ever going to contact will always be concerned about your job status and income. The loan sanction officers will consider your net salary, monthly expenses and any other EMIs on the run to assess your repayment capacity. A surplus of 50 to 60% is what they require.

  • Show Multiple Sources of Income

To get your home loan application clearance in one go, try to include an additional source of income if possible. That can be from a rented property, any part-time job or a side business. With this step, your financial health can improve, and your lenders have a surety of loan recovery on time.

  • Add a Co-Applicant

Including the name of family members, spouse or siblings that have a stable source of income and good credit can be extremely beneficial in the case of joint home loan. You can club their earnings with yours and make them a co-applicant to get your loan sanctioned quickly and at affordable interest rates.

  • Keep Your Calm

There is no benefit in hurrying over a home loan. A good amount of research and effort is required for the process, and terms and conditions have to be finalized. All the necessary documents have to be arranged and a full assessment has to be done. So, take your time and go with the flow.

Four Crucial Loan Tips for First-Time Home Buyers

Home buying is exciting and fun, especially for the first-timers. There are long-term dreams that are on the verge to get fulfilled, hence a great impatience to sign off the deal and take over the ownership. However, amidst that eagerness, one can commit mistakes that can lead to severe disappointments or financial setbacks.

One must understand that a real estate investment is an expensive one. Also, the mortgage liability that comes along is complicated and critical. So, to get most out of it and ride through as smoothly as possible, you have to do some research and be considerate enough of the following things –

  1. Assess your Loan Affordability

You might be eyeing a 5 BHK villa on popular streets of Montreal, but have to forego 70 to 80% of your monthly salary. Therefore, you better be realistic with your pocket limits and filter out the extravagant choices in the first step. Use a mortgage calculator to know what price of the home you can afford. That way, you will not have to waste time in looking over properties that are outside your budget or trying to get pre-approval for loans with high EMIs. Choose the programs where mortgage rates are within 50% of your disposable income.

  • Make Arrangements for Down Payment

Generally, banks and other lending institutions fund up to 90% of your property value; which means if you are buying a property worth $500K, you might get a loan up to $450K. But, that does depend on your lender and the type of loan you choose. So, be ready with at least 10% of the purchase price as the down payment of the home. If a large down payment is not your cup of tea, then look into FHA loans. Also, discuss with your mortgage broker for the other suitable options.

  • Maintain Good Credibility

Every mortgage lender first evaluates your credit report before loan approval. Hence, if you wish to get the best deal on your home loan shortly, you have to start improving your credit status from now on and fix the flawed records as well because a low credit score decreases your chances of getting loan approvals. You just keep up with the habit of clearing off the bills and not apply for any new credit if you aren’t sure of it. After all, you don’t want to mess up your credibility during the loan process in case the lenders pull out your credit report for the second time.

  • Compare Rates

All loan programs are not equal. Even the mortgage programs offering the same interest rate can differ from each other and its benefits can vary from lender to lender. If you find yourself in a similar situation, just be thoughtful of the components that go into determining its overall price. Then, make a sensible comparison between various banks and lenders. Make sure you watch over the seasonal offers and subsidized rates too.

Is the COVID-19 Pandemic Right Time to Buy a House?

The impact of COVID-19 is severe in many countries affecting all types of business and leading the downfall of the economy, as stated by most of the people and news channels. It was not enough that the announcement of lockdown adversely affected the capital market, leading to some severe changes in the stock market and falling of the property prices.

It could be good news for many homebuyers who are looking for a property for self-use since the reasonable prices could become even better in the coming months. Although many buyers and sellers are in a dilemma whether the real estate prices will sway for good or not.

The simplest thing that could be concluded during this pandemic is if you have searched for the home that seems right for you and are financially sound with a stable job, you can get financing at historically low rates. Having a mortgage broker to buy you a house in the time of a pandemic will turn out to be even more beneficial since he can negotiate the price for you. Therefore, buying a home with the help of a mortgage broker would be the wise thing to do- even now!

 Do you want to buy an investment property? The story is same for the investment properties too. A few years back, a housing crisis allowed investors to take up properties at extremely low prices and to finance them at low-interest rates. Hence, nobody can make out whether the property prices will fall back again.

Remortgaging during the COVID-19 pandemic-

Coronavirus has most of us in the lockdown, but you can still have the opportunity to remortgage and save a considerable amount of money. The average time people could look out for remortgaging is 4-months prior to existing fixed rates. However, since most of the people are falling sick during the pandemic, I would advise you to start remortgaging six months prior to your existing rate ends.

How to find a mortgage broker near you and what will they charge?

Since you cannot physically contact people by going out, so the best way to find the mortgage broker is by doing online searches and critically analysing the websites of the one you find suitable. Contact a mortgage broker who is local and has displayed his email and contact number on his website for an easy approach. Mostly, a mortgage broker gets their commission from the mortgage lenders and you do not have to pay them, while some of them may charge you reasonable fee.

How can a mortgage broker help you?

Due to COVID-19, some bankers or lenders may have problem processing mortgage applications at that time, but the mortgage brokers will be available at your service to find which lender is suitable during this time and is ready to offer low-interest rates. There is no need for you to risk your life; the mortgage application work will be completed on your behalf by your broker.

Second Mortgage: Working and Advantages

Many people apply for home loans and mortgage to buy their desired home. Since we all know that your home is your valuable possession and that value increases with time. Therefore, your home is your asset. A second mortgage loan allows you to borrow against the worth of your house for indulging in some new ventures. A second mortgage loan is also referred to as Home Equity Line Of Credit (HELOCs) or a home equity loan because it enables you to borrow against the equity of your home. In short, you can use your home for investing in other projects and goals without having to sell it.

What is a Second Mortgage?

A second mortgage is basically a subordinate mortgage made while the first is still in effect. The second mortgage receives repayments only when the first loan has been paid of. So it is regarded as collateral, similar to the one that you used in purchasing your house. You must know that the rate of interest imposed for the second mortgage tends to be higher and the amount acquired will be lower as compared to the one in the first mortgage. 

Second mortgage dives into the equity of your home, which could vary depending upon the time but eventually, it grows over time. Several things can change equity. They are discussed below-

  • Equity increases when you make monthly payments on your loan and reduces the loan balance.
  • Equity increases when you make improvements in your home based on the strong real estate market that increases the value of your home.
  • Equity decreases when you borrow against your home or when your home loses its value.

Forms of Second Mortgage- A second mortgage comes in various forms so you must talk to your reliable mortgage broker before committing to one. Let’s have a look-

  • Lump-Sum- It provides lump-sum money to use for the new project that could be paid in the form of fixed monthly payments. With each payment, you pay for a portion of your loan balance and interest coast known as Amortization.
  • Line of Credit- You can borrow using the line of credit or a pool of money from where you can draw. Your lender will specify the borrowing limit and you can continue to draw until you reach a maximum borrowing limit.
  • Rate Choices- Rates may vary depending upon the type of loan you choose. A fixed-rate interest loan will not change, while the variable-rate interest will change according to the market value.

Advantages of a Second Mortgage-

1) Loan Amount- The second mortgage allows you to borrow a significant amount based on your property. Though acquiring the amount depends on your lender but, you can borrow about 85 per cent of your home’s value.

2) Interest Rates- The second mortgage provides a lower rate of interests since securing the loan with your home reduces the lender’s risk and helps you achieve interest rates in single digits.

3) Tax Benefits- There is a possibility of deduction in your mortgage interest with the second mortgage.

Overcoming The Challenges Of Getting A Mortgage When You Are Self-Employed

There will always come a time in your life when you may need to acquire a mortgage for the property of your dreams. Applying for one has some qualification procedures that you must follow. It will be easy to secure documents that you need in order to qualify for that much-needed mortgage if you are employed by a company who can help certify your capacity to pay the mortgage amount. The question is what will happen if you are self-employed?

Self-employed Canadians and the mortgage scenario

mortgage refinance

It has to be noted that almost 23% of income earners in Canada are self-employed or have at least made a living from part-time jobs. These statistics is an indication that more and more Canadians are attracted to being hired on a contractual basis or becoming self-employed to survive everyday living. The sad thing about this is it will be not as easy as it is for them to get approved for a mortgage loan from private lenders as it will be if they are employed by private companies or other companies for that matter.

The benefits and drawbacks of being self-employed

Being self-employed allows you to say you can work and survive on your own. Add to that, you can also pay slightly lower taxes because you can include your personal expenses among your deductibles before arriving at your taxable income figures. Take note though that there is a drawback that comes with the choice of being self-employed, one of which is it will not be easy for you to prove your income. Since you have a smaller income reflected on your tax return, it follows that you will have a hard time qualifying for mortgage and even if you do, you will only be granted a minimum mortgage amount.

Overcoming these challenges

It is good to note that mortgages are now available for you even when you are self-employed and just like you, there are other self-employed individuals who want to avail of such a privilege. Mortgage agents and brokers have made it possible for you to enjoy your hard-earned money and own the property you have dreamed of.

These agents work with you and give you access to lenders to get the amount of mortgage you need. They negotiate on your behalf in order to make the terms more flexible and agreeable for you. You can use these mortgages to buy a new home or other properties that you have in mind. All you have to do is basically show proof of income using documents such as income tax returns or a six-month bank statement. Business licenses, contracts, invoices, and articles of incorporation may also be required if you own a business.

New mortgage rules

One of the things you should bear in mind when looking for mortgage lenders in Montreal is to make sure that you are updated with the existing mortgage rules especially that new rules have been made effective on January 2018. You have to take note of what is in store for you with these new rules. Never hesitate to ask questions or make a research before signing the mortgage contract.

Are You Unsuccessful In Your Mortgage Renewal?

When your mortgage hits its maturity date, you will have to renew the outstanding balance for yet another term. You can do this repeatedly before fully paying off the mortgage. Before your term expires, your lender sends you a renewal offer via email. The new offer contains information on the new term and mortgage rates, with a slip on which you can sign and send back. However, as convenient as it may seem, your approval odds are never 100%. A great way to evade the inconveniences is switching best mortgage companies in Montreal. But, if your slip is denied, there is no need to worry. Let’s explore the possible options you may have if your slip is denied.

Reasons For Denial

While switching lenders is convenient, why not exhaust all available options before leaping out? A good reason to move on with your lender is that you won’t have to re-qualify. If you pay off all your mortgage payments during your term, your lender will not deny you the mortgage renewal application. They will still review your current financial situation to figure out whether you are creditworthy. They may even evaluate your current employment and income rates to weigh the scales. If your finances are questionable, the lender may choose to deny your renewal. It is good to negotiate to see if you can increase your chances of fast approval.

Contacting A New Lender

If your lender denies you the mortgage renewal, or you are in search for better terms out there, you may consider going to another lender. To find a new lender, contact a mortgage broker or agent. However, the downside is that you have to submit a new mortgage application for renewal.

Since the new lender does not know anything about your financial status apart from your outstanding mortgage balance, they will have to verify your income to ensure you meet the standard credit requirements for approval. This makes it even more difficult. Therefore, do not cut links with your current lender just yet.

Possible Solutions After Being Denied

Both your current and new lender may deny you renewals. If so, do not give up. You can try convincing them into accepting your terms. If you fail, just consider other options. For instance, if your “A” lender is a bank or credit union, branch out to “B” lenders. Typically, they may be bad institutional lenders and trust companies for cash-strapped individuals. However, lenders go with logic. Therefore, if your credit score is way below the reasonable standard, you will still miss out. But, don’t bow out. Private lenders can suit you best at this level so you don’t sell out your home. You will have to convince that private lender because they need an assurance too before approving your request.

Getting to the point where you will be forced to sell your home is never your only last option. It can only happen when your finances dwindle below the required standards. To evade this tragic situation, make sure you timely pay all your monthly payments and you will maintain your good credit score. If you religiously follow the rules, it will not be difficult to have your mortgage renewed for another term.

Essential Information To Know About Private Mortgages

Does everyone want to secure a favorable mortgage deal? But still, many people cannot just land a good deal. The stringent Government regulations on down payments, high-ratio buyers and investments make many Canadians miss out on mortgage rewards these days. To, land a favorable deal, you have to do your homework beforehand.

While it is often said that housing is the bedrock of Canadian economy, in all reality, it is fast-dwindling as things currently stand. As a result, things have got harder for the self-employed individuals residing in far-flung areas. To evade this backdrop, more Canadians have resolved to shift to private mortgage lenders for their home financing needs. They save a lot and avoid the time-consuming guidelines and procedures set out by the traditional systems. Indeed, they are the go-to option.

Private Lenders Operate Differently

To start off, a private mortgage is simply a home loan offered by a company or individuals, and not a bank or any other banks. Among the greatest upsides of working with private lenders is, since they are financed by investors or a group of investors, they do not bow to the stringent guidelines set forth by the major institutions. Private mortgages are therefore more friendly and faster, particularly when it comes to the application process. This means if your situation falls squarely out of the conventional lending guidelines, it is the best catch.

You Will Qualify For Private Mortgages, If You:

  • Are self-employed
  • Intend to purchase raw land or private property
  • Desire to make a real-estate investment
  • Have less credit
  • Are suffering hefty penalties and need to access equity but don’t want to refinance your bank mortgages.
  • Are looking to renovate already existing property
  • Seek a short-time loan.
  • Need to consolidate the high-interest rate debt.

How Private Mortgages Operate

If you are thinking private mortgages are daunting, fear not. The secret lies in understanding the easy-to-follow process to secure a subsidized loan. First, you need to reach out to your broker who after assessing the situation, will determine whether you are eligible for the loan or not. Then he or she will search for best mortgages solutions that fit your needs. The experts who offer debt consolidation mortgages in Montreal will then structure the deal, with an exit strategy so you know how long it will take.

It is important also to keep in mind that private lenders mostly consider applications from borrowers at convenient locations. It is because private mortgages are uninsured to allow the lender to easily regain the property in case of a default. It is therefore that before branching out to any broker around, be mindful of the distance involved and most importantly, the charges you will incur as the deal is saving you money. Before approaching a broker also, take some time to evaluate their reputation and reviews to avoid schemers.

Currently, the private mortgage industry is steadily growing in popularity. Since many borrowers fall afoul of the traditional guidelines, they leverage the private mortgages opportunity to upscale their business. Do not be too fast, so you avoid a bad deal. There are countless options available, thus you must remember to scour the alternatives and settle for what is favorable on your part.

What Are Assumable Mortgages?

Interest rates in Canada are predicted to rise over the next few years. With this prediction, many people are thinking about mortgage assumption, also known as assumable mortgages. This type of mortgage, basically, allows the buyer to assume or take over the seller’s existing mortgage. This is only possible, however, upon the approval of the lender. Learn more about the ins and outs of assumable mortgages through the following facts.

The assumable mortgage process

This mortgage is actually a financing agreement where a seller is allowed to transfer his mortgage to the buyer. The transfer includes everything related to the seller’s existing mortgage including interest rates, mortgage terms, and of course the remaining balance. This gives the buyer a chance to get rid of the rudiments of negotiating a new mortgage, which in these times can have a higher interest rate.

The process is not commonly utilised simply because lenders do not recommend them as it will place them into a losing situation. Years ago, there was no formal approval needed for assumable mortgages. The seller back then, agrees that he will be responsible in case the buyer fails to make payments. Some were not at all interested with this type of mortgage.

The pros of assumable mortgages

mortgage refinance

It is clear that in assumable mortgages, interest rates are lower. This will give potential buyers a list of benefits as they can save much on closing costs as well as appraisal fees. Brokers and lenders can likewise help when it comes to reviewing the mortgage thus giving the buyer a detailed calculation. This will allow the buyer to get a better deal after all costs and considerations have been factored in. On the part of the seller, an assumable mortgage can be his best way to sell his property in the fastest possible time. Eligible buyers become enticed with the purchase basically because of the lower interest rate.

The cons of assumable mortgages

Assumable mortgages are not all benefits. There are drawbacks when availing one. The buyer, for example, has to assume higher monthly payments since the amortisation period becomes shorter. Mortgage insurance premiums may also be added to the cost of the mortgage thus increasing the monthly payments even more.

Sellers, on the other hand, may have to face risks since they are passing on the mortgage to someone who has not gone through the entire process of applying for a mortgage. When buyers default on payment, sellers have to take charge. Even when there is mortgage insurance already in place, the seller will still be obliged to pay any remaining balance.

An assumable mortgage is not your only way out of an increasing interest rate in the market. There is not even a guarantee that the lenders will approve your request for this type of mortgage plus it is still possible you have to undergo the necessary parts of the application process before getting approved. If you are looking forward to purchase a home and want to make sure you are getting the best deal, you have to check mortgage rates in Montreal first. You should also get advice from experts.

How Is A Mortgage Interest Rate Different From Its Annual Percentage Rate (APR)?

If you want the best out of a mortgage, there are several things you will need to get right including picking the right mortgage lenders and making sure that your credit score is good before starting the application process. It’s also critical to understand some of the technical features of mortgages. Knowing how mortgages work puts you in a better position to negotiate for better terms, higher limits and more. It’s also an important tool for people who have current mortgages. By understanding the intricacies of a mortgage, it will be easier to monitor your mortgage and make beneficial changes such as refinancing the mortgage.

An important technical piece of knowledge is understanding the difference between a mortgage interest rate and its annual percentage rate. Interest rates are usually the starting point for negotiation or examination of mortgage terms, so it’s important to understand it thoroughly.

The interest rate


This is the percentage of the mortgage amount that you will be charged for borrowing. There could be other fees associated with a mortgage, but the mortgage interest rate can be thought of as the base fee. When comparing mortgage services from different lenders, it is common to compare the mortgage interest rate to find out which is the best for you. This is important, but should not be the only variable you use to figure out what would be best for you.

The annual percentage rate 

On the other hand, the annual percentage rate is a mortgage fee which takes into account the mortgage interest rate and other fees that may be levied by the lender. For instance, a particular lender may provide a mortgage product that has a comparably low interest rate, but which has many other additional fees. These could be percentages or set amounts of money, and could be paid once or repeatedly. Many people consider the Annual Percentage Rate as the true amount of money that the mortgage will cost you.

Calculation of the APR

The mortgage interest rate is easy to calculate, since you simply get the interest rate and find out how much this translates to when you consider the amount you are going to apply for. The APR, on the other hand, is a little more complex to calculate. To do so, the lender’s fees are included in the interest rate, usually by amortizing these fees over the mortgage’s life. In essence, it assumes that they are additional payments. After all the additional fees are added this way, the new interest rate is then calculated.

This gives a true picture of how much you will spend on the mortgage, rather than focusing on the interest rate alone. It can be used in many other decisions besides choosing which mortgage to take, including getting a second mortgage in Montreal or choosing between static and variable interest rates.

When making the decision to get a mortgage, always ensure that you understand the true amount you will pay for it using the APR. High quality lenders will always be upfront and give you information regarding the extra fees you will be charged including the interest, so that you can get a true picture of the mortgage cost