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.

Is It Possible For Someone Else To Pay For My Mortgage?

Most lenders don’t really care how you repay your mortgage as long as you make your monthly payments on time. The law understands that sometimes due to unforeseen circumstances, a homeowner may not be able to complete his payments on a home loan. To answer the above question, yes it is possible for someone else to pay for your mortgage.

 Be clear on repayment terms

You need to alert the mortgage lenders in Montreal on the changes and make it clear as to whether you will retain the title of the house or you wish to transfer it to the person making payments. If you wish to transfer ownership then that means that the person paying the mortgage will need to start a new process to get a deed of trust. Usually, the lender will need to check his financial history to make sure they are able to take over the new responsibility. The lender will have to approve first before the third party can start making payments.

If the person is offering to pay without requiring anything in return, then that is treated as a gift. The law requires the person to pay gift tax on his monthly payments. Some lenders don’t accept payments directly from the third’s party bank account and so that means they need to transfer the cash to your account first. You need to have clear records so that it can be clear to the IRS on how much gift tax is deductible. There are some common circumstances that allow other people to pay for someone’s mortgage. Some of the common circumstances include:

Payments from a spouse after divorce


Usually, a couple has to agree who will reside in the house after the divorce is complete. Just because a couple is separated it does not negate them from repaying the mortgage. A spouse can agree to pay the mortgage even after moving out. If the couple has a joint claim on the title of the house and they agree that the one residing in it has to take over mortgage repayments then he or she has to apply for a quitclaim deed. The lending company sometimes has to check financial statements to ensure that the new sole owner is able to repay the home loan.

Children paying for their parents’ mortgage

It is normal for a child to want to pay for his parents’ mortgage as one way of showing appreciation. If the child does not require the ownership of the title or he does not expect a repayment from his parents later on, then this is considered to be a gift. He will still be legible for a gift tax. If by any chance the child wants to assume the ownership title, then he has to undergo a process that takes 60 to 90 days. Lenders use this time to scrutinize his financial records before changing ownership. The parents have to confirm that they are willing to turn over the house title to their son or daughter.

It’s Time To Figure Out Which Kind Of Mortgage Is Right For You!

Mortgages are a good option for those who desire to acquire property or equipment fast. Unfortunately, you cannot compare a mortgage to a one-size-fits-all garment. There are different types of mortgages one can choose from to fit different situations. What does this mean? For example, when you go shopping for a vehicle, a salesman can give you all the advantages that come from owning a pickup truck and when you look at it there is actually some sense in owning one. However, what he did not consider was that you could be a salesman working in the city or a soccer mom who needs to drive her kids to and fro school every day.

Yes, the truck sounds like a good idea but will not fit these two scenarios. This is the same with mortgages. The following are mortgages type that you can choose from depending on what suits your situation best.

15 year FRM

A 15-year fixed rate mortgage means that you have to pay off your mortgage in fifteen years. This mortgage type allows you to pay off your mortgage within a short period of time and that come with several benefits. It means that you will not have to put up with payments in your golden years when you are on a fixed income.

The other benefit is that you save a lot of interest to be paid compared to a 30-year plan. The shorter the loan term the less the interest rate! One downside to this mortgage type is that you have to make higher monthly payments than when you have to pay for a longer period of time. This mortgage plan is best suited for someone who is able to make huge monthly payments without too much financial strain.


5/1 ARM

This is a mortgage type fully known as the 5-year adjustable rate mortgage. There are myths about this mortgage type which can easily scare one away. The 5-year adjustable rate mortgage usually means that you agree on a low interest rate let’s say about 2.75 percent for the first five years. After the first five years are over, the rate changes every year depending on a defined index. This means that your monthly payments will also change depending on how rates change. You save a lot of interest the first five years. This plan suits best someone who is planning to sell off their house after the 5 years are over therefore saving on interest paid.

30 year FRM

The 30-year fixed rate mortgage is popular to many mortgage applicants the reason being the security if offers to borrowers. The mortgage payments are spread out in 30 years on a fixed interest rate meaning that payments stay constant for 30 years. The monthly payments are usually low compared to the 15-year FRM and the first five years of 5/1 ARM. You can use the amount saved on monthly payments to invest in other things therefore, giving you more chances of growing. This plan is best suited for someone who loves security and is looking for low mortgage rates.

3 Important Things You Need To Lock Down Before Applying Your First Home Loan

Setting off on a journey to get your own home is such an exciting thing. This is because the last thing you will worry about at the end of every month is paying rent. While there is some excitement in buying a new home, there are also a number of challenges that you may face. As you read on, you will learn about three basic things that you need to know to get it right when looking for the most effective finance solution so you can acquire your dream home.

Present your credit report

credit report

This should not worry you at all because you are entitled to at least three credit reports from various credit bureaus operating in your locale. It is important to ensure that you have taken a keen look at the credit reports before you start picking houses. If you are intending to acquire a home with a spouse, they should also bring out their credit reports.

Look for anything that may lead to illegibility when applying for a home loan. Try to see if you can settle any outstanding debts or possibly fix certain errors that may exist in the credit report. If there is any serious issue, you can always liaise with the bureau and you will be assisted.

Boost your savings

If you are planning to get a new home, you should consider boosting your savings. You can simply do that by increasing the amount of money you set aside monthly or periodically by a certain percentage. You should increase your savings because when you apply for a loan, the lender will require copies of your bank statements.

Generally, they are interested in knowing the amount of money that you have in your bank account currently. Note that it applies to all the bank accounts under your name. You will have to be transparent and genuine regarding this matter. This is because you may be required to explain any unusual large amount in any of your bank accounts. If you have less savings, that could still be a problem. Just ensure you have the right amount of savings in your bank, which is achievable by saving a little more.

Look for a good mortgage lender

When looking for a mortgage lender, you should not close a deal with the first lender who offers you a loan. Instead, try to approach several other lenders by either telephone calls or email. Finding several lenders will put you in a position to make the right choice. You will be able to determine if you will do well with a particular lender. Different lenders offer varying mortgage rates, varying fees and terms. Shopping around allows you to get the best deal.

Before applying for a home loan, you need to ensure that everything is perfectly in place. If there is anything that seems unclear, you may consult brokers for further explanation. Real estate agents are also in a better position to help you get a better view of things. Essentially, good credit report, adequate savings and a good lender are the crucial factors that will help you get a good mortgage deal.

What You Need To Know Before Refinancing Your Home

Debt consolidation or mortgage refinance is the process of obtaining a new mortgage with a goal to reduce monthly payments. You can choose to refinance when you want to lower your interest rate, or you need cash to cater for large purchases. People with equity on their homes prefer to choose refinancing. Having equity in your home is simply the sum total of the difference between the value of your home and the amount owed to a mortgage company.

Advantages of Refinancing

• People who refinance with their mortgage companies end up paying less interest on their loans and this increases their credit scores. With a better credit score, you can access more loans if need be.

• Refinancing helps a person in obtaining money for huge purchases. Therefore, they don’t end up using their credit cards thus reducing debts.

Risks involved in mortgage refinance

mortgage refinance

It is important to note that most mortgage agreements allow the company to charge a fee when you choose to refinance your home. These costs sometimes run into thousands of dollars and can be very expensive. Before you finalize your agreement for refinancing ensure that the cost of penalties will be worth it with the value you get in the final run.

You also need to keep in mind the other hidden costs like paying for your attorney who ensures that you get the most beneficial deal possible and bank fees. You can shop around for free refinancing, and this will save you on the bank charges.

The cost of mortgage refinancing

The following are costs involved in refinancing your home.

• The application fee: This cost is usually imposed on by the lenders to cover the expenses when they go through the initial processes of checking your credit score and loan processing.

• The attorney fees: Lenders have to pay for their attorneys who conduct these settlements. The bank then charges these fees to the borrower. You can retain your attorney to represent you in the settlement.

• The title insurance company: This is put in place to cover the cost of policy. The insurance covers the policyholder any loss that may incur due to discrepancies in the title of the property. It also includes the cost of verifying property ownerships by reviewing public records.

When to refinance your home?

Most lenders require one to at least maintain his mortgage for 12 months before thinking of refinancing their home. Each lender has their terms. Therefore, it is best to check with your lender to understand the restrictions that come with the applied mortgage. In most cases it is advisable to refinance with your original lender although this is not always required. Most banks prefer to keep their current clients by offering better prices for those looking to refinance. It saves you in the cost of having to go through a property appraisal all over again since your original lender has this information already. With these facts in mind, you obtain a better rate when you refinance with your original lender.

Comparing House Prices in Montreal, Vancouver and Toronto

For starters, the average price of a home in Canada is approximately $440,000. Montreal is one of Canada’s best big-city bargains when it comes to buying a home. Average sale prices, over the past few years, were forecasted to be more than $887K in Vancouver, less than $613K in Toronto, and over $338K in Montreal. Read on to find out more about the house prices in each city as well as the types of houses you can purchase with the value of an average Canadian home pricing.

Types of houses found in Montreal, Vancouver and Toronto

Montreal is built in a way that makes incorporating a wide variety of apartment styles possible. In addition, it has a housing market that consists of more than 50% renters. For starters, you can find studio or loft apartments in Montreal and they typically feature one large open space that comes with a mezzanine for sleeping. There are also two- and three-story apartment buildings that houses units that have their own entrances. Also known as duplexes and triplexes, these apartment units can feature winding stairs as well. In Montreal, full houses (which are available for rent) and multiple apartment buildings are uncommon.

From townhouses, condominiums to penthouses, Vancouver offers a decent range of housing options but at really expensive prices. If you are planning to invest in a property here for the long haul, price won’t matter. Even if the price of your home in Vancouver drops in the short term, you can still afford to hold on to it as it will eventually recover. What’s more, there is a shortage of land here. Toronto, on the other hand, is enjoying a booming condo market, and there more condo projects growing more complex, expensive and larger over the years.

What can the average price of a Canadian home get you in each city?

In Montreal, you can purchase a 930 square foot, two-bedroom duplex that comes with a single bathroom. Vancouver, on the other hand, has 925 square foot, two-bedroom condos that you can purchase at the same value. The average price for a single-family detached home here has also surpassed the $1.4 million mark. The near 20 per cent jump over the past year has widened the affordability gap between condos and houses. The value of a land in Vancouver is one of the biggest reasons why prices were driven higher for detached properties.

Based on the average Canadian home pricing, you can also purchase a 900 square foot, two-bedroom condo that comes with two attached bathrooms in Toronto. Recent studies have also shown that the average price of a house in the Greater Toronto Area has increased by more than 7%.

How to purchase a house in Montreal, Vancouver or Toronto?

If you are buying your first home in Montreal, Vancouver or Toronto, it is pertinent that you consult mortgage brokers for their knowledge and advice, and be mindful of your current financial situation. By having full control over your mortgage, you can also grow your home’s equity as its value increases. Once the technical aspects of buying a home are covered, you can choose the type of house you really like with peace of mind.