Mortgage pre-approval is an estimate of how much you can borrow and at what interest rate. It is crucial because it allows you to set a realistic budget for your home purchase and shows sellers that you are a serious buyer. In addition, it protects you against interest rate fluctuations for a set period of time.
Yes, it is possible to buy a home with less than a 20% down payment. However, you will need to purchase mortgage loan insurance, such as CMHC (Canada Mortgage and Housing Corporation). This allows you to buy with as little as a 5% down payment, but it comes at an additional cost.
A fixed rate remains unchanged for the entire term, ensuring consistent mortgage payments. A variable rate, on the other hand, fluctuates with the market. A variable rate can save money if rates go down, but it carries more risk if interest rates go up.
Yes, refinancing a mortgage is possible and can be beneficial in several situations: if interest rates have dropped, if you want to consolidate your debt, or if you need funds for renovations. However, penalty fees may apply if you break your mortgage before the end of the term.
Yes, it is possible to get a mortgage even with bad credit. However, you may be limited to higher interest rates or have to go through specialized lenders. Working with a mortgage broker allows you to find the best options available for your situation.
Yes, in some cases you can transfer your existing mortgage to a new property, keeping the same terms and conditions. This can be advantageous if you have a lower interest rate and do not want to pay an early termination penalty.
Yes, there are several options that allow you to pay off your mortgage faster, such as making prepayments or increasing your regular payments. Some mortgages offer penalty-free prepayment privileges, so check your terms.
Mortgage insurance (CMHC, Genworth or Canada Guaranty insurance) is a type of protection required by lenders when the buyer makes a down payment of less than 20% of the purchase price of the property. It protects the lender in the event of a borrower defaulting on the loan. Mortgage loan insurance allows buyers to access a property with a lower down payment, but it is added to the total cost of the mortgage. It is therefore required when the loan-to-value ratio exceeds 80%.
A reverse mortgage allows homeowners 55 and older to unlock some of the equity in their home without having to sell it. You can borrow up to a percentage of your home's value, and payments are typically not required as long as you remain in your home. Interest accrues on the amount borrowed and will be repaid when the home is sold or when the owner moves out or dies.