What is a Mortgage?

A residential mortgage is a long-term loan that you obtain to purchase a home. The house can be used as a residence or rental property by the landlord. With a residential mortgage, the first time homebuyer borrows money to purchase the property and then repays the loan, with interest, over a given period of time. The interest rate can either be fixed or variable, depending on your agreed-upon terms.

Benefits of a Home Mortgage?

In comparison to other loans, mortgage debt is relatively low interest. This means that it costs much less to borrow money to buy a home than it would to borrow money for other uses. With this, the longer your repayment period, the lower your monthly payments become. This can allow you to remain financially liquid in the sense that you can put more of your money towards other things. Of course, each borrower’s financial situation is unique, so it is beneficial to speak with an established mortgage broker who can help you make the best decision.

Steps to Make Your Mortgage-Hunting Journey Simple

Obtaining a mortgage for your home can be complex and time-consuming. Still, you can make this as pain-free as possible. Following are several steps you can follow to make the route easy for you.

Pick the right type of mortgage

There are many different types of mortgages that suit borrowers uniquely. For example, the right mortgage can depend on numerous factors, including:

Location: whether the property is in a rural or urban region
Loan to value ratio
Value of the property itself
Credit history
The lender & their terms and rates

When it comes to getting a mortgage, it’s important to cover all your bases.

Think About Your Financial Position

Don’t rush. Think about your budget. This is a large investment and you should undoubtedly ensure that it is within your financial range. Be sure to calculate it and work out how much you can spend.

If you’ve got a good credit score, lenders will actually be more positive than you are on how much house you can afford. Be mindful that their job is to market a loan — it is your responsibility to repay it.

Consider the Length of the Residential Mortgage Loan

You probably choked a bit when the first time you heard “30-year mortgage. It is a long-standing commitment. Yet 10 to 15-year loans are still available — a variety of borrowers provide specific loans with services for “create your own plan” between 10 to 30 years.

This strategy can provide many benefits, such as flexibility in terms of interest rates and payments, but it can also lead to higher monthly payments.

Establish a Savings Plan for the Down Payment & Other Upfront Costs

From the eyes of a lender, they want to get some capital in the bank among other closing costs upfront. When it comes to the down payment, you have a high degree of flexibility with how much you want to put in. For some, it can be as little as 5% down. Keep in mind that this can have a direct effect on the amount of your monthly payments. It’s beneficial to lay out a few different scenarios that suit your financial position and choose the one that makes the most sense.

Understand Mortgage Interest Rates

In general, mortgage rates are never fixed. They change a lot. However, you may lock in the interest rate of your loan for the long term or allow it to vary.

The factors that determine interest rates depend on multiple variables. These include the economy as a whole, the individual lender & their risk tolerance, the borrower’s history, among many others.

Explore Your Mortgage Lender Options Wisely

Similar to shopping for clothes or groceries, getting the best mortgage requires you to shop around when it comes to lenders. Too many homebuyers go straight to their bank for a mortgage, without shopping around to see their other options. That’s where mortgage brokers come in.

At Kal-Mor, we have access to more than 40+ lenders which means that we shop around for you to ensure you get the best mortgage possible. You can put the cost savings towards your down payment, or anything else you’d like.

Get Pre-Approved for a Mortgage in Canada

Get pre-approval in no time. All you have to do is give us a call or apply online today. We’ll send you a shopping list of things we’ll need from your end, and then we’ll handle the rest.

The Last Word

Mortgages don’t have to be complex for the borrower, that’s why we’re here. Be sure you meet with a professional mortgage broker who can guide you through the home buying process and support you from the beginning to end.