The average price of a home in Canada is more than $450,000. For first-time home buyers, the most popular way to get onto the property ladder is to apply for a residential mortgage loan.
How to Apply for a Residential Mortgage Loan?
A residential mortgage is the most popular route home buyers take to finance their purchase. While various types of residential mortgage loans are available at every financial and lending institution, there are certain criteria you need to meet. This includes a good credit score; a solid credit history will make it easier to get a residential mortgage from different lending institutions.
The higher your credit score, the less of a risk you are for a private mortgage lender; the lower your credit score, the more lenders see you as being a risk for defaulting on your mortgage. If you have a bruised or bad credit score, it is going to be more difficult to secure a residential mortgage-however, it isn’t impossible.
Qualified Residential Mortgage Rules
It’s become more difficult to qualify for a residential mortgage in the Mississauga area. By making it tougher to get a residential mortgage, the Canadian government was hoping to avoid a housing crash similar to the one that decimated the U.S. markets.
The tougher residential mortgage lending rules only apply to residential mortgages insured through the Canada Mortgage and Housing Corporation (CMHC) and other private sector mortgage insurance providers. The new rules affect home buyers with less than a 20% down payment; which is a significant portion of first-time home buyers.
The new rules for a residential mortgage include:
- The maximum amortization period has been reduced to 25 years from 40.
- Home buyers must have a down payment of at least five percent of the home purchase price; previously, no down payment was required.
- Non-owner occupied properties now require a mandatory down payment of at least 20%.
- Canadians can now borrow to a maximum of 80% of the value of their homes when refinancing, down from 95%.
- Government-backed mortgage insurance is now available only for homes with a purchase price of less than $1.0 million.
- Canadalend.com, the #1 Residential Mortgages Lender
The independent, licensed mortgage professionals at Canadalend.com have a proven track record of securing clients with residential mortgages and helping them achieve the goal of home ownership. We also help secure a residential mortgage for those in Mississauga and the Greater Toronto Area who are self-employed, are looking to refinance their home, need to consolidate their debt, cannot verify their income, or are in arrears with their mortgage, taxes, and/or credit cards.
If you are interested in seeing what kind of residential mortgage you qualify for, contact Canadalend.com or apply online and a mortgage specialist will help set up an appointment at your earliest convenience.