- Don’t buy if you can’t afford it
You may qualify for a loan with a down payment of as little as 5% of the purchase price. This is on the condition that you take out mortgage insurance from the Canada Mortgage and Housing Corporation. But a loan that covers 95% of the total price is not for everyone.
Did you know that you can use your RRSP to buy your first home through the HBP? Here’s how it works.
Think carefully about your ability to make your monthly repayments, bearing in mind that the interest rate will increase. You will also need to consider the stability of:
your job;
that of your spouse;
your pair.
Your situation should dictate how much mortgage debt you can afford.
- Find a good mortgage broker
Mr Bacon recommends looking around. “Word of mouth is always the best place to start,” he explains.
He strongly recommends asking specific questions, for example:
Do you have a mortgage broker license?
Who do you represent?
How are you paid?
What services do you offer?
- Fixed rate or variable rate? Up to you.
Variable-rate loans are more advantageous in the long term. But the decision is entirely up to you. It can be dictated by your financial situation and other factors (peace of mind). If your loan keeps you up at night, it’s not for you. - Read your mortgage contract carefully
It may seem obvious, but not everyone does it.
Just because you have a good broker doesn’t mean you don’t have to worry about anything anymore. You should at least ask him about:
fees and penalties;
payment options;
interest rates;
the renewal process.
Consider getting mortgage protection insurance.
When preparing a loan application, you should think about protecting your investment with the right insurance.
Mortgage insurance, combining term life insurance and critical illness insurance, can help you:
protect your family’s finances;
continue to repay your loan in the event of illness or death.
Critical illness insurance entitles you to a lump sum that you can use as you see fit. On the other hand, life insurance will allow your designated beneficiary to receive a tax-free payment upon your death. The price may be more than enough to repay your loan, and your beneficiaries will be able to use the rest freely.
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