Getting a mortgage in OntarioIf you’re new to the home buying process, mortgages might seem a little complicated and overwhelming to you. Luckily, in today’s blog post I’m breaking down exactly what a mortgage is and the most important things you need to know about them.

What exactly is a mortgage?
A mortgage is a loan that is secured by property (the home you’re planning to purchase) and paid for over a set amount of time in installments.

How do I get a mortgage?
To get a mortgage, you will need to meet a variety of criteria set out by a lender. This will include things like credit history, income and assets. A mortgage lender can be a broker, a bank or credit union.

How big of a mortgage can I get?
The amount of your mortgage depends on your income. The more money you make, the more you will be able to afford. Regardless of whether you think you will be earning more in a couple years, your lender only cares about what you make now and if you will be able to pay the monthly installments now.

Do I need to be preapproved before I start looking for a house?
Ideally, yes. Getting pre-approved for a mortgage will give you a better idea of what you can afford, how big of a down payment you should budget for and what your monthly mortgage payment will look like. You’ll also be able to see what type of loan you will be using to purchase your new home. I recommend sitting down with a mortgage advisor to go over your options and to explain the entire process to you.

What is an amortization period?
An amortization period is the length of time you have to pay off your mortgage. Your monthly payments will reflect how long it will take you to pay off your mortgage so that you own your home. The longest amortization period you can get in Canada is 25 years if you have less than a 20% downpayment and 30 years if your down payment is 20% or higher.

Have more questions about mortgage? Stay tuned for part two in my blog series. Next week I will be covering different types of mortgage terms and what you need to know about them.

Posted by Greg Dewar on
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