|
See the Mortgage
Calculator section for Ron's recommended mortgage
specialists.
How can I get a mortgage?
Before you start serious house-hunting, you should work
with your Realtor to determine how much you can afford.
In the end, of course, you'll have to work with your
mortgage lender who will have a very definite set of
rules and criteria to follow before approving your mortgage.
How can I figure out how much mortgage I can handle?
Use the gross debt-service formula (GDS): principal,
interest, and taxes (PIT) and energy costs (and condominium
maintenance costs) on your mortgage loan should not
exceed 32% of your gross income. Example: if your monthly
payment for these items is $1,000, you'll need a gross
annual income of at least $40,000.
What types of mortgages are available?
Pre-approved mortgages are granted in advance
on a mortgage for a specified amount with a guaranteed
interest rate.
Conventional mortgages are granted with the
property as security, normally with a 25% down payment.
If you don't have the 25% down payment, you will need
mortgage insurance to qualify for a mortgage.
Vendor take-back mortgages are granted when
the seller underwrites part of the purchase as a loan
to be repaid by you as the buyer. These are often used
as second mortgages to bridge any gaps or to make the
property more attractive to the buyer. In some provinces
the seller may also transfer the mortgage to the buyer.
Open mortgages are granted with the option that
you can make extra payments on the principal, reducing
your borrowing costs. Because of this flexibility, interest
rates for open mortgages are a little higher.
Closed mortgages are granted on the condition
that you must wait until the term has expired to pay
your own mortgage. Because of this inflexibility, interest
rates on closed mortgages are generally lower.
Partially open mortgages are granted with some
of the features of both open and closed mortgages
Flexible payment options.
- Monthly payments
- Bi-weekly monthly payments
- Weekly payments
- Accelerated payments which allow you to make extra
contributions
- Shortened amortization period which raises payments
but shortens the mortgage term
|
