house

What Should You Buy: A Starter or a Permanent House?

There is no better way to define success and stability than having a house of your own. Besides the shelter it provides, it is also a hard-earned investment that owners can be truly proud of. The tricky part of buying a home, apart from all the processes and requirements, is decision-making. Since the property is a big purchase, you have to think about your decisions well, including its long-term consequences. 

One of the most important decisions you have to make is whether or not you will buy a starter or a permanent home. If you are faced with this tough decision-making, let this article help you understand what they are and what you should choose. 

Starter or Permanent Home: What Is the Difference?

The main difference between a starter or a permanent home is how long you plan to stay in it. They may be the same house for the same purpose but might differ in structure and size. 

Starter homes are usually smaller in size and are often purchased by first-time homebuyers who are just starting. Some examples of starter homes are semi-detached or fully detached houses, condos, and townhouses. They are also the more affordable option. 

Permanent homes are houses that you see yourself living in for ten or more years. There is no clear definition of its look and size. However, since it is the house that usually accommodates a big family for a long time, it may contain more rooms than the starter homes. 

So, before you decide, think about how long you plan to live in that place you are eyeing. Weigh the pros and cons of the two as well. Here is a good comparison of the two. 

Why a Starter Home Can Be a Good Purchase

Anyone looking for an affordable and small house would benefit a lot from a starter home. Since it is more affordable, it also means that you would pay for a much lower down payment. Perhaps, you could also get a lower monthly price and finish paying it in a few years. 

Just like other investments, it also has its flaws, such as the following:

  • You have a growing family with changing needs.
  • You have to finish its payment should you decide to live somewhere bigger or in a different location or lose your source of income.

What to Keep in Mind Before Buying a Starter Home

If you think a starter home is what you would need in the next few years, here are some things to consider before you make your purchase:

  • The Cost of the Homes: Even if starter homes are not as expensive as permanent homes, they still require you to secure a mortgage. Make sure that the price you will be paying meets your budget. Looking for lenders who provide mortgage services and having your loan pre-approved would help you with your purchase.
  • The Features and Amenities: Since you will be paying less than a permanent house, expect some of its features might not fit the dream house you have. See if you are willing to stay in a home that does not have a yard or miss a half-bath before you decide. 

Conclusion

Whichever you choose, whether a starter home or a permanent home, the house you would get will be an investment. What you need to consider now are other factors, such as your priorities, budget, and plan for the future. Once decided, look for someone who can help you find a quality home that meets your needs. 

Ottawa Mortgage Services is an Ottawa-based mortgage agent that can help you find lenders allowing self-employed Canadians with good records to qualify for the lowest mortgage rates. Contact us to learn how we can help. 

people discussing debt

The Beginner’s Guide to Debt Consolidation—How It Works

It’s a universally-accepted fact that money plays a crucial role in our daily lives. Most people work to receive their pay in hopes of fulfilling their wants while accommodating their basic needs. However, there comes a point in some people’s lives where their salary can’t cover their expenses, resulting in accumulated debt.

Debt is an economic transaction people use to borrow money by promising to repay it with interest or capital when the loan ends. It is often the result of unpaid credit card statements, mortgages, and personal loans. Moreover, debt is a financial obligation that can lead to consequences, such as bankruptcy, when you don’t pay it back.

Having numerous debts to keep track of may be too overwhelming. You may find yourself in an impossible situation where you are unable to make the payments. Here is when you might want to consider debt consolidation.

What Is Debt Consolidation?

Debt consolidation is a process that allows people to combine multiple debts into one loan. It has an interest rate lower than its current rate of finance charges on all of the individual loans.

Debt consolidation can benefit people drowning in debt with high-interest rates, high monthly payments, and low credit scores. 

According to the Government of Canada’s Office of Consumer Affairs (OCA), the loan a person acquires for debt consolidation often comes from a local bank. However, professional mortgage services can also help you find private lenders to help with debt consolidation. 

What Are the Advantages of Consolidating Your Debt?

There are many benefits to pursuing debt consolidation, some of which you can see below:

Simplified Debt

You’ll have a better time managing your finances if you apply for debt consolidation.

After all, debt consolidation essentially takes your different debts and merges them into one loan to make repayment easier. Instead of having to keep tabs on several monthly payments, you’ll only need to worry about one. 

Lower Interest Rate

Most people consolidate their debt to acquire a loan with a lower interest than what they currently have. If you don’t know where to start, applying for mortgage services should be the first thing on your list of things to do.

A mortgage professional will take the time to study your finances, help you deal with lenders, and provide necessary insight while negotiating the terms of your debt consolidation. 

There are other benefits to debt consolidation, notably the protection of your credit rating. However, the one thing about debt consolidation that stands out the most is the lower interest rate that you’ll need to pay, saving you money in the long run. 

What Are the Disadvantages of Consolidating Your Debt?

Given all that has been discussed so far, it’s easy to see that debt consolidation benefits those indebted to several creditors. However, consolidating your debt presents several drawbacks as well.

For one, debt consolidation loans have strict requirements, regardless of whether you’re going to a local bank or a private lender. The conditions may vary, but generally, you’ll need to have an income that can cover the monthly payments and decent credit history to back you.

Another thing you need to consider is a co-signer. Your debt consolidation loan may require another person to co-sign your debt, and if you fail to make your payments, they’ll be left to pick it up. 

Lastly, you could risk losing personal assets should you fail to pay your debt consolidation loan in time. This is because some lenders may have you put up your home as collateral. 

Final Thoughts

Debt consolidation works to compile your debts into one monthly payment with lower interest rates. Like most things related to finance, debt consolidation has its advantages and disadvantages, and it’s up to you to weigh in on these. Mortgage services from professionals may give you the necessary insight to make your final decision. 

Are you wondering why you can’t acquire the best debt consolidation loans? You may require the assistance of Ottawa mortgage services to improve your financial literacy and help you make better, more informed choices about loans and mortgages. 

Ottawa Mortgage Services is a firm that seeks to provide aid to first-time homebuyers, self-employed individuals, and commercial clients. We also help those looking to get debt consolidation. Consult with us, and we’ll do our utmost best to help you with your loans! 

Mortgage

Things to Consider Before Applying for a 35-Year Mortgage

Buying property in Canada often entails applying for a mortgage as well. With millions of mortgages available, it can be difficult to find one that suits you. Depending on how much you are willing to shell out, and for how long a period of time, your mortgage may vary.

On average, most Canadians opt for an amortisation period of 20 to 30 years. Such mortgage periods are available for application to any Canadian citizen that has a “low-ratio mortgage.” If this is something you are considering, then it’s important to think about the factors that come with it.

Here are some of the things you should be asking yourself before applying for a long-term amortisation.

1. What Is a Low-Ratio Mortgage?

First of all, let’s understand what is considered a low-ratio mortgage. In Canada, you must at least have a downpayment of 5 per cent, although some choose to pay larger. If you are one of those that pay 20 per cent or below, then you are considered high-ratio.

If you are high-ratio, then you will have to buy CMHC insurance, which protects your lender should you default on your mortgage. For high-ratio mortgages, the amortisation period falls around 25 years.

On the other hand, those that pay about 20 per cent or more down payment are known as low-ratio mortgages. In this case, you wouldn’t need default insurance, and amortisation periods are more extended.

2. What Is the Longest Mortgage Term?

In Canada, the average new mortgage will typically fall under a 25-year amortisation period. But of course, this is not the only length you are allowed to choose. If you please, Canadians are given the choice of up to 35 years of amortisation for mortgages.

The maximum recorded amortisation period was previously 40 years, but due to newly-minted regulations, the highest mortgage term you can get in this day and age is up to 35 years only.

3. How Much Monthly Payment?

One of the biggest benefits in a 35-year mortgage is there is a lower monthly payment. Because you are extending your amortisation period, you are given the freedom to spread out your payments over a longer period of time. 

Let’s take a look at a $500,000, 25-year mortgage with an interest rate of 1.90 per cent. This kind of mortgage will typically cost you around $2,093 a month. However, with a 35-year amortisation, you can now pay as low as $1,629 a month.

4. How Much Interest Is Paid?

However, there are drawbacks to long-term mortgages as well. One of the more significant ones is that there is more interest paid for long-term amortisation. Given the same example, your interest will take you about $184,125, whereas a 25-year amortisation will only cost $127,962 interest.

On a brighter note, if you are wise with budgeting, you can easily plan for this as early as now. Make sure you consult a financial adviser or a mortgage agent so that you make well-thought-out decisions.

Conclusion

A 35-year mortgage is definitely something to consider if you are a low-ratio mortgage payer. Despite its higher interest, it will help you space out your payments in a manner that allows you to pay for them in your own time.

If you are planning on getting a long-term mortgage, consult with Ottawa Mortgage Services. We offer trust mortgage agent services in Ottawa for first-time homebuyers, self-employed individuals, and commercial clients. Contact us today for any financial help.

women looking at laptop

Getting a Home Equity Line of Credit: What You Should Know

There are many advantages of getting a home equity line of credit. However, before even considering it, it pays to know exactly what you are getting into first. There are two main types of home equity lines of credit. One is combined with a mortgage, and another one is a standalone product. This blog post will shed light on these two types of home equity lines of credit, or HELOC, and how they may come in handy for you. 

Getting a Home Equity Line of Credit: What You Should Know

Home equity lines of credit may be used in a variety of different ways. These two types of HELOC are designed to meet different needs and financial goals. This blog post will help you understand the specifics that go into each type of HELOC. This way, you will be able to make a more informed decision about which one may work more effectively for your specific needs.

Home Equity Line of Credit Combined with a Mortgage

This type of HELOC is also often referred to as a readvanceable mortgage. Most lenders offer this type of product combined with a mortgage under their own specific brand name. This type of HELOC combines a revolving home equity line of credit and a fixed-term mortgage.

With this type of HELOC, you will be able to use a portion of your home equity line of credit and your fixed-term mortgage to finance the purchase of your home. Depending on your lender, you may be able to gain access to other banking products such as personal loans, car loans, and credit cards that all fall under a single line of credit. 

Standalone Home Equity Line of Credit

On the other hand, a standalone HELOC is a line of credit that is backed by the equity of your home. Unlike a home equity line of credit combined with a mortgage, it has nothing to do with your mortgage. It is treated as a separate product altogether.

The total amount that can be loaned under a standalone HELOC can go up to 65% of your home’s market value or purchase price. This type of HELOC may be used in place of a mortgage to buy a home. However, certain terms may apply to buying a home using a home equity line of credit instead of a traditional mortgage. Higher down payments may be required for this type of home buying method. However, you may also achieve more flexibility in contrast to a traditional mortgage scheme. It is best to inquire with your lender as to these terms before agreeing to push through with the HELOC.

Conclusion

There are many ways by which you may be able to take full advantage of your HELOC. It pays to know the specifics of how to use these mortgage products, especially if you are thinking about using them to purchase a home. If you have additional inquiries, it is best to take them up with an experienced mortgage agent. These professionals will be able to accurately provide answers and tell you if taking out a HELOC will be a good idea for you or not. 

Should you need the assistance of a skilled mortgage professional or have questions on home equity line of credit, come to Ottawa Mortgage Services. We make it a point to provide mortgage agent services for first-time homebuyers in Ottawa, self-employed individuals, and commercial clients. We also help with refinancing, pre-approvals, and debt consolidation.

Mortgage

Getting Mortgage Approvals for Self-Employed Professionals

Freelancers and self-employed individuals experience challenges not only in finding steady income sources but also in acquiring home loans. Unfortunately, even those with steady businesses and clients failed to secure their own homes for the same reason: they do not have the W-2 tax form that shows the amount of your federal and state taxes for the year. 

If you are one of these people, do not lose hope. More mortgage lenders nowadays are opening themselves to cater to this growing target market. If you plan to secure financing for your dream home soon and hope to get mortgage loan pre-approval in Ottawa, here are the steps you need to take to ensure your mortgage application approval:

Step 1: Determine Your Lender’s Requirements

Every lender has different requirements, but one thing is for sure: they want borrowers who can guarantee they can pay back what they loan. That means what they look for in individuals is a stable source of income that can assure them that these people can pay.  

Lenders ultimately look at employment or income records of at least two years. When you can show that you have been getting a steady income source for the past two years, they might be able to see that you have an excellent financial health standing. Therefore, consider you for a mortgage application approval. Make sure to secure sound financial records before you attempt to apply.

Step 2: Increase Your Credit Score

Another way you can prove your financial capability is by improving your credit score. One’s credit score determines whether one could qualify for a loan or not. While requirements for each mortgage lender differ, they usually follow the 660 to 724 credit score requirement. The credit score informs the lender about the payment potentials of individuals. The higher their credit score is, the more likely they could get approved. 

You can achieve that by paying your bills on time, clearing off your debts, and keeping your credit card balance under 30 percent of its credit limit. Try not to apply for another credit card before you apply for a mortgage too. 

Step 3: Keep Your Debt-to-Income Ratio Low

The debt-to-income ratio tells how much income you generate every month goes to servicing debt. In short, it measures the amount of debt you have compared to your overall income. By looking at this, your lender can gauge whether you can afford to have another loan to pay. When you keep your DTI ratio low, they realize that you can comfortably pay for a monthly mortgage payment. 

Step 4: Aim for a Higher Down Payment

If you can pay for a higher down payment for your dream home, you could catch loan providers’ attention and make yourself look less risky as a borrower. Furthermore, you can get a lower interest rate should you provide a higher down payment than what they are asking. If you can, aim for at least 20 percent of the total amount of the house you are eyeing. It would be a win-win situation for you. 

Conclusion 

Those are just a few of the tips you can do to make yourself look capable of paying your mortgage fees even without the W-2 document. Life as a self-employed and freelancing professional is frustrating enough, but there are ways you can turn the situation around. While waiting for a much lenient way to borrow money from lenders, consider saving for your down payment and keeping good financial health. 

Make sure to find a mortgage agent who can help you find the best mortgage loan pre-approval in Ottawa that fits your unique situation. Ottawa Mortgage Services can assist you in finding lenders that let self-employed Canadians with good records qualify for the lowest mortgage rates. Contact us to learn how we can help.