mortgage

Do’s and Don’ts for Being Pre-Approved For A Mortgage

Getting pre-approved for a mortgage is an essential step towards buying a home in Ottawa. It’s a process that many homebuyers don’t take seriously, but it can make a huge difference in the home buying process. A pre-approval letter from a lender shows that you are a serious buyer, and it can give you an edge over other buyers who haven’t been pre-approved. In this article, we’ll discuss the do’s and don’ts of getting pre-approved for a mortgage in Ottawa.

DO: Check Your Credit Score

One of the first things you should do before applying for pre-approval is checking your credit score. Your credit score is a major factor in determining your mortgage interest rate, so it’s essential to know where you stand. You can check your credit score for free once a year with one of the major credit reporting agencies, such as Equifax or TransUnion.

DON’T: Apply for Credit Cards or Loans

While you’re in the process of getting pre-approved for a mortgage, it’s important not to apply for any new credit cards or loans. Every time you apply for credit, it shows up on your credit report as a hard inquiry. Too many hard inquiries can lower your credit score, which can hurt your chances of getting pre-approved for a mortgage.

DO: Gather Your Financial Documents

When you apply for pre-approval, you’ll need to provide your lender with various financial documents, including pay stubs, tax returns, and bank statements. It’s a good idea to gather these documents before you apply, so you can provide them quickly when asked.

DON’T: Make Large Purchases

During the pre-approval process, it’s important to avoid making any large purchases, such as buying a new car or furniture. These purchases can increase your debt-to-income ratio, which could hurt your chances of getting pre-approved for a mortgage.

DO: Shop Around for Lenders

It’s a good idea to shop around for lenders when you’re getting pre-approved for a mortgage. Different lenders may offer different interest rates and terms, so it’s important to compare your options. You can use online tools to compare rates and fees, or you can work with a mortgage broker who can help you find the best lender for your needs.

DON’T: Change Jobs

If you’re in the process of getting pre-approved for a mortgage, it’s important not to change jobs. Lenders want to see stability in your employment history, and changing jobs can make it harder to get pre-approved. If you do need to change jobs, it’s best to do it before you start the pre-approval process.

DO: Be Honest About Your Finances

When you’re applying for pre-approval, it’s essential to be honest about your finances. Your lender will review your financial documents and credit history, so it’s important not to hide anything. If you have any questions about what to disclose, ask your lender for guidance.

DON’T: Make Large Deposits

During the pre-approval process, it’s important not to make any large deposits into your bank account. Large deposits can raise red flags for lenders, who may question the source of the funds. If you do receive a large deposit, be prepared to provide documentation to show where the funds came from.

DO: Get Pre-Approved Before House Hunting

Finally, it’s important to get pre-approved before you start house hunting in Ottawa. A pre-approval letter from a lender shows that you are a serious buyer, and it can strengthen your offer when you find a home you want to buy. Without pre-approval, you may be at a disadvantage in a competitive housing market.

Conclusion

By following these do’s and don’ts, you can increase your chances of getting pre-approved and make the home buying process smoother and more successful. Remember to check your credit score, gather your financial documents, shop around for lenders, and be honest about your finances. Avoid making large purchases or deposits, changing jobs, or applying for new credit cards or loans. With these guidelines in mind, you’ll be well on your way to getting pre-approved for a mortgage in Ottawa.

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re looking for local mortgage brokers in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!

mortgage

How to Get the Best Mortgage Interest Rate in Canada

When buying a home, getting the best interest rate on your mortgage is crucial. Even a small difference in interest rates can significantly impact your monthly mortgage payment and the total amount you end up paying over the life of your loan. This article will provide useful tips to help you secure the best interest rate on your mortgage.

1. Improve Your Credit Score

Your credit score is one of the most important factors lenders consider when determining your interest rate. A higher credit score usually means a lower interest rate. Therefore, it’s essential to ensure your credit score is as high as possible before applying for a mortgage. You can improve your credit score by paying down debts, making timely payments, and avoiding opening new credit accounts.

2. Save for a Larger Down Payment

A larger down payment can also help you secure a better interest rate on your mortgage. Lenders see borrowers who put more money down as less risky and may offer them lower interest rates. Saving for a larger down payment can reduce your monthly mortgage and help you avoid paying private mortgage insurance (PMI).

3. Shop Around for the Best Rates

Don’t settle for the first lender that offers you a mortgage. Instead, shop around and compare rates from different lenders. Doing your research can help you find the best interest rate and save you money over the life of your loan. You can use online comparison tools to compare rates from different lenders.

4. Consider a Shorter Loan Term

Shorter loan terms usually come with lower interest rates. While a 30-year mortgage may seem more affordable because of the lower monthly payments, it’ll cost you more in interest over the life of the loan. A 15-year mortgage, on the other hand, can save you thousands of dollars in interest and help you pay off your home faster.

5. Improve Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is another factor that lenders consider when determining your interest rate. Your DTI ratio is the percentage of your monthly income for paying debts. A lower DTI ratio usually means a lower interest rate. You can improve your DTI ratio by paying debts or increasing your income.

6. Consider Paying Points

Paying points is a way to lower your interest rate by pre-paying interest upfront. Each point is equal to one percent of your mortgage amount. For example, if you have a $200,000 mortgage, one point would cost you $2,000. Paying points can be a good option if you plan to stay in your home for a long time.

7. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage can give you an idea of the interest rate you’re likely to receive. Pre-approval involves providing your lender with your financial information, such as your credit score, income, and debts. Your lender will then give you a pre-approval letter stating the maximum amount you can borrow and the interest rate you qualify for.

Conclusion

Securing the best interest rate on your mortgage can help you save money over the life of your loan. Improving your credit score, saving for a larger down payment, shopping around for the best rates, considering a shorter loan term, improving your debt-to-income ratio, paying points, and getting pre-approved for a mortgage are all effective ways to get the best interest rate. By following these tips, you can be sure to get the best mortgage deal possible.

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re a first-time home buyer in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!

person with debt

What You Need to Know about Debt Consolidation in Ottawa

By taking out a loan to pay off other loans and obligations, debt consolidation can help you save money and pay off your debts faster. If you take out a loan with a lower interest rate than what you currently have, you could save on monthly interest costs. You can also reduce your monthly payments if the new loan has a longer repayment term. Debt consolidation could be a great step toward improving your financial situation.

Is Debt Consolidation a Good Financial Solution?

Rather than asking whether debt consolidation is good or bad, it’s more beneficial to ask if it is an effective solution for one’s current financial situation. Debt consolidation can benefit those dedicated to paying off their debt and plan to avoid taking on additional debt. However, it might not be as effective for those who cannot commit to making payments or are not disciplined enough to refrain from accumulating more debt.

Debt Consolidation in Ottawa

Ottawa is an amazing city—renowned for its distinct neighbourhoods and festivals and boasting plenty of world-class museums. Nevertheless living in Canada can be costly, and if you’re struggling with debt, it’s easy to feel overwhelmed. To help you, consider contacting Credit Canada for debt counselling in Ottawa. They offer services designed to help you manage your finances, so you can sleep soundly again.

With a debt consolidation program in Ottawa, you don’t take out a new loan. Instead, you work with a professional debt relief organization to create a plan that helps you pay off your debt in a way that works for you. The program will help you consolidate your unsecured debt into one reduced monthly payment. It can also reduce or eliminate the interest payments on your debt and help you set a timeline for becoming debt free. Additionally, the program can help stop collection calls.

Why Consolidate Debt

Debt consolidation is usually unsecured, meaning it does not require any collateral and has a higher interest rate than if it was secured. This option is useful for people in Ottawa with multiple debts with different due dates, such as credit cards, payday loans, auto loans, public utilities, and other consumer loans. Debt consolidation can help make budgeting easier and lower your interest payments by combining all payments.

Qualifying for Debt Consolidation

When you apply for debt consolidation Ottawa or nearby areas, you’ll have to provide a list of all your debts and a plan on how you intend to pay them off. Your chances of approval will be higher if you have a steady income, reasonable monthly expenses relative to your income, a good credit score, and assets that can be used to guarantee the loan in case of default.

Before a bank or credit union decides to lend you money, they will look into your credit score and past payment history to determine how likely you are to default. If you can offer collateral or someone to co-sign, they may be more likely to lend you money. Generally, they will lend you around ten percent of your net worth without requiring collateral. However, suppose the economy is doing well. In that case, you may get a larger loan if you can offer collateral such as a newer vehicle, boat, motorcycle, RV, mobile home, non-RSP mutual funds, or real estate.

Conclusion

Debt consolidation in Ottawa can be a great option for those struggling with multiple payments and needing help controlling their debt. It can help reduce interest rates, lower monthly payments, and help manage debt more effectively. It is important to remember that debt consolidation is not a one-size-fits-all solution and that each individual should assess their financial situation before deciding if it is right for them.

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, and commercial clients. We also help those applying for refinancing, pre-approvals, and debt consolidation loans. So if you’re looking for the best debt consolidation loans in Ottawa, ON, apply with us today! 

What You Should Remember If Your Mortgage Renews in 2023

Mortgage interest rates are crucial in the decision-making process of homebuyers. They’re central to a home’s affordability and will determine how much you’ll pay over the loan’s life. 

However, being a responsible borrower means going beyond that. You should also know when to renew your mortgage and how to handle the higher interest rate. While it may be valid to feel stressed, you should understand the renewal process, work with mortgage services, and prepare for the trend to ensure the transition runs smoothly. 

If you want to make more informed decisions, this article will enumerate five things to remember if your mortgage renews in 2023.

1. You Can’t Requalify Unless You Change Lenders

Before your mortgage term expires, your lender should send you a renewal statement with a new offer, including a new interest rate, payment frequency, duration, and applicable charges or fees. 

You must always compare your current lender’s renewal offer with other mortgage services to determine if you can get a better deal and save money. If you accept your current lenders’ renewal terms, you don’t need to requalify, and it may be your best option if you’re struggling financially. 

However, if you switch lenders, you should requalify as a borrower, including passing the mortgage stress test when interests are high. 

2. You Can Hit Your Trigger Rate before Your Renewal

If you have a mortgage with a fixed payment amount, the monthly payment won’t change even if the interest rates rise. However, if you pay less towards the principal loan and more interest, the amount you owe will eventually increase because of the higher interest rate. This situation can be problematic in the long run. 

If interest rates, your lender may contact you with three options: increase payments, make a prepayment, or switch to a fixed-rate mortgage. Regardless of your choice, carefully read through your mortgage agreement and consult your mortgage service if you have questions.

3. Shopping Around Is Worth Trying

If you have a steady income and manageable debt payments, you shouldn’t just accept the mortgage renewal offer from your current lender. Instead, take some time to research, compare the rates from different lenders, and negotiate a better deal with your current lender. 

However, if you’re switching lenders, you should know about potential additional fees like setup costs, discharge or transfer fees, appraisal fees, and removal of collateral charges. Ask the new lender if they’ll cover these expenses to win your business.

4. Choosing a Shorter Term Can Be Beneficial

It may be best to consider shortening your mortgage’s duration. When you go with a fixed-rate loan of one to three years, it will protect you from potential rate hikes. You can also take advantage of them quickly without renegotiations or breaking your contract when rates go down.

On the other hand, variable-rate mortgages have an interest that can change over time, regardless of your chosen term’s length. You may get a more significant discount on the interest rate when you renew if you choose a shorter period. However, you could experience more frequent increases in interest rates before the Bank of Canada changes the key lending rate. 

5. Higher Interests Rate Can Significantly Affect Payments

The Bank of Canada increased its overnight rate six times since March, currently at 3.75%. This trend caused mortgage rates to rise from two to six percent. 

If you had a $500,000 mortgage with a two percent interest rate on a 25-year amortization schedule, your monthly payments would’ve increased to $3,200, or an extra $12,240 yearly.

Conclusion

Mortgage renewals can be stressful, especially for first-time homeowners. Fortunately, you can make the process easier by negotiating, comparing different offers, and seeking help from professional mortgage services. 

If you need mortgage services in Ottawa, let Ottawa Mortgage Services help. We provide mortgage agent services for first-time buyers, self-employed individuals, and commercial clients. Contact us now!