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The Full Mortgage Amount: Should You Spend It All?

Buying a house in Canada can be hectic, as it entails properly handling your finances to make your home purchase easier. Aside from that, it would help if you determined how much mortgage you need to secure. After all, homes are on the market for different prices.

This is where mortgage pre-approval comes into the picture. Before buying a new home for you and your family, you must understand how mortgage pre-approval works and how it can help you with your mortgage loan.

What is Mortgage Pre-Approval?

Like most homebuyers, you’ll need a mortgage to finance your purchase. Before you can get a mortgage, you’ll need pre-approval. A mortgage pre-approval is a note that explains how much you can borrow for a home purchase. This is based on your income, credit score, and down payment size.

Getting a pre-approval letter means the lender will evaluate your financial situation and determine an amount you can afford to borrow. But what if the lender approves a higher mortgage amount than what you need? Should you spend it all? The answer is no. 

The mortgage amount you get is not a “use it or lose it” deal. If you only borrow the amount you need, you’ll have a lower monthly mortgage payment. That’s because your loan will be for a smaller amount, and you’ll have a shorter loan term. 

In addition, you’ll have less debt and interest to pay over the life of your loan. That means you’ll have more equity in your home, and you’ll be paying it back over a shorter period. This can be good if you ever need to sell or refinance.

How Does the Lender Determine the Mortgage Amount?

When you go to a bank or lender for mortgage pre-approval, you’ll instantly receive a quote for the maximum amount you can borrow. They often use mortgage ratios to identify what you can afford based on your:

  • Gross Debt Service Ratio: Your mortgage expenses should include your monthly fees, including the GDS ratio items. You can also add debt payments, such as credit cards, lines of credit, car payments, and alimony/child support.
  • Total Debt Service Ratio: The gross annual income required to qualify for the mortgage loan is called the TDS. This is the percentage of your yearly gross income that can pay your mortgage and all other debts.

How Much You Can Afford to Buy Your New Home

Although it’s tempting to use the full mortgage amount you’re approved for, you still have to consider various factors before deciding. These can include your current expenses, how much of a down payment you can afford to make, and whether you need to get a mortgage insurance policy.

It would help if you studied whether you want a conventional mortgage from a private lender or a government-backed mortgage. Conventional mortgages are available from private lenders, while government-backed mortgages are from government agencies like the Canada Mortgage and Housing Corporation (CMHC).

Once you’ve considered all these factors, you can start shopping around for a mortgage and compare interest rates and terms from different lenders. You can also work with a mortgage agent to help you find the best mortgage for your situation.

Final Thoughts

It is important to consider whether or not you should spend the full mortgage amount when taking out a loan. There are pros and cons to doing so, and it ultimately comes down to your financial situation. Spending the full amount may be a good option if you can pay off the loan immediately. However, if you are tight on cash flow or have little extra money, it may be better only to borrow what you need. 

Ottawa Mortgage Services is a mortgage agent that can help you with your mortgage loan pre-approval in Ottawa. Get in touch with us today for a free consultation!

Mortgage

What Is the Acceptable Credit Score When Applying for a Mortgage in Canada?

When applying for a mortgage in Canada, the lender will pull your credit score to assess your financial health. They will also look at several other factors, such as your employment history, income, and debts. If your credit score is high, it can show the lender that you are a low-risk borrower, and they may be more likely to approve your mortgage and offer you lower interest rates. If your credit score is low, the lender may view you as a high-risk borrower, and you may be less likely to be approved for a mortgage or offered good rates.

Here, Ottawa Mortgage Services shares what you need to know regarding credit score requirements for mortgages in Canada:

What Credit Score Will Get You Approved for a Mortgage in Canada?

In Canada, credit scores range from 300 to 900. A score of 660 or higher is deemed good, meaning that the risk of defaulting on a mortgage is low, and the person is a safe candidate for a loan.

To be approved for a mortgage, you will need a credit score of at least 680. Some lenders may be willing to approve a lower score, but a higher score is always better. A credit score of 700 is optimal.

Factors That Impact Your Credit Score

Here are some of the factors that have an effect on your credit score:

  • Payment History
  • Credit Utilization
  • Credit History
  • New Credit Requests
  • Types of Credit

How Does Your Credit Score Affect Mortgage Application?

Your credit score affects your mortgage in a few ways. First, it will determine the interest rate you qualify for. A higher score means you’re seen as a lower-risk borrower, leading to a lower interest rate on your loan.

A lower score could lead to a higher interest rate and could mean you won’t qualify for a loan at all. Many lenders prefer an applicant’s credit score of 680 or higher. But there are programs available for borrowers with lower scores.

Your credit score will also affect the size of your down payment. Lenders typically require a higher down payment from borrowers with lower credit scores.

Can One Get a Mortgage With a Bad Credit?

Everyone knows having poor credit can make it challenging to get a mortgage.

Lenders are typically unwilling to work with borrowers with poor credit histories, viewing them as higher risk. That said, it is still possible for someone to get a mortgage with bad credit. There are a number of specialized lenders who work with borrowers with less-than-perfect credit. These lenders are typically willing to take on more risk and, as such, may be more expensive than traditional lenders.

It’s important to note that getting a mortgage with bad credit will likely come with some challenges. For one, you may be required to make a larger down payment than you would with good credit. You may also be subject to higher interest rates and fees.

If you’re willing to work with a specialized lender and are prepared to make some compromises, getting a mortgage even with bad credit is possible.

Conclusion

Your credit score is one of the most important factors in getting approved for a mortgage in Canada. A high credit score shows you’re a low-risk borrower, one that is attractive to lenders. A low credit score could lead to a higher interest rate and could mean you’ll have to put down a larger down payment. So it’s certainly in your best interest to keep your credit score as high as possible. If you need more information on this, you can consult a mortgage specialist in Ottawa who can help you. 

Ottawa Mortgage Services is a mortgage agent in Ottawa that can provide you with the assistance you need when you apply for a home loan. Get in touch with us to set up an appointment!

man looking at paper

What You Must Know About Getting a Mortgage in Canada

Anyone buying a property will almost certainly require a mortgage. What is the process of getting a mortgage in Canada? It’s a basic financial instrument, but its many alternatives and interest rates might be perplexing. Because buying a home will most likely be the most significant investment of your life, you’ll want to be sure you understand how mortgages work.

How Does a Mortgage Work?

A mortgage is a loan that you take out to finance the purchase of a home. It’s a product that you’ll pay back for the duration of your home ownership, which means that you’ll be paying an interest rate for the use of your money. The principal of your mortgage is the amount of money you actually borrowed, while the interest is the fee you need to pay back to the bank to use your money.

What are the Qualification Criteria to Get a Mortgage in Canada?

Before you apply for a mortgage, it’s important to consider these five requirements for your application to run smoothly with any lender in Canada.

1. Down Payment

In Canada, buyers are required to have a minimum down payment of 5%. The minimum down payment can differ from lender to lender, with the average being 10%.

2. Credit Score

A good credit score is an important part of the application process when getting a mortgage in Canada. Your lender will look at your credit score, which is a reflection of your entire credit history. This score poses a minimum of at least 600 to 680, with a higher number reflecting a better credit history.

3. Secured Income

The lender will also look for proof of income and a steady job. This can be done with a letter from an employer, or by providing your most recently filed tax return.

Types of Mortgages

Do you intend to make additional payments to pay off your mortgage as soon as possible? Then you should try to acquire an open mortgage, which is more flexible in terms of prepayments. This sort of mortgage, however, normally has a higher interest rate.

On the other hand, a closed mortgage has a lower interest rate but limits the amount of extra money you may put down to pay off your mortgage faster. If you try to make prepayments that exceed the maximum specified by your lender or if you want to breach the mortgage arrangement, you will normally be charged a penalty fee.

Amortization Period and Term

It’s important to remember that both the amortization period and the term of the mortgage refer to the length of the loan that you will pay off. This length differs between mortgages, and it’s important to understand that the shorter the amortization period, the lower the interest rate is. The term refers to the number of years you will be paying off your mortgage loan. Depending on the lender, the maximum term of a mortgage loan is 30 years. You can, however, choose to pay it off in a shorter period.

Conclusion

There are many different mortgage options available, and it’s important to know how every one of them works. However, with a good understanding of your finances and of your finances, you can mortgage with confidence.

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!

Mortgage Pre-Approval

5 Ways Mortgage Pre-Approval Protects You From Rising Rates

With rising interest rates, now is a great time to find and buy a home. When you search for a home, get pre-approved for a loan to ensure you can afford to take on the risk of home ownership.

In a buyers market, the more advantages you may get, the better your chances of securing your ideal property.

What is a Mortgage Pre-Approval?

A mortgage pre-approval document is mainly signed by the bank or mortgage broker. With it, you are guaranteed to receive a loan for purchasing a home at a specific interest rate, amount, and term. 

Besides income and assets, lenders are interested in your debt/credit-to-income ratio. You should make sure you are in good standing with your mortgage company before you start shopping for a house.

Here are five ways why getting one can be beneficial for you:

1. Helps You Buy Now and Lock in a Lower Rate

Mortgage rates can go up and down. If you pre-approve a loan, you can buy now before rates go up; then, you can lock your rate in with a 30-day commitment fee or a nominal fee. 

Moreover, you can lock in your rate for up to 10 years. If you wait to get pre-approved until the last minute, you may be less likely to lock in a low rate.

2. Helps You Avoid a Higher Interest Rate

If you are not a ʻqualified buyer,’ you may be required to pay a slightly higher interest rate. Furthermore, ʻqualified buyers’ may be charged a higher interest rate if they are not pre-approved. 

If you do not have enough cash for your down payment and closing costs, you may not be able to obtain a loan. If you are approved for a loan and can’t close, you will have to pay a fee.

However, if you are a ʻqualified buyer,’ it may not be as easy to get a loan as you think. A bank will ask for documentation of your down payment and ample cash for closing costs.  As a first-time homebuyer, your lender may require a larger down payment and more cash for closing costs.

3. Helps Negotiate a Better Deal

Negotiating a better price is simpler if you have previously been pre-approved for a loan and can show your sellers your letter. Your vendors will be more likely to negotiate on price if they know they can count on you to pay them soon after you are “approved.”

On the other hand, ‘unapproved’ buyers may be required to pay a higher price at closing. If your sellers know you are committed to purchasing the home, they will be more likely to help you with a lower price.

4. Gets the First Option to Buy 

By having a pre-approval letter, you can get your offer accepted first. If a house receives many requests, only the pre-approved buyers will be allowed to make an offer. 

When you are ʻapproved,’ they will accept your offer first. If the seller is one of the ʻapproved’ sellers, they will usually ask for a higher price or a lower deposit.

Furthermore, ʻapproved’ sellers might have a higher market demand. Since they have been pre-approved, they may have a faster time selling their home. As a result, they might ask for a higher price.

5. Helps Avoid Foreclosure

Foreclosure is more likely when buyers cannot make their mortgage payments, but they can take measures to avoid it. A ‘short sale’ is one option. 

Your house or property may be worth less to the bank than it currently is. You might be able to work out a better deal with the bank. 

You should, however, be prepared to get an ‘appraisal’ of the property’s worth. Another option is negotiating a better agreement with the bank or selling the property before foreclosure.

Conclusion

Don’t put off being pre-approved for a loan. You might be shocked by how many individuals try to sell their homes before getting pre-approved for a loan. Remember, you are more likely to obtain a better bargain on your ideal house if pre-approved.

At Ottawa Mortgage Services, we realize that you’re seeking a mortgage services specialist who will examine your financial condition and help you get the best mortgage available. We’ll offer you several mortgage options, clarify what paperwork is required to qualify for your mortgage, negotiate with lenders on your behalf, and ensure you’re properly taken care of throughout the process. Take the first move, reach out, and let us know how we can help you!

Self-Employed

How to Get a Mortgage as a Self-Employed Individual

Millions of Canadians don’t work as an employee and instead are considered self-employed individuals. These people have the freedom of being their own boss. While that sounds amazing at first, it does come with some disadvantages. For many people, one significant setback of being self-employed is not being able to take out a mortgage. However, in this guide, we’ll show you that getting a loan as a self-employed individual is not only possible but can be easy with the right help.

Why Lenders are Strict Concerning Self-Employment

When you’re trying to get a mortgage as a self-employed individual, it’s important to remember that there will be some unique challenges. This is because job stability can be limited. It’s also important to consider that self-employed applicants are more likely to have a spotty credit history. This means that lenders may have more restrictive guidelines for self-employed applicants.

Getting a Mortgage as Self-Employed

In order to be eligible for a mortgage, you will still have to meet your lender’s qualifying standards for income. In other words, you have to have enough income to be able to pay your monthly mortgage payments.

Self-employed individuals don’t always have a stable booking schedule. This makes it hard for them to apply for a mortgage as a self-employed individual because conventional lenders don’t have a way to access the income of someone that doesn’t have an employer. But there is a way to get around this.

How Self-Employed Individuals Qualify for a Mortgage

Self-employed individuals who want to take out a mortgage will find that their lender will need to verify their income. However, the typical methods of proof aren’t always available to those who work for themselves. In order to overcome this, lenders have come up with a couple of options for self-employed persons who want to be able to take out a mortgage. These include:

Business Number Registration

Lenders can rely on сorporate documentation when assessing the income of self-employed individuals. This is because self-employed individuals often register their business with the Canada Revenue Agency (CRA). What this means is that their business number can be used as proof of income when applying for a mortgage.

Bank Statements

As a self-employed individual, you probably have your own bank account connected to your business or personal account. It’s also likely that you have a business account at an institution other than the one that you use for your personal banking. This is even more beneficial because it means you have the option of applying for a mortgage by providing bank statements from one of your business accounts.

Financial Statements

For non-traditional income verification, lenders also allow self-employed individuals to provide financial statements instead of pay stubs. This is usually more effective than other income verification types in this situation.

Notice of Assessment

There is another option for self-employed individuals who want to apply for a mortgage. This involves the mortgage applicant submitting a Notice of Assessment or your T1 General Income Tax Returns for the previous two or three years. This way, the lender can see a complete picture of your income and use it to calculate your mortgage.

Conclusion

This guide has shown you that getting a mortgage as a self-employed individual isn’t impossible. But it may be more difficult than getting a mortgage as an employed individual. The key to getting a mortgage as a self-employed individual is making sure to meet your lender’s requirements for income verification.

If you think you can qualify for a mortgage even if you’re a self-employed individual, then the next step for you is to find a mortgage agent who can help you connect with a lender. This is where Ottawa Mortgage Services comes into play. We provide mortgage agent services for first-time home buyers, self-employed individuals, and commercial clients. Reach out to us today to get your free assessment with no obligation.

mortgage

A Beginner’s Guide to Mortgage Pre-Approval

If you want to buy your own place, you’ll need to know how much you can afford. Your finances play a big role in this, and getting a mortgage pre-approval will help you understand your buying power.

How Does Mortgage Pre-Approval Work?

A mortgage pre-approval is a process that potential home buyers can use to see how much money a lender is willing to lend them. It is often recommended that buyers get pre-approved before making an offer on the house. The pre-approval process includes assessing the maximum mortgage amount you qualify for, your estimated monthly payments, and your interest rate.

Your mortgage pre-approval locks your interest rate for a set period, usually 90-120 days. If interest rates go up during that time, you’re still guaranteed the original rate. However, if rates fall, you can try to get a lower rate when you’re ready to close on your mortgage.

Remember that some lenders can only offer you a fixed interest rate for the duration of your pre-approval period. Based on the Bank of Canada’s policy rate, variable mortgage rates can change at any time. Pre-approvals are good for 90-120 days, although some lenders may offer them for up to 130 days.

What Are the Requirements for a Mortgage Pre-Approval?

Regardless of which mortgage lender you go to, you’re going to need to provide the following information:

  • Your identification
  • Letter of employment and proof of income
  • Position and length of time with your current employer
  • Additional income and assets
  • Outstanding debt
  • Bank statements
  • Down payment
  • Notice of Assessment from the Canada Revenue Agency for the past two years (self-employed individuals only)
  • Permission to allow the lender to obtain your credit report

How to Apply for Mortgage Pre-Approval

Since it doesn’t cost anything to get pre-approved, comparing offers from different lenders is a good idea. Most lenders will do a hard credit check as part of the pre-approval process, so make sure your credit score is in good shape before you start shopping around. 

Multiple credit inquiries from different lenders within a short period (usually 14 to 45 days) will only count as one hard check on your credit history so it won’t have a big impact on your credit score.

You can contact different mortgage lenders to see how much you’ll be approved for and what interest rates they offer. Or, you could use a mortgage broker who will shop around for you. The lender pays mortgage brokers, so there’s no cost to you.

It usually takes a day or two to hear back after applying. With formal approval, you’ll know exactly how much you can spend. Keep in mind that there are other costs like closing costs, moving costs, and ongoing maintenance. You may not want to spend your entire budget on housing.

Conclusion

Getting pre-approved for a mortgage is a great first step toward buying a house. If you get it done early in your house-hunting journey, you can compare mortgage offers and better plan your budget. The pre-approval process can take a little time and paperwork, but it is worth it when you are ready to make an offer on a home. 

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!

Mortgage Application

Mortgage Application Denied: Here Are 5 Possible Reasons Why

Home loan denials happen, but it doesn’t mean you’ll never be able to buy a home. A lender may not have approved your loan for a variety of reasons. The key to success is knowing why something is happening and what you can do to fix it.

Check out our five probable reasons for a home loan denial. Also, find out what you can do to secure loan approval on your next mortgage application.

1. Low Appraisal

If the property’s appraised value is much less than the purchase price, the loan-to-value ratio (LTV) may be greater than the lender may legally allow.

Potential solution: Property value difficulties, while difficult to fix, is not insurmountable. Try renegotiating if the purchase price exceeds the neighbourhood’s house prices. Make a greater down payment and accept the lesser loan amount if you have the financial resources to do so. Unfortunately, depending on the market, you won’t be able to shop lenders to see if you can get more money. The chances of the house remaining on the market are small. As a result, you might think about renegotiating or making a larger down payment.

2. Poor Credit History

A low credit score often results from not making payments on time, carrying a high balance, or maxing out credit cards. Any of these things can impact your score and make it difficult to qualify for a mortgage.

Potential solution: The first step is to get a copy of your credit report and check for any errors. If there are any, you’ll want to dispute them right away. If everything looks accurate, you may need to take some time to improve your score before applying for a home loan again. This can be done by paying all bills on time, keeping balances low on your credit cards, and only opening new accounts when necessary.

3. Inadequate Employment History

Lenders like to see a steady employment history because it’s an indicator of future earnings potential. So, if you recently switched jobs or are self-employed, you may have a more difficult time qualifying for a loan.

Potential solution: The best way to overcome this issue is by waiting to apply for a mortgage until you’ve been with your current employer for at least two years. If you are self-employed, be prepared to provide additional documentation, such as tax returns and financial statements, to prove your income.

4. Lack of Downpayment

One of the biggest reasons people are denied a home loan is that they don’t have enough saved for a down payment. Most lenders require a down payment of at least 3-5% of the purchase price.

Potential solution: The best way to overcome this issue is by saving up for a larger down payment. You may want to consider setting up a separate savings account and automated transfers to make saving easier. Another option is to look into government-backed loans, like an FHA loan, which only requires a 3.5% down payment.

5. High Debt-Debt-to-income (DTI)

Debt-Debt-to-income is a ratio that looks at how much of your monthly income is going towards debt payments. A high DTI can make it difficult to qualify for a loan because it indicates you may have difficulty making your mortgage payments.

Potential solution: The best way to lower your DTI is by paying down your debts, which can include credit cards, car loans, and student loans. You may also want to consider waiting to apply for a mortgage until you’ve been with your current employer for at least two years, which will give you time to save up and pay down debt.

Conclusion

There are several reasons why your home loan application may be denied. But, don’t despair! In many cases, there are things you can do to improve your chances of being approved the next time around.

If you’re looking to apply for a mortgage, you need to find an agent that you can trust throughout the process. Ottawa Mortgage Services is the perfect partner to help you get that mortgage that suits your needs and your budget. Our team actively deals with lenders and negotiates all aspects of mortgage underwriting to ensure you get exactly what you need for your loan. Apply now and get a free assessment from a professional mortgage agent.

Mortgage

Separation Anxieties: Managing a Mortgage After a Divorce

Divorce can be challenging enough without the financial complication because you have to deal with the emotions. Worst case scenario will be if there are kids involved. You need to help them through the trauma while handling your heartaches.

You might face another post-divorce dilemma if you get through the emotional roller coaster: a mortgage. You might have to sell your current home if it is in both of your names or refinance it as a part of the divorce agreement. But if you are not making enough money to cover the bills, how will you pay for the divorce attorney?

If these daunt you, you should simply take a breather and read this blog carefully. We have tapped into the prowess of seasoned mortgage brokers in Ottawa to help you through this crisis.   

Talk about It

Your mortgage agent will encourage you to talk things over. You have to determine what each party wants. 

You may be tempted to tell your former partner to take off, but it is not that simple. Your ex-spouse might not have enough money for a down payment. With this said, you might have to work side by side with your former spouse in determining the path forward. It is certainly not an easy job, but it is undoubtedly possible with the help of an intermediary.

You also need to determine the value of the property. In this step, you need the help of an appraiser or a realtor. They can tell you how much the property is worth at the divorce.

Options for Handling the Mortgage

Your mortgage agent can offer you a few options. Think of them as life vests in a turbulent ocean of divorce. Here are some:

Sell Your Home

You can sell your house. As mentioned earlier, your home is probably the most valuable asset. It can fetch a reasonable price. The mental stress alone is worth it.  

However, you need to be creative in terms of selling it. You do not have to go the traditional route of a realtor. You can look for buyers online. If you have to sell it for whatever price you can get, you might have to wait for some time because it is no longer a seller’s market

Refinance

You might be astounded that you can still avail a refinance, but you still can. It would be best if you simply asked your mortgage agent. To qualify for refinancing, you need to meet the credit requirements of your lender. 

Kindly note that this choice is only available if you can afford the mortgage payment yourself. If you are unsure, you might have to go for a short sale. Remember that refinancing your mortgage has one significant upside: you can keep your house.

Refinancing may be an option after all. You would need to talk to a mortgage agent to see if you are qualified for this. 

Conclusion

You do not have to go through this alone. Your mortgage professional can guide you on this path. They can help you understand your options and decide which one best fits your situation. Do not be afraid to ask.

If you are going through this type of change, you should contact Ottawa Mortgage Services. As a mortgage agent in Ottawa, I can help you through this tricky monetary dilemma. You simply have to consult me, so contact me now for more information!

buyer receiving house key

5 Clever Ways of Paying Off Your Mortgage Faster

For the average Canadian, getting a mortgage on a single-family home is a big, big deal. It’s essentially the single largest debt you will ever have to pay off in your life. A typical mortgage will last up to 30 years, 60 years (if you stretch it out), or even 80 years! The good news is, there are ways to pay off your mortgage sooner. Let’s look at some of the ways to do it.

1. Pay More Than the Minimum on your Mortgage

When you get a mortgage on a residential property, you will be required to make monthly payments on it. The amount of these payments is commonly called the “mortgage payment.” If you pay more than the minimum amount of your mortgage payment, then you will be increasing the amount of money you pay against your mortgage on a monthly basis. And as a result, you will be getting rid of the mortgage faster.

The minimum mortgage payment is typically calculated as a percentage of your outstanding mortgage amount. For example, let’s say you have a mortgage of $300,000 and you have 20 years to pay it off. If the minimum payment is 2.5%, then the minimum payment that you will be required to pay per month is $850. But let’s say you decide to make your monthly payments equal to 3%. In this case, your monthly payment will be $1,050. This means that you will end up paying an extra $200 each month. This is money that will be added to the outstanding mortgage, and therefore, your mortgage will be paid off faster.

2. Make your Extra Payments to Pay Off the Principal of the Loan

When you remit payment to your lender, the bank will be able to tell if you are overpaying on your mortgage based on the interest rate. For example, if you make a $1,000 payment, but the bank only charges you $550 in interest, it is going to look at your payment history and see you’ve overpaid by $450. It will then redirect those payments to your principal. If you are already paying more than the minimum amount required to pay the interest, then you can make extra payments that will only be applied to the principal balance.

This will shorten the life of your mortgage, and you will be able to pay it off sooner than later.

3. Consolidate Multiple Mortgages

If you have multiple mortgages, then you may be able to consolidate them into one new mortgage. This will be beneficial because you will only be required to make one mortgage payment every month. Even better, the lower rate on your new mortgage will make your monthly payment lower, and you will be able to save money. This will free up cash flow, and paying down your mortgage will be made more attainable.

4. Utilize Your Tax Refund

A lot of Canadians wait for the tax refund at the end of the year and then use it to pay down debt. If you have a mortgage, then you can apply your tax refund to your mortgage as well. This will reduce the amount of time it takes to pay off your mortgage. Plus, you will have money to use for your other debt payments.

5. Keep Your Payments the Same When Refinancing Your Mortgage

When renewing your mortgage, you will likely be able to get a better rate on it. If you are able to get a lower interest rate, then you will want to move your mortgage to take advantage of it. However, you want to make sure that you do not get a longer-term in order to keep your payment the same. If your mortgage is shorter, then you will be able to pay off your mortgage and get rid of it sooner.

Conclusion

The sooner you can pay off your mortgage, the sooner you can start saving for other things. There are many ways to pay off your mortgage, so if you haven’t started yet, then think about using one of the above methods.

If you’re looking to apply for a mortgage, you need to find an agent that you can trust throughout the process. Ottawa Mortgage Services is the perfect partner to help you get that mortgage that suits your needs and your budget. Our team actively deals with lenders and negotiates all aspects of mortgage underwriting to make sure you get exactly what you need for your loan. Apply now and get a free assessment from a professional mortgage agent.

mortgage loan

Costly Mistakes: What You Avoid to Get a Pre-Approved Loan

Forbes encouraged the public to invest in Canada’s real estate early last year. In that article, the columnist enumerated five reasons to do so. Although the blog was targeting non-Canadians, it is safe to say that Canadians should not miss out on this investment opportunity.

To enjoy this privilege, you should avail of a mortgage loan pre-approval. After all, you do not want to be left behind. However, it would help to take the proper steps to get pre-approved. 

If you do not know what to do, you should keep your eyes glued. This blog has enlisted the help of seasoned mortgage brokers in Ottawa to guide you through the loan process. They have enumerated the things to avoid, and here they are:

Paying Your Debt Late

Doing this is probably the fastest way to deny your application for a mortgage loan. Mortgages are meant for payment of the loan, not for other bills. If your payment is delayed, your application could suffer the same fate.

If you have a poor credit score, you should take corrective measures. It includes paying your existing loans, credit cards and other dues. You should also make recurring payments on your credit accounts.

In addition, you should maintain a debt-to-income ratio below 43%. In other words, your income should be able to cover your monthly expenses, including your mortgage payment.

Taking on Additional Debt

If you find it difficult to pay your debts, you should not take on more debt. You may be thinking of applying for a credit card or a personal loan. The better option is to wait until you can do it.

Before you take on a mortgage loan pre-approval, you should know that your credit score should reflect your financial responsibility. It shows the potential lender that you are capable of handling additional debt. As mentioned earlier, if you have bad credit, you should try to improve it. It is the easiest way to convince the loan provider that you will be able to pay on time.

If you have a bad credit score, the lender could hesitate to give you a loan. However, it is better to have a bad credit score than no credit score.

Transferring to a New Job

If you are employed, you should not change your job unless you have concrete chances of improvement. If you opt for a transfer, you should present thorough research about the new firm or industry. You should also know that the transfer could affect your chances of getting a mortgage loan pre-approval.

A lender is less keen to lend money if you just transferred to a new job. It is a sign that you are still looking for stability. Instead of immediately applying for a mortgage loan pre-approval, you should wait a while.

Conclusion 

You should avoid the mistakes mentioned above if you seek a mortgage loan pre-approval. It is essential to remember that a mortgage is a long-term commitment. In addition, you should make a note that you should not forget the down payment. Although there is no explicit rule about giving a 20% down payment, it would be prudent to do so. 

Now that you know more, you should talk to Ottawa Mortgage Services. We have given mortgage loan pre-approval to Ottawa residents. Take that plunge and pursue a profitable real estate investment by getting that loan from us!